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2019 (1) TMI 53 - AT - Central ExciseClassification of goods - Rice Milling Machinery along with belt conveyors and Bucket Elevator - whether classifiable under Chapter Heading No.8428 of Central Excise Tariff Act, 1985 or are classified under Chapter Heading No.8437 of Central Excise Tariff Act, 1985 as machinery using in milling? - Held that - The issue stands settled by this Tribunal in the case of Alpsco Graintech Pvt Ltd. 2018 (12) TMI 478 - CESTAT CHANDIGARH , where it was held that as per Section notes the entire machinery is classifiable under heading 8437 which is for machinery used in milling industry and it is not disputed that these elevators and conveyors being manufactured by the appellants were not used for milling industry. The belt conveyors and bucket elevators specifically manufactured as the part of rice milling machinery along with other machinery of rice mill by the appellants merit classification under chapter heading No. 8437 of CETA, 1985 - appeal allowed - decided in favor of appellant.
Issues: Classification of belt conveyors and bucket elevators under Central Excise Tariff Act, 1985
Issue 1: Classification of belt conveyors and bucket elevators The appellants contested the classification of belt conveyors and bucket elevators under Chapter Heading No. 8428 of the Central Excise Tariff Act, 1985, as opposed to Chapter Heading No. 8437 for machinery used in milling. The Revenue argued that conveyors and elevators are more appropriately classified under Chapter Heading No. 8428. The Tribunal referred to previous cases and analyzed the relevant tariff headings (8428 and 8437) along with the HSN Explanatory notes. The Tribunal noted that the conveyors and elevators were specifically designed for rice mills and were part of a combination of machines used in rice milling, ultimately performing the function of milling. Therefore, according to Section notes, the entire machinery, including the conveyors and elevators, should be classified under heading 8437 for machinery used in the milling industry. Issue 2: Legal interpretation of Section Notes The Tribunal examined Section Notes 3, 4, and 5 of the Central Excise Tariff Act, which clarified the classification of composite machines and individual components contributing to a defined function. The Tribunal emphasized that the conveyors and elevators manufactured by the appellants were specifically designed for rice mills, contributing to the milling process. The Tribunal highlighted that the HSN Explanatory notes are not law but merely guiding factors, and the reliance on them to change classification was unwarranted when the Section notes were clear. The Tribunal cited previous cases and legal provisions to support the classification of the conveyors and elevators under Chapter Heading No. 8437. Issue 3: Precedents and Technical Opinions The Tribunal referenced previous judgments, such as Commissioner of Central Excise vs. Rationale Iron & Steel Co., to establish that explanatory notes are for guidance and do not hold the force of law. The Tribunal differentiated the present case from Eminence Equipments Pvt. Ltd., where the conveyors and elevators were not specifically designed for rice milling. Technical opinions and data from Customs and Central Excise Department were presented to support the classification of conveyors and elevators under Chapter Heading No. 8437. The Tribunal concluded that the conveyors and elevators, when specifically manufactured for rice milling machinery, merit classification under Chapter Heading No. 8437 of the Central Excise Tariff Act, 1985. In conclusion, the Tribunal set aside the impugned order, ruling in favor of the appellants regarding the classification of belt conveyors and bucket elevators under Chapter Heading No. 8437, thereby dismissing the demand for duty and penalties against the appellants.
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