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TMI Blog2024 (12) TMI 364X X X X Extracts X X X X X X X X Extracts X X X X ..... e., 842230 or 8479 89 and the respective Tariff Items i.e., 842230 00or 8479 89 99 falling there under, in which the impugned goods are correctly classifiable. Now, we may closely examine the scope of the contending Sub-headings and Tariff Items thereof for determining correct classification of the imported goods. In the present case, the appellants had filed the five Bills of Entry (B/Es), by describing the imported goods in terms of specific description based on their function such as blow moulding machine, coating machine, filling machine, labelling machine, bottle dryer machine, shrink packing machine, which form a part of filling up of aerated water. Further, on perusal of the goods covered under each of the sub-heading - single dash, it would follow that dish washing machines of house hold type and other types are specifically covered under sub-heading 842210, in terms of specific tariff entry at 8422 1100 and 8422 1900, respectively. Further, machinery for cleaning or drying bottles/containers are covered under sub-heading 8422 20/tariff entry 8422 2000, with no further sub-classification. Machines having specific function mentioned therein and machinery used for aerating th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its parts thereof under CTI 8422 9090 of the First Schedule to the Customs Tariff Act, 1975. The classification under tariff item 8422 30 00 is appropriate as per GIR 3. Hence, the appropriate classification of the imported goods would be under Customs Tariff Item 8422 30 00. The Co-ordinate Bench of the Tribunal have examined the issue of classification of similar machinery used in aerated water manufacturing industry in the case of HINDUSTAN COCA COLA BEVERAGES PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS (IMPORT) ACC, MUMBAI [ 2017 (4) TMI 418 - CESTAT MUMBAI] and have held that the machines are classifiable under sub-heading 842230. The goods under consideration i.e., Coating machine - Innopet Plasmax System 20Q would be appropriately classifiable under Customs Tariff Item (CTI) 8422 30 00 and not under CTI 8479 89 99, as claimed by Revenue. Further, parts of such coating machine, therefore is appropriately classifiable under CTI 8422 90 90. The impugned order passed by the learned Commissioner of Customs cannot stand the legal scrutiny - the impugned order is set aside and the appeals are allowed in favour of the appellants. - HON BLE MR. S.K. MOHANTY, MEMBER (JUDICIAL) AND HON ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeals before the Tribunal. 3.1 Learned Advocate appearing for the appellants, stated that the appellants is an aerated water bottling manufacturer for M/s Coca-Cola India Private Limited and are engaged in manufacturing of beverages of Coca-Cola brand and for this purpose they are registered with the GST authorities. In order to set up a new plant of the above nature at Kursi industrial area, Barabanki, the appellants have placed a purchase order dated 20.03.2018 with M/s KHS GmbH, Germany for supply of complete modernized aerating beverages plant. He further stated that due to the huge size of the complete plant machinery, these were imported in CKD condition in various consignments for which totally five B/Es were filed. The total machinery imported in terms of final quotation/supply order included the following namely, (i) Stretch blow moulding machine viz., Innopet Blomax 24SBL , including blower periphery, machine chiller (ii) PET bottle coating machine viz., Innopet Plasmax System 20Q , including periphery and auxiliaries (iii) bottle filling and closing machineviz., Innofill DRV-VF , including foam cleaning system, Cap conveyor Gassner (iv) Filler management system (v) mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s relied upon tariff heading for sub-heading 8422where the function of coating has not been mentioned and on the other hand as per HSN explanatory notes to sub-heading 8479 include coating machines of different kinds. Further, learned AR by relying upon the case of Associated Cement Companies Ltd. Vs. Commissioner of Customs, Kolkata 2001 (136) E.L.T. 936 (Tri. Kolkata) had submitted that the Co-ordinate Bench in the referred case had decided the classification of coating machine under 8479.89. Therefore, he prayed that the appeals preferred by the appellants is liable to be set aside. 5. Heard both sides and perused the records of the case. We have also considered the additional written submissions given in the form of paper book by learned Advocates for the appellants as well as Authorised Representative for the Revenue, and the arguments advanced during the hearings of this case. 6. The issue for consideration before us is the classification of imported goods by the appellants as to whether, it merits classification under Customs Tariff Item (CTI) 8422 3000as claimed by the appellants; or, is it classifiable under CTI 8479 8999as contended by the Department, for deciding on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s rule), presented unassembled or disassembled. (b) Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of rule 3. 