2018 (6) TMI 125 - AT - Central Excise

Classification of stitching machines - machines manufactured by respondent No.1 under brand namely Usha Magic Master Merritt Designer Luxmi & Aristo and respondent No.II under the brand name Usha Flora - Case of the Revenue is that the embroidery is the primary function of the impugned goods and hence these goods are classifiable as embroidery machines under CTH 8447 of the Tariff Act - benefit of Sl. No. 201 of N/N. 6/2002-CE dated 1.3.2002 and under Sl. No. 15 of N/N. 6/2006-CE dated 1.3.2006. Whether the machines are sewing machines or embroidery machines and the same having merit classification under heading 8452 or 8447 of the Tariff Act? Held that - As per Note 7 to Chapter 84 a machine is used for more than one purpose is for the purposes of classification to be treated as it its principal purpose were its sole purpose - On going through the HSN Explanatory Notes to Chapter heading 8447 the heading does not cover sewing machines capable of doing simple embroidery in addition to ordinary sewing under 8452. Further as per HSN Explanatory Note to heading 84.52 states that the machines designed to do embroidery work only under heading 84.52. Admittedly in the case in hand the machine in question is sewing but they can do ordinary embroidery sewing. In that circumstance as per HSN Explanatory Note 7 to Chapter 84 the principal function of the machine is sewing in that circumstance it is held that held that the machine in question are sewing machines having merit classification under heading 84.52 of the Tariff Act and are also entitled for the benefit of notification. Appeal dismissed - decided against Revenue.

Summary

Issues: Classification of sewing machines capable of embroidery under CTH 8452 or 8447 for duty exemption.

Analysis:
1. The dispute revolves around the classification of sewing machines capable of embroidery under CTH 8452 or 8447 for duty exemption. The respondents classified the machines under CTH 8452 to claim exemption from duty under specific notifications. However, the Revenue argued that the machines should be classified as "embroidery machines" under CTH 8447 and are not entitled to the claimed exemption.

2. The Revenue contended that since the machines are capable of embroidery, they should be classified under CTH 8447, and the respondents are not eligible for duty exemption under the mentioned notifications.

3. The Appellate Tribunal heard arguments from both sides. The Revenue's representative reiterated that the machines should be classified as embroidery machines under CTH 8447 due to their capability to perform embroidery work.

4. On the other hand, the respondents' counsel highlighted that the Commissioner's findings supported the classification of the machines as sewing machines capable of embroidery, not exclusively embroidery machines. The counsel argued that the HSN Explanatory Notes differentiate between sewing machines capable of simple embroidery and those designed solely for embroidery work.

5. The main issue was whether the machines should be classified as sewing machines or embroidery machines under CTH 8452 or 8447. The relevant entries from the Tariff Act were examined to determine the appropriate classification based on the machines' principal function.

6. The Tribunal referred to the HSN Explanatory Notes for Chapter headings 8447 and 8452 to interpret the classification criteria. It was noted that machines capable of simple embroidery in addition to ordinary sewing should be classified under 8452, while those designed solely for embroidery work fall under 8447.

7. Considering the HSN Explanatory Notes and the principal function of the machines in question, the Tribunal concluded that the machines are sewing machines with the merit classification under heading 8452 of the Tariff Act.

8. Consequently, the Tribunal upheld the impugned orders and dismissed the Revenue's appeals, along with disposing of the cross objections in the same manner.

This detailed analysis of the judgment provides a comprehensive understanding of the classification issue and the Tribunal's decision based on the relevant legal provisions and explanatory notes.