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TMI Blog2021 (4) TMI 508X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in the case of M/S JYOTI SALES CORPORATION, M/S PUNJAB FABRICATOR VERSUS CCE, PANCHKULA [ 2016 (11) TMI 767 - CESTAT CHANDIGARH] held that par boiling machine and dryer is classifiable under Heading 8419 of the Central Excise Tariff and there being on stay on the order by the Apex Court which is also in conformity with the Board's Circular No.982/06/2014-CX, dated 15-05-2014 issued in F.No.167/42/2009-CX.1, we observe that the goods under reference merits classification under 8419 attracting 9% CGST and 9% SGST. - KAR ADRG 21/2021 - - - Dated:- 6-4-2021 - DR. M.P. RAVI PRASAD AND SRI.MASHHOOD UR REHMAN FAROOQUI, MEMBER Represented by : Sri. Surendran Thumboochetty, Advocate DAR ORDER UNDER SECTION 98(4) OF CENTRAL GOODS AND SERVICES TAX ACT, 2017 AND UNDER SECTION 98(4) OF KARNATAKA GOODS AND SERVICES TAX ACT, 2017 1. M/s SKF Boilers and Driers (P) Ltd., #129, Bannadka, Belvai-574213, Moodabidri, Dakshina Kannada District having GSTIN number-29AAHCS9043D1Z6, have filed an application for Advance Ruling under Section 97 of CGST Act, 2017, read with Rule 104 of the CGST Rules and Section 97 of the KGST Act, 2017 read with Rule 104 of KGST Rules 2017, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty and result in losses. 5.3 The applicant has contended that the parboiling is a process which leads to improving the nutritional value of rice post-milling with increased head rice yield. Minerals such as phytin phosphorous, potassium and magnesium are migrated to the interior of the rice kernel during the process of soaking and steaming. Hence, the removal of the bran layer during milling without parboiling will result in the reduction of minerals in the milled rice product. In other words, the milling of paddy without any pre-treatment such as parboiling would be highly susceptible to breakage and loss of minerals and vitamins and hence, the said process was developed to reduce the breakage and loss of minerals and vitamins. The parboiling machinery includes a packaged boiler, pre-cleaner, holding bins, soaking tank, cooking tanks and drier. It is submitted that although the parboiling plant is involved in a process anterior to the process of milling of rice, the said plant would constitute a part of rice mill machinery. 5.4 The applicant further contended that vide CGST Notification bearing No.1/2017 dated 28-06-2017 which is issued in exercise of the powers vested in it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Interpretation of this Schedule appended to the GST Tariff, classification, for legal purposes shall be determined according to the terms of the Headings and any relative Section or Chapter Notes and, provided such Headings or Notes do not otherwise require. 5.7 The applicant states that while coming to the aspect of interpretation of the entries 8419 and 8437 as found in the GST Tariff read with Rule 1 of the Rules for interpretation cited above, Note 2 appended to Chapter 84 of the GST Tariff reads as under: 2. Subject to the operation of Note 3 to Section XVI and subject to Note 9 to this Chapter, a machine or appliance which answers to a description in one or more of the headings 8401 to 8424, or heading 8486 and at the same time to a description in one or other of the headings 8425 to 8480 is to be classified under the appropriate heading of the headings 8401 to 8424 or under the heading 8486, as the case may be, and not under the headings 8425 to 8480 . 5.8 The applicant states that he has understood that as per Note 2 appended to Chapter 84 of the GST Tariff, in the event a machine or appliance answers to a description in one or more of the Headings 8401 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for short), clarifies as under: Chapter Note 2 provides that if a machine can be classified based on description under heading 8419 and also under 8437, in that case it should be classified under 8419 only. Therefore, it would be seen that as per Chapter Note 2, the parboiling machine merit classification under heading 8419 but as per Section Note 3 and 4, the machinery merit classification under heading 8437. The Board observes that this controversy has been perceived by the HSN and at pages 1235 it has been mentioned that Chapter Note 2 which is known as rule of precedence for heading 8401 to 84.24 applies only to machines considered as whole. Composite machines or multifunction machines are required to be classified in accordance with Note 3 and Note 4 of Section XVI. As per this clarification available in the HSN, the parboiling machine and dryers which are part of composite machine (rice mill) would be correctly classified in terms of Section Notes 3 and 4 and therefore, the correct classification should be under heading 8437. Further, grain dampening machine has been excluded from the purview of heading 8419 and placed under heading 8437. One of the functions of rice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T, Chandigarh in the case of Alpsco Graintech (P) Ltd -Vs- CCE, Chandigarh reported in 2019 (365) ELT 944 holding that rice bucket elevator and rice conveyor used in the rice milling industry, supplied along with other rice milling machinery is a combination of machine which ultimately performs the function of rice milling and hence merits classification under Heading No.8437 of the Excise Tariff. It is also stated by them that the appeal filed against the said decision was dismissed by the Hon'ble Supreme Court vide Civil Appeal No.5518 to 5520/2019. Drawing analogy to the above decision, the applicant has contended that parboiling and drier plant is used along with rice milling machinery and is specifically manufacture for use in rice milling industry and said machinery is a combination of machines which ultimately performs the function of rice milling and hence is classifiable under Heading 8437 of the GST Tariff attracting levy of GST at 5% under Sl.No.233 of Schedule I of the Notification dated 28-06-2017. PERSONAL HEARING: / PROCEEDINGS HELD ON 16-12-2020 6. Sri. Surendran Thumboochetty, Chartered Accountant and Duly Authorized Representative of the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sl.No. Chapter/Heading/ Sub-heading/Tariff item Description of Goods (1) (2) (3) 233 8437 Machines for cleaning, sorting or grading, seed grain or dried leguminous vegetables; machinery used in milling industry or for the working of cereals or dried leguminous vegetables other than farm type machinery and parts thereof 320 8419 Machinery, plant or laboratory equipment, whether or not electrically heated (excluding furnaces, ovens and other equipment of heading 8514), for the treatment of materials by a process involving a change of temperature such as heating, cooking, roasting, distilling, rectifying, sterilising, pasteurising, steaming, drying, evaporating, vapourising, condensing or cooling, other than machinery or plant of a kind used for domestic purposes; instantaneous or storage water heaters, non-electric [other than Solar water heater and system] ; The applicant has stated about Section XVI and Chapter 84 of the Central Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -05-2014 [F.No.167/42/2009-CX.1], classifying rice par-boiling machine and dryer under Central Excise Tariff Heading 8419 as per Note 2 to Chapter 84. 9.8 As there was conflicting judgments on the issue in the case of Jyoti Sales Corporation Vs Commissioner of Central Excise Panchkula reported in 2011 (272) E.L.T. 689 (Tri.Del.), classifying par-boiling machine and dryer under 8419 of Central Excise Tariff and in the case of SKF Boilers and Driers Private Limited V. Commissioner of Central Excise, Mangalore reported in 2011 (264) E.L.T. 425 (Tri-Bang.), classifying the same machines under 8437, the Hon'ble President of CESTAT constituted a Larger Bench as per the directions of the Hon'ble Supreme Court in Civil Appeal No.8612/2011 , to resolve this conflict and to decide the appropriate classification of the par boiling machine and drier. 9.9 The Larger Bench of Hon'ble Tribunal vide order dated 27.09.2016 decided the issue in favour of the Heading 8419. This order has been appealed against and the Hon'ble Supreme Court has admitted the appeal as reported in [ 2018 (360) E.L.T A172 (S.C )]. However, it appears that there is no stay against the opera ..... X X X X Extracts X X X X X X X X Extracts X X X X
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