2019 (11) TMI 948 - AT - Central Excise

Classification of goods - food processing machines and its parts and automobile components for JCB, elevator and conveyors etc. - classifiable under heading No. 8437 as machinery used in Milling Industry or are classifiable under heading No. 8428, as other lifting, handling, loading or unloading machines? HELD THAT - Similar case came up before this Tribunal in the case of ALPSCO GRAINTECH PVT LTD, NIRDOSH BALI MANAGING DIRECTOR OF MS ALPSCO GRAINTECH PVT LTD VERSUS C.C.E. S.T. -CHANDIGARH-II 2018 (12) TMI 478 - CESTAT CHANDIGARH respectively, this Tribunal held that the merit classification of the said goods is under Chapter Heading No. 8437 of CETA 1985 and this order of this Tribunal have been affirmed by the Hon ble Apex Court in COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX CHANDIGARH II VERSUS ALPSCO GRAINTECH PVT LTD ETC. 2019 (7) TMI 1177 - SC ORDER . Thus, the conveyors and elevators etc. specifically manufactured by the appellant for food processing machinery alongwith other machinery has the merit classification under Chapter 8437 of CETA, 1985 - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Classification of goods under the appropriate tariff heading.
2. Applicability of interest and penalty under Section 11 AC of the Act.

Issue-wise Detailed Analysis:

1. Classification of Goods:
The primary issue revolves around the classification of the appellant's manufactured goods, specifically food processing machines, automobile components, and parts for elevators and conveyors. The appellant classified these goods under heading No. 8437 as "machinery used in Milling Industry," which carries a nil tariff rate. However, the department contended that these goods should be classified under heading No. 8428 as "other lifting, handling, loading or unloading machines," which includes lifts, escalators, and conveyors, thereby attracting a different tariff rate.

The appellant cited previous Tribunal decisions in similar cases (Alpsco Graintech Pvt. Ltd. and Annapurna Agronics Machinery Pvt. Ltd.) where the goods were classified under Chapter Heading No. 8437 of CETA 1985. These decisions were affirmed by the Hon'ble Apex Court, making the issue res-integra. The Tribunal's observation was that the conveyors and elevators manufactured by the appellants were specifically designed for rice mills and supplied along with other rice mill machinery, forming a composite machine performing the function of rice milling. Therefore, as per Section Notes 3, 4, and 5 to Section 6 of the Central Excise Tariff Act, these goods should be classified under heading 8437.

The Tribunal also noted that the HSN Explanatory Notes, which the revenue relied upon, are only guiding factors and not legally binding. The Tribunal emphasized that the explanatory notes to HSN cannot override the clear provisions of the Central Excise Tariff Act. The Tribunal concluded that the conveyors and elevators, being part of the composite machinery for rice milling, should be classified under heading 8437.

2. Applicability of Interest and Penalty:
Given the Tribunal's decision on the classification issue, the demand for duty along with interest and the imposition of penalty under Section 11 AC of the Act were deemed unsustainable. The Tribunal held that since the goods were correctly classified under heading 8437, there was no merit in the impugned order, and consequently, no penalty could be imposed on the appellant.

Conclusion:
The Tribunal set aside the impugned order, holding that the conveyors and elevators specifically manufactured as part of rice milling machinery merit classification under Chapter 8437 of CETA, 1985. Consequently, the demand for duty along with interest was not sustainable, and no penalty was imposable on the appellant. The appeal was allowed with consequential relief, if any.

← Previous Next →