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2009 (5) TMI 159 - AT - Central ExciseBulk Milk Cooling Tank classification - Bulk Milk Cooling Tank consists of milk vessel, ice water vessel, heat exchangers coil and condensing unit. The cooling coil immersed in water vessel produces ice. The ice water is sprayed on the outside surface of the milk vessel thereby maintaining the temperature at 4 degree Centigrade. Thus in effect though the milk may be maintained at around 4 degree Centigrade, the machinery do have the refrigerating function of generating ice. As per the explanatory note to CH. 8418, the temperature at the active cooling element is what is important and not the temperature of the refrigerated product. Impugned tank is classifiable under SH 8418.10 and not under SH 8419.10 The explanatory notes to the HSN are a safe guide and aid for ascertaining the true meaning of any expression used in the Act in case of any doubt and that the explanatory notes to HSN are not only of persuasive value but are entitled to greater consideration in classifying goods
Issues: Classification of Bulk Milk Cooling Tank under Central Excise Tariff
Issue 1: Classification of Bulk Milk Cooling Tank The case involved the classification of the product Bulk Milk Cooling Tank under Chapter Heading 8418.10 of the Central Excise Tariff. The respondents argued that the product should be classified under Chapter Heading 8419.10 based on its function and application. They contended that the main purpose of the tank was to cool milk rapidly and prevent bacterial contamination, maintaining it within a specific temperature range without allowing it to freeze. The competitors of the respondents also classified similar products under the heading claimed by them. Analysis: The Assistant Commissioner initially classified the Bulk Milk Cooling Tank under Chapter sub-heading 8418.10, considering it akin to refrigerating equipment used not only to cool milk but also to maintain its temperature. However, the Commissioner (Appeals) disagreed, relying on a circular and a tribunal decision stating that the tank did not have a refrigeration impact as the milk's temperature never dropped below 4 degrees Celsius. The Commissioner held that the tank should be classified under Chapter Heading 8419.10, setting aside the Assistant Commissioner's decision. Issue 2: Functionality of the Bulk Milk Cooling Tank The respondents detailed the components of the Bulk Milk Cooling Tank, including the milk vessel, ice water vessel, cooling coil, and condensing unit, each serving a specific function to ensure proper and rapid cooling of milk. They argued that the combination of these units created a cooling effect up to 4 degrees Celsius, maintaining the milk's safety for human consumption. Analysis: The Tribunal examined the functionality of the entire system, noting that the cooling coil generated ice, which was then sprayed on the milk vessel to maintain the temperature at 4 degrees Celsius. Despite the milk being kept at around 4 degrees Celsius, the machinery had a refrigerating function by generating ice, which produced cryogenic temperatures. This led the Tribunal to conclude that the Bulk Milk Cooling Tank fell under Chapter Heading 8418.10 based on the explanatory note to the Harmonized Commodity Description and Coding Systems. Issue 3: Legal Precedents and Explanatory Notes The Tribunal considered legal precedents where the Supreme Court emphasized the importance of explanatory notes to the Harmonized System Nomenclature (HSN) in interpreting the Central Excise Tariff. The Supreme Court's judgments highlighted that the explanatory notes were crucial for classifying goods under the Customs and Central Excise Tariff. Analysis: Citing the Supreme Court's decisions, the Tribunal held that the Bulk Milk Cooling Tank should be classified under Chapter Heading 8418.10 based on the explanatory notes to the HSN. The Tribunal overturned the Commissioner (Appeals) decision, restoring the Assistant Commissioner's classification and allowing the appeal filed by the Revenue while dismissing the cross-objection filed by the respondents. In conclusion, the Appellate Tribunal classified the Bulk Milk Cooling Tank under Chapter Heading 8418.10, emphasizing its refrigerating function and adherence to the explanatory notes to the HSN, setting aside the Commissioner (Appeals) decision and ruling in favor of the Revenue.
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