3. When by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) Mixtures, composit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r group of articles is preceded by - - , the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has - . where the description of an article or group of articles is preceded by --- or ---- , the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has - or -- . 2. The abbreviation % in any column of this Schedule in relation to the rate of duty indicates that duty on the goods to which the entry relates shall be charged on the basis of the value of the goods as defined in section 14 of the Customs Act, 1962 (52 of 1962), the duty being equal to such percentage of the value as is indicated in that column. 3. In any entry, if no rate of duty is shown in column (5), the rate shown under column (4) shall be applicable. ADDITIONAL NOTES In this Schedule, (1)(a) heading , in respect of goods, means a description in list of tariff provisions accompanied by a four-digit number and includes all sub-headings of tariff items the first four-digits of which correspond to that number; ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by HS explanatory notes, the trade parlance theory is to be adopted for ascertaining as to how the goods are known in the common trade parlance for the purpose of dealing between the parties. 8.2 In context with the case in hand, we note that the following are some of the important rules to be followed in the scheme of determining correct classification of imported goods: (i) classification of goods shall be determined according to the terms of the headings and any relative Section or Chapter Notes; (GIR 1) (ii) if the goods are found to be classifiable under two or more headings, then the classification shall be effected as per the rules provided under 3(a), 3(b) and 3(c) [GIR 3] (iii) Goods which cannot be classified in accordance with the aforesaid rules, then the same shall be classified under the heading appropriate to the goods to which they are more akin. (GIR 4) (iv) For legal purposes, the classification of goods in the sub-headings shall be determined according to the terms of those sub-headings and any related sub-heading Notes (GIR 6) (v) When the description of the goods under a heading is preceded by single dash i.e., - , the said goods shall be taken to be a sub-c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ork 8479 40 00 - Rope or cable-making machines 8479 50 00 - Industrial robots, not elsewhere specified or included 8479 60 00 - Evaporative air coolers - Passenger boarding bridges: 8479 71 00 -- Of a kind used in airports 8479 71 90 -- Other - Other machines and mechanical appliances: 8479 81 00 -- For treating metal, including electric wire coil-winders 8479 82 00 -- Mixing, kneading, crushing, grinding, screening, sifting, homogenizing, emulsifying or stirring machines 8479 89 -- Other: 8479 89 70 --- Machinery for the manufacture of chemical and pharmaceuticals goods --- Other: 8479 89 92 ---- Briquetting plant and machinery intended for manufacture of briquettes from agricultural and municipal waste 8479 89 99 ---- Other 8479 90 - Parts: 8479 90 90 --- Other Thus, it is clear that at the Chapter level i.e., Chapter 84, there is no difference of opinion in classification of goods among the appellants and the department. The dispute in classification lies in the narrow compass of the two Sub-headings i.e., 842230 or 8479 89 and the respective Tariff Items i.e., 842230 00or 8479 89 99 falling there under, in which the impugned goods are correctly classifiable. Now, we may closely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m a part of filling up of aerated water. Further, on perusal of the goods covered under each of the sub-heading - single dash, it would follow that dish washing machines of house hold type and other types are specifically covered under sub-heading 842210, in terms of specific tariff entry at 8422 1100 and 8422 1900, respectively. Further, machinery for cleaning or drying bottles/containers are covered under sub-heading 8422 20/tariff entry 8422 2000, with no further sub-classification. Machines having specific function mentioned therein and machinery used for aerating the beverages or aerated water are covered under sub-heading8422 30/tariff entry 8422 3000, with no further sub-classification. Machinery used for packing or wrapping are covered under sub-heading 8422 40/tariff entry 8422 4000, with no further sub-classification. The parts of these machinery are grouped under residual entry at sub-heading 8422 90, with specific tariff entry for the machines of category corresponding with the above-mentioned sub-heading. 9.4 In respect of goods covered under the scope of heading 8479, as the heading entry makes it clear, those machines and mechanical appliances which have individual f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adopted by the department. As the sub-heading 8422 30 specifically cover machines for aerating beverages , and the entry in heading 8479 makes it clear that it covers only those machines which are not specifically included or covered elsewhere in Chapter 84, the aforesaid conclusion arrived at the impugned order is contrary to the legal position contained in the Customs Tariff Act, 1975. 