1997 (8) TMI 304 - AT - Central Excise

Summary

Issues:
1. Benefit of Notification No. 49/95 dated 16-3-1995 as amended regarding machinery for production of commodities under Tariff Heading 8479.89.

Analysis:
The appeal before the Appellate Tribunal CEGAT, Madras revolves around the interpretation and application of Notification No. 49/95 dated 16-3-1995 as amended, specifically concerning machinery for the production of commodities falling under Tariff Heading 8479.89. The dispute arises from the classification of pond aerators imported by the respondents under Heading 8479.89. The original authority denied the benefit of the Notification, asserting that pond aerators were not utilized for the production of any commodity, as they were employed in an Acquafarm for shrimp production, emphasizing the essential role of providing oxygeneration for the survival and growth of shrimps.

The Department's representative contended that the lower appellate authority erred in granting the benefit of the Notification, arguing that no commodity was produced in the farm and that the equipment in question did not contribute to prawn production. The Department emphasized that prawns were introduced as seedlings in the farm, nourished, and grown to full size for trading purposes, suggesting that the machinery did not directly contribute to commodity production. However, the CCE(A) relied on a Supreme Court decision to support the view that the machinery could be considered instrumental in prawn production, thus eligible for the Notification's benefit.

On the other hand, the respondents' Consultant argued that the term "production of commodities" should be construed appropriately, highlighting that fish, including prawns, are taxable items and that prawns become a commodity only after growing into full size in the Acquafarm. The Consultant asserted that prawns, being an edible commodity bought and sold for consumption, justified considering the machinery as intended for commodity production.

The Tribunal deliberated on the interpretation of the term "production of commodities" within the Notification. Considering common parlance understanding, the Tribunal referred to dictionary definitions of "produce" and "commodity" to ascertain the term's scope. In the context of prawn culture, the Tribunal analyzed the process in the Acquafarm, concluding that the growth and harvesting of prawns from seedlings constituted commodity production. Acknowledging technological advancements in prawn farming and the evolving production processes, the Tribunal emphasized the need for a dynamic interpretation of tariff provisions to prevent denial of benefits due to narrow interpretations. Citing a Supreme Court precedent emphasizing the consideration of scientific advancements in goods classification, the Tribunal upheld the CCE(A)'s decision to allow the benefit of the Notification, ultimately dismissing the Revenue's appeal.