2017 (8) TMI 503 - AT - Customs

Classification of imported goods - pellet mill and spare parts for shrimp feed machinery - whether part of pellet mill and spare parts of shrimp feed machinery can be classified under CTH 8436 as claimed by the appellant or otherwise under 8438 as per the stand of the department? - Held that - The HSN notes for 8436 reads .The heading covers machinery, not falling in headings 84.32 to 84.35, which is of the type used on farms (including agricultural schools, co-operatives or testing stations), in forestry, market gardens, or poultry-keeping or bee-keeping farms or the like. However, it excludes machines clearly of a kind designed for industrial use - Notwithstanding the appellant s protestations that the impugned goods are parts of shrimp feed machinery for use in their own aqua farms, that does not come through from the facts on hand. Appellant has not adduced any proof to establish such a contention. On the other hand, the very name of the appellant, Laila Global Feed Pvt. Ltd., prima facie, appears to indicate that they are in the business of manufacture of shrimp feed. It is also not the case that appellant are only a shrimp farm and that they are importing the goods for use in production of shrimp feed in their own farm. As early as in 2002, the Hon ble Supreme Court vide their judgment in Collector of Customs, Bombay Vs Business Farms Ltd. 2002 (1) TMI 68 - SUPREME COURT OF INDIA relying upon their earlier decision in Collector Vs Wood Craft Products Ltd. 1995 (3) TMI 93 - SUPREME COURT OF INDIA laid down that Explanatory Notes to HSN not only has persuasive value but entitled to the greater consideration in classifying the goods under Central Excise & Customs Tariff. Appeal dismissed - decided against appellant.

Summary

Issues:
Classification of imported goods under CTH 8436 or CTH 8438.

Analysis:
The case involved the classification of imported goods declared as parts of a pellet mill and spare parts for shrimp feed machinery. The appellants imported these goods from Taiwan and paid the applicable duty. The Department argued that the goods should be classified under CTH 84389090 instead of CTH 84368090. The differential duty liability was confirmed in adjudication proceedings, and the appeal was rejected by the Commissioner (Appeals).

During the hearing, the appellant's advocate argued that the imported goods were for the manufacture of animal feed for the appellant's aqua unit, not for industrial use. They contended that even for industrial production, the goods should be classified under CTH 8436, citing a Tribunal case supporting this classification.

The main issue for appellate decision was whether the goods should be classified under CTH 8436 as claimed by the appellant or under CTH 8438 as argued by the Department. The Customs Tariff Headings for both categories were examined to understand the classification criteria.

Despite the appellant's assertions, the tribunal found that the goods did not qualify as machinery for preparing animal feeding stuffs under CTH 8436. The HSN notes excluded machines clearly designed for industrial use from this category. The tribunal noted that the appellant had not provided evidence to support their claim that the goods were for their aqua farms, and the company's name suggested involvement in the manufacture of shrimp feed, not just farming.

The tribunal emphasized the importance of HSN notes in classifying goods under the Customs Tariff Act, citing a Supreme Court judgment that highlighted the significance of these notes in classification. Several tribunal decisions were mentioned where the HSN Explanatory Notes were given substantial weight in classification disputes.

Based on the analysis of the tariff headings, HSN notes, and legal precedents, the tribunal found no fault in the impugned order and dismissed the appeal. The decision was pronounced in court on 10.08.2017.