1999 (3) TMI 187 - AT - Central Excise

Summary

Issues:
Classification of automated vertical storage systems under Heading 94.03 as furniture or under Heading 84.28 as material handling machinery; imposition of penalty and confiscation of plant and machinery; applicability of extended period under Section 11A.

Classification Issue:
The appeal before the Appellate Tribunal CEGAT, Mumbai involved the classification of automated vertical storage systems as either furniture under Heading 94.03 or material handling machinery under Heading 84.28. The product in question consisted of a large vertical structure with shelves connected to a system of gears, controlled by a computerized system for delivering goods stored in specific shafts. The appellant argued that the primary function of the product was delivery of goods, citing similar products classified under Heading 84.28. The Departmental Representative contended that the goods were primarily for storage, relying on consistent statements from the manufacturer. The Tribunal analyzed the design and function of the product, emphasizing its purpose of storage and retrieval, ultimately classifying it as material handling equipment under Heading 84.28.

Interpretative Rule Application:
The Tribunal considered the Explanatory Notes to Chapter 94 of the HSN defining furniture and noted that not every item with storage function falls under this category. Examples provided supported the view that goods designed for functions beyond furniture should be classified elsewhere. Applying interpretative rules, the Tribunal found Heading 84.28 more appropriate for the product, emphasizing the specific description of material handling equipment over the general description of furniture under Heading 94.03.

Significance of Precedent:
The Tribunal referenced a judgment of the Bombay High Court regarding a similar matter involving power-operated storage racks. The Court's observation that items with elaborate machinery for moving goods should not be considered furniture was deemed relevant in determining the specific character of the product. This observation, along with the distinction between storage and material handling functions, supported the classification of the automated vertical storage systems as material handling equipment.

Conclusion:
After thorough analysis and consideration of arguments, the Tribunal allowed the appeal, setting aside the impugned order and providing consequential relief. The judgment highlighted the importance of distinguishing between furniture and material handling equipment based on design, function, and common sense understanding, ultimately leading to the classification of the automated vertical storage systems under Heading 84.28.