2018 (12) TMI 733 - AT - Customs

Classification of imported goods - Beverage Cooler SC-80 - whether classified under CTH 8418 50 00 or under CTH 8418 69 30 of CTA? - Held that - Heading 8418 takes into its ambit the refrigerators, freezers or freezing equipments. The sub-heading 50 00 relates to the other furniture for storage and display, incorporating refrigerating or freezing equipments. The sub-heading 8418 69 30 covers vending machines other than automatic vending machine - the heading 8418 50 00 is for the other goods used for storage and display, incorporating refrigerating or freezing equipments. As is clear from the wordings, the said headings cover the goods which are meant for storage as well as display of beverages to be sold. Admittedly all the items falling under heading 8418 invariably have storage facilities apart from refrigeration or freezing or cooling. As such, as rightly observed by the authorities below, the classification of a product would depend upon the additional feature or function which the machines carry apart from cooling or storage. As per catalogue produced by the appellant, the machines in question have a very small storage facility and the same are not designed for display of the articles stored therein. There is no feature shown in the said catalogue indicating any display of the products stored inside. The fact that the machine has the capacity to dispense with the fixed quantity of the beverage itself shows that the same is a vending machine. The contention of the learned Advocate that heading 8418 69 30 only covers the automatic vending machine, without any human intervention, cannot be accepted inasmuch as the said heading includes vending machines, other than automatic vending machines. This indicates that automatic vending machines are not covered by the said heading which relate to only vending machines. Vending machines stand covered by heading 8418 69 30 specifically includes the vending machines and the goods in question admittedly being vending machines have to be held as covered by the said heading. Appeal dismissed - decided against appellant.

Issues Involved:
1. Classification of the imported product "Beverage Cooler SC-80" under Customs Tariff.
2. Determination of the correct heading under which the product should be classified: 8418 50 00 or 8418 69 30.

Issue-wise Detailed Analysis:

1. Classification of the Imported Product "Beverage Cooler SC-80":

The primary issue in both appeals is the classification of the imported product "Beverage Cooler SC-80." The appellants claimed classification under Customs Tariff Heading (CTH) 8418 50 00, while the Revenue classified it under CTH 8418 69 30. The product in question is described as a "Coca Cola Splash Bar," which provides portable countertop refrigeration and a beverage dispensing system. The appellants argued that the product should be classified under Heading 8418 50 00 as it is primarily a refrigerating machine. They contended that vending machines are those capable of selling a product on their own without human intervention, and since their product does not have a money-accepting feature, it should not be classified under Heading 8418 69 30.

2. Determination of the Correct Heading:

The Revenue argued that since the machine has the function of dispensing goods, it should be classified as a vending machine under Heading 8418 69 30. The tribunal examined the product's features and the relevant headings. Heading 8418 covers refrigerators, freezers, and other refrigerating or freezing equipment. Sub-heading 8418 50 00 pertains to other furniture for storage and display, incorporating refrigerating or freezing equipment. Sub-heading 8418 69 30 covers vending machines other than automatic vending machines.

The tribunal noted that the machine has mechanisms for fixing large Coca Cola bottles in an upside-down position and has tap-like outlets for dispensing beverages. The primary function of the machine is cooling and refrigerating, but it also serves as a dispenser for beverages. The tribunal concluded that the heading 8418 50 00 is for goods meant for storage and display, while the product in question is not designed for mere storage and display but for dispensing beverages. The tribunal agreed with the lower authorities that the classification depends on the additional feature or function of the machine apart from cooling or storage.

The Commissioner(Appeals) observed that the product literature described the machine as a "portable countertop refrigerator and beverage dispensing system." The product is not designed for mere storage and display but incorporates a beverage dispensing system. The tribunal found that the heading 8418 69 30, which includes vending machines other than automatic vending machines, is more appropriate for the product in question. The tribunal noted that the product has a small storage capacity and is predominantly designed for dispensing cooled beverages, making it more suitable for classification under CTH 8418 69 30.

The tribunal also referred to the Rules of Interpretation, stating that the entry which more specifically covers the goods should be adopted. Vending machines are specifically covered by heading 8418 69 30, and the product in question being a vending machine, falls under this heading. The tribunal upheld the lower authorities' decision, finding no infirmity in the classification under CTH 8418 69 30.

Conclusion:

The tribunal concluded that the imported product "Beverage Cooler SC-80" is correctly classifiable under CTH 8418 69 30 as a vending machine other than an automatic vending machine. Both appeals were rejected, and the impugned orders were upheld. The decision was pronounced in the open court on 11.12.2018.

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