2024 (4) TMI 830 - AT - Customs

Classification of imported goods - Imports aluminium shelving for Mushroom - Benefit of exemption - appellant classifying the said goods under CTH 84369900 at nil rate of duty - Department proposed the goods to be classified under CTH 76109010 - Penalty - Whether the goods imported can be called as machine or mechanical appliances covered under chapter 84 or are more precisely specifically classifiable as the aluminum structures of chapter 76 - HELD THAT - From the general rule of interpretation, as discussed, it is clear that the goods have to be classified to the more appropriate category instead of being covered under the generic category. Chapter 76 is generic to all aluminium structures but chapter 84 is specific for any machine/ device of any metal which is used for agriculture purpose. There can be no denial that growing mushroom is an agricultural or horticultural activity and the product imported is crucial and specific for the said activity that the product is specifically designed part of mushroom growing apparatus. Chapter 76 is all about anything made of aluminium. On the contrary chapter 84 is about mechanical appliances of whatsoever metal but specific for agricultural use. There is no denial to the fact that the aluminium shelving in question is not known to the common trade parlance as a mere aluminium structure but is specifically known as Mushroom growing rack. Hence, we hold that the goods under question as imported by appellant (mushroom shelving) are classifiable under CTH 84369977. Appellant is held to have rightly classified the same under CTH 84369900. The decisions relied upon by the Department in the case of Saraswati Sugar Mills 2011 (8) TMI 4 - SUPREME COURT is about captive use of iron and steel structures in the sugar mill and the question adjudicated therein is whether or not these structures could be called as capital goods to entitle the assessee credit of duty paid on those goods. Similarly the extract that China Customs is classifying this product under CTH 7610 is also not that relevant, as the said observations are not binding on the Indian Customs or on the Indian importers. The agricultural equipments are otherwise eligible for duty benefits in Indian scenario. Hence we hold that the appellant has rightly claimed the duty exemption while importing a product which is exclusively for the purpose of agriculture and which otherwise is a mechanical device. With these findings the order under challenge is hereby set aside and the appeal is hereby allowed.

Summary

Issues Involved:
Classification of imported goods under Customs Tariff Act, 1962; Misclassification leading to short levy of duty; Applicability of duty rates and exemptions for agricultural machinery.

Classification of Goods:
The appellant imported aluminium shelving, floor drain, and automatic watering system for mushroom growing, classified under CTH 84369900 at 'nil rate of duty'. The Department proposed classification under CTH 76109010 with duty rates, alleging misclassification and short levy of duty. The appellant contended that the imported goods are integral to mushroom cultivation mechanization, supported by ICAR certificate and supplier specialization in mushroom growing equipment. The goods facilitate climate control crucial for mushroom farming, making them essential for the process. The appellant argued that the goods, being assemblies of racks with railings, are excluded from Chapter 76 as per explanatory notes to HSN Volume 3.

Legal Interpretation:
The Tribunal analyzed the applicability of Customs Tariff Entry to the imported goods, emphasizing the rules for classification under the Central Excise Tariff Act. Rule 3 dictates that the heading providing the most specific description should be preferred over more general descriptions. The goods in question were compared under Chapter 84 related to machinery and Chapter 76 concerning aluminium structures. The Tribunal determined that the imported goods, specifically designed for mushroom cultivation, qualify as mechanical appliances under Chapter 84 for agricultural use, rather than generic aluminium structures under Chapter 76.

Decision and Rationale:
After evaluating the arguments and legal provisions, the Tribunal held that the imported goods, particularly the mushroom shelving, are classifiable under CTH 84369977 for agricultural machinery. The appellant's classification under CTH 84369900 was deemed correct, considering the specific design and purpose of the goods for mushroom growing. The Tribunal rejected the Department's reliance on a previous case unrelated to agricultural machinery and China Customs' classification, emphasizing the duty benefits for agricultural equipment in the Indian context. Consequently, the Tribunal set aside the order under challenge, allowing the appeal in favor of the appellant.