2023 (9) TMI 1085 - AT - Central Excise

Classification of goods - Chick drinker and Auto feeder manufactured by the appellant - classifiable under CETH 84361000 of Central Excise Tariff Act, 1985 as claimed by the appellant or whether to be classified under CETH 39269099 as held by the department? - Poultry cage - classifiable under CETH 84361000 as claimed by the appellant or whether to be classified under CETH 39231090 as held by the department? - demand alongwith interest and penalty - HELD THAT - The impugned goods are indeed poultry keeping machinery and merits classification under 84361000. The adjudicating authority has held that the miscellaneous products namely, Hose--PVC, Flexible Blue, Tee joint Nipple etc. cleared along with the above goods are also to be classified under CETH 39269099 / 39231090 - As it is already held that the Chick drinker, Auto feeder, and Poultry cage are rightly classifiable under CETH 84361000, these miscellaneous products cleared along with and corresponding to the finished products are also to be classified under CETH 84361000. The appellant is eligible for the benefit of nil rate of duty. The Tribunal in the case of SHIVA POULTRY EQUIPMENTS VERSUS C.C.E.S.T., CHANDIGARH-II 2016 (9) TMI 572 - CESTAT CHANDIGARH has discussed, the Board circular, the decision in the case of AZRA POULTRY EQUIPMENTS VERSUS UOI AND ORS. 2012 (3) TMI 326 - DELHI HIGH COURT as well as the decision of the Tribunal in the case of WELD FUSE (P) LTD. VERSUS COMMISSIONER OF C. EX., HYDERABAD 2007 (12) TMI 339 - CESTAT, BANGALORE . The Tribunal held that the welded wire mesh supplied to poultry farms merit classification under 84.36 as poultry keeping machinery. Thus, the impugned goods merit classification under CETH 84361000, as adopted by the appellant. Whether the demand of duty, interest and penalties are sustainable? - HELD THAT - The duty demand, interest and penalty therefore cannot sustain and requires to be set aside. The impugned order is set aside - Appeal allowed.

Summary

Issues Involved:
1. Classification of Chick Drinker and Auto Feeder.
2. Classification of Poultry Cage.
3. Sustainability of demand for duty, interest, and penalties.

Summary:

Issue 1: Classification of Chick Drinker and Auto Feeder
The appellant argued that Chick Drinker and Auto Feeder should be classified under CETH 84361000 as poultry-keeping machinery. The department contended that these items lack mechanical functions and should be classified under CETH 39269099 as plastic articles. The Tribunal noted that the goods function using gravity and air-lock mechanisms, which prevent overflow and ensure regulated supply. The HSN Explanatory Notes and the definition of "machine" under Section XVI of CETA 1985 support the classification of these items under CETH 84361000. The Tribunal held that the goods are indeed poultry-keeping machinery and merit classification under 84361000.

Issue 2: Classification of Poultry Cage
The appellant claimed the poultry cage should be classified under CETH 84361000, while the department classified it under CETH 39231090 as plastic articles. The Tribunal observed that the poultry cage is specifically designed for poultry farming and fits within the scope of poultry-keeping machinery. The Tribunal concluded that the poultry cage should be classified under CETH 84361000.

Issue 3: Sustainability of Demand for Duty, Interest, and Penalties
The Tribunal found that the goods are correctly classified under CETH 84361000, which attracts a 'nil' rate of duty. Consequently, the demand for duty, interest, and penalties cannot be sustained. The Tribunal also addressed the issue of limitation, noting that the appellant had informed the authorities about the classification of their products, negating any suppression or intent to evade duty.

Conclusion:
The Tribunal set aside the impugned order, allowed the appeals, and granted consequential reliefs to the appellant. The miscellaneous products cleared along with the primary goods were also classified under CETH 84361000. The reliance on the Board Circular and the Azra Poultry Equipments case by the department was deemed incorrect. The Tribunal's decision was supported by previous judgments in similar cases.