2014 (11) TMI 309 - AT - Central Excise

Classification of welded wire mesh - used as poultry form accessory to cover the cages - Classification under Heading 7314 or under heading 8436 - Held that -We have seen the Entry 8436.99, which existed prior to 2005 and the one which existed post 2005. The Entry in the new Tariff includes the parts of the Poultry keeping machinery. - Commissioner, Hyderabad vide his separate order-in-original dated 16.05.2014, passed in the case of wire mesh has taken note of the above developments and has held that wire mesh meant for use in the poultry form is properly classifiable under Heading No.8436 91 00. The Hon ble Delhi High Court dismissed the writ petition 2012 (3) TMI 326 - Delhi High Court pertaining to the earlier Entry No.8436, which related to only a Poultry Keeping Machinery and it is held that wire mesh cannot be treated as poultry keeping machinery. We are of the view that the same may not be strictly applicable to the new Tariff Entry, which specifically included the parts of the poultry keeping machinery. Apart from the above, we also note that the said decision of the High Court of Delhi was challenged before the Hon ble Supreme Court by way of filing an SLP and vide 2014 (10) TMI 774 - SUPREME COURT , the SLP was allowed to be withdrawn so as to pursue the matter with the Commissioner (Appeals).The Hon ble Supreme Court specifically directed that, in case, the appeal is entertained by the Commissioner (Appeals), it will be considered on its own merit, uninfluenced by no observation of the Delhi High Court. - Prima facie case is in favor of assessee - stay granted.

Summary

Issues: Classification of goods under Customs Tariff Act, 1975 - Whether wire mesh is classifiable under Heading 8436.99 attracting nil rate of duty or under Heading 7314 as steel and iron wire.

The judgment revolves around the classification of wire mesh for duty payment purposes. Initially, the appellant classified the wire mesh under Heading 73.19 as Iron and Steel articles and paid duty accordingly. However, following a Tribunal decision, they reclassified it under Heading 8436.99, attracting nil duty, and ceased duty payments after notifying the central excise authorities.

Subsequently, the Delhi High Court, in line with Azra Poultry Equipments case, determined that the goods should be classified as steel and iron wire under Heading 7314, not as machinery under Heading 8436. This led to the initiation of proceedings against the appellant through show cause notices for duty demand and penalties for the period 2009-2013, based on the High Court's decision.

The Tribunal analyzed the differences between the Tribunal's decision at Bangalore regarding Chapter 8436.99 and the Delhi High Court's decision on Entry 8436 pre and post the introduction of the 8-digit tariff in 2005. The new Tariff Entry specifically included parts of poultry keeping machinery. The Tribunal noted that the Delhi High Court's decision was challenged in the Supreme Court, and the SLP was allowed to be withdrawn for appeal consideration by the Commissioner (Appeals). The Commissioner in Hyderabad also classified wire mesh for poultry use under Heading No.8436 91 00.

Considering these aspects, the Tribunal concluded that the appellant was entitled to an unconditional stay based on the differences in the classification interpretations and the subsequent developments in the case law. The Tribunal ordered the stay accordingly, allowing the appellant relief from the duty demand and penalties imposed.

This judgment highlights the complexities involved in the classification of goods under the Customs Tariff Act, emphasizing the importance of legal precedents, Tribunal decisions, High Court rulings, and Supreme Court interventions in determining the appropriate classification for duty payment purposes.