2016 (12) TMI 772 - AT - Central Excise

Classification of goods - grain cleaning and drying machine - Whether the impugned goods grain cleaning and drying machine was manufactured and cleared and such fall under the tariff entry 84.37 or under 84.19? - Held that - when the tariff entry is looked into, Revenue has not discharged its burden of proof to show the very purpose that the machinery serves. Various purpose are listed in the entry and treatment of materials by the processes involved as stated in the entry. The term drying also appears in that entry but that cannot be read in isolation. Intention of the entry is to cover a machine or plant or laboratory equipment, which is basically meant for the treatment of the materials. But the goods manufactured by the appellant serves no useful purpose of entry 84.19 rather it serves useful purpose of the entry 84.37 being specifically used in the milling entry - No technical test of the goods has been done by the Revenue to show that the impugned goods cannot be used by milling industry. Its purpose, capacity and usage remained uncontroverted leading in evidence. In absence of any technical test, report or expert opinion, the benefit of doubt goes to the assessee - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues: Classification of goods under tariff entry 84.37 or 84.19

In this judgment by the Appellate Tribunal CESTAT CHENNAI, the issue at hand revolved around the classification of the goods, specifically a "grain cleaning and drying machine," under either tariff entry 84.37 or 84.19. The appellant contended that the goods should be classified under 84.37 as they are used by the milling industry for cleaning and drying purposes. On the other hand, the Revenue argued for classification under 84.19, emphasizing the scope of the entry covering machinery used for processes involving temperature changes.

Analysis:

The Tribunal delved into a detailed analysis of the two tariff entries to determine the appropriate classification for the impugned goods. The appellant's argument was centered on the specific usage of the goods in the milling industry, which aligned more closely with the description provided under tariff entry 84.37. They emphasized that the goods were primarily used for cleaning and drying purposes in the milling industry, making them rightly classifiable under 84.37. The Tribunal noted the importance of the purpose for which the machinery was designed and used in determining its classification.

On the other hand, the Revenue's contention favored classification under tariff entry 84.19, citing the machinery's functions related to heating and other processes specified within the entry. However, the Tribunal pointed out a crucial flaw in the Revenue's argument, highlighting that the nature and character of the impugned goods were not clearly linked to the requirements of tariff entry 84.19. The lack of specific details in the show cause notice regarding how the machinery satisfied the criteria of 84.19 weakened the Revenue's case.

The Tribunal further scrutinized the machinery's characteristics and intended purpose as outlined in the tariff entries. Despite the presence of terms like "drying" in entry 84.19, the Tribunal emphasized that the overall intention was to cover machinery meant for the treatment of materials through various processes. It was noted that the impugned goods did not align with the intended purpose of entry 84.19 but rather served the specific needs of the milling industry, falling more aptly under 84.37.

Moreover, the Tribunal highlighted the absence of technical tests or expert opinions conducted by the Revenue to demonstrate that the impugned goods were unsuitable for use in the milling industry. The lack of concrete evidence regarding the machinery's purpose, capacity, and usability in the milling industry worked in favor of the appellant, leading to the benefit of the doubt being granted to them. As a result of the comprehensive analysis and the lack of substantial evidence from the Revenue, the Tribunal allowed the appeal in favor of the appellant, emphasizing the importance of aligning the classification with the actual purpose and usage of the goods.