2017 (4) TMI 418 - AT - Customs

Classification of imported goods - empty bottle Inspector Morella number Lynott Tronic 735M 2 - whether the machinery imported by the appellants merits classification under Customs tariff heading number 8422 or 9031? - Held that - The use of the machines in the factory of the appellant is not in dispute. The manufacturing activity, as explained before us as well as before the adjudicating authority, is PET bottles are formed, inspected and filled with aerated water sealed, packed and cleared. The use of the machine which are imported, as explained by the learned Counsel, is just after the forming of the PET bottle. If that be so, we find that the explanatory notes to the HSN clearly support the case of the appellant - the explanatory note of HSN to chapter 90 does not support the case of the revenue as the said explanatory notes talks about stand-alone test bench or equipments which is not in conjunction with any machinery. The machines imported by the appellant being used in conjunction with form, fill and seal machine, merits classification under CTH 84 2230 00 and eligible for benefit of N/N. 21/2002 - appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of imported machinery under Customs tariff heading number 8422 or 9031.

Analysis:
1. The appeal addressed the issue of whether the machinery imported by the appellant should be classified under Customs tariff heading number 8422 or 9031. The appellant imported a consignment of empty bottle Inspector Morella number Lynott Tronic 735M 2 and claimed classification under CTH 8422, while the revenue authorities argued for classification under CTH 9031. The adjudicating authority held that the machines are classifiable under CTH 9031 due to misdeclaration of classification, leading to confiscation and penalties.

2. The appellant's counsel argued that the imported machines are used for inspecting newly formed PET bottles in the process of manufacturing aerated water, thus should be classified under CTH 8422. The counsel referenced a certificate from the manufacturer and exporter, along with notes to HSN supporting the classification under CTH 8422. On the other hand, the Departmental Representative contended that the machines should be classified under CTH 9031 as measuring or checking instruments, as per the notes to HSN.

3. The Tribunal examined the submissions and records, noting the manufacturer's certificate stating expertise in bottling line for bottled drinks industry and PET bottle inspection. The Tribunal acknowledged the manufacturing process involving PET bottles being formed, inspected, filled with aerated water, sealed, packed, and cleared. The explanatory notes to the HSN under chapter 84 supported the appellant's case by outlining machinery functions related to filling, closing, sealing, labeling bottles, and aerating beverages, which align with the imported machines' purpose.

4. Contrarily, the explanatory notes to the HSN under chapter 90 did not support the revenue's argument, focusing on standalone test benches or equipment not in conjunction with machinery. The Tribunal highlighted specific functions and types of machines falling under CTH 8422, emphasizing that the imported machines used in conjunction with form, fill, and seal machines merit classification under CTH 8422 and qualify for the benefits of notification number 21/2002.

5. The Tribunal referred to a similar case where classification of an inspection machine was contested, and the Tribunal ruled in favor of classification under CTH 8422 due to functions performed in tandem with other processes. Drawing parallels, the Tribunal concluded that the impugned order was unsustainable, setting it aside and allowing the appeal. The imported machines were deemed correctly classifiable under CTH 8422, making them eligible for the benefits specified.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision based on the arguments presented by both parties.