9.5 On the basis of above analysis about the scope of coverage of goods under contending sub-headings 842230 or 8479 89, in terms of GIR-1, it can be concluded that appropriate classification of the impugned goods as per the terms of headings , is sub-heading 8422 30 inasmuch as it specifically refers the impugned machines by their functions and the industry of aerated beverages; and not sub-heading 8479 89, which is a residuary category, with no specific mention of the function or industry where the impugned goods are used. 9.6 In addition to the above, in deciding the issue of classification within the Chapter Heading 84, whether the imported goods fall under the category as machinery for aerating water as claimed by the appellants or under the category other machinery having individual function ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed water of pre-determined quantity along with CO2 gas is filled, cap fixed, PET bottle is labelled and packed in shrink wrapping for final clearance, each of the machinery performing the aforesaid individual functions are connected to main function of filling up of aerated water/beverages for clearance as final product. As such, each machine cannot be treated as individual machine having separate function but as a part of whole machinery for aerating beverages/aerated water which is also signify the principal function of such composite machines. Therefore, in terms of Section Note 3 and 4, the classification of impugned goods under CTI 8422 3000 would be appropriate. 9.8 Thus, upon detailed analysis of the scope of coverage of goods under contending sub-headings in paragraphs 9.1 to 9.5 as above, and on the basis of the Section Notes 3, 4 of Section XVI covering goods of chapter 84, we are of considered opinion that the imported machinery Innopet Plasmax System 20Q used for coating of PET bottles for aerating of beverages/ aerated waters are appropriately classifiable under CTI 8422 3000 and its parts thereof under CTI 8422 9090 of the First Schedule to the Customs Tariff Act, 197 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... banding machines, including hand-operated portable appliances, provided with plates or similar devices enabling them to be rested, while in use, on the bales, cases or other packages to be strapped. Machines of this heading frequently perform several of the foregoing functions. They may also incorporate provision for filling or sealing in vacuo or under other controlled atmospheric conditions. Machines which in addition to packing, wrapping, etc., also perform other operations remain classified in the heading provided the additional operations are incidental to the packing, etc. Thus machines which pack or wrap goods into the forms or presentations in which they are normally distributed and sold in commerce, are classified in this heading, whether or not the machines also contain devices for weighing or measuring. Similarly the heading includes machines incorporating devices which, as a secondary function, cut, mould or press previously prepared products into purely presentational forms without affecting their essential character (e.g., machines for moulding butter or margarine into blocks, etc., and wrapping them). The heading does not, however, cover machines whose primary functi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For this purpose the following are to be regarded as having individual functions : (A) Mechanical devices, with or without motors or other driving force, whose function can be performed distinctly from and independently of any other machine or appliance. Example : Air humidification and dehumidification are individual functions because they can be performed by appliances operating independently of any other machine or appliance. A separately presented air dehumidifier, even if designed to be mounted on an ozone generator falls, therefore, to be classified in this heading as having an individual function. (B) Mechanical devices which cannot perform their function unless they are mounted on another machine or appliance, or are incorporated in a more complex entity, provided that this function: (i) is distinct from that which is performed by the machine or appliance whereon they are to be mounted, or by the entity wherein they are to be incorporated, and (ii) does not play an integral and inseparable part in the operation of such machine, appliance or entity. Example : A chain cutter is a device which is mounted on an industrial sewing machine and which automatically cuts the thread s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... automatic machine greasers. (5) Match-dipping machines. (6) Machinery for cask tarring or coating other than spraying appliances of heading 84.24. (7) Machines for coating welding electrodes. (8) Machines for cleaning off or re-covering gelatin inking rollers. (9) Machines for coating photosensitive emulsions on to a backing other than those machines of heading 84.86. (10) Machines for frosting glass by the acid process. (11) Bolting or unbolting machines and metal core extractors, other than hand tools of Chapter 82 and small tools for working in the hand, pneumatic, hydraulic or with self-contained electric or non-electric motor (heading 84.67). (12) Machines for the maintenance of pipelines or other non-flexible pipes (e.g., small self-propelled machines used on oil pipelines to clean the pipe, coat it with asphalt or other protective covering; machines, carried through the pipes by the flow of the fluid itself, used for cleaning the inside of pipelines). The detailed scope of coverage of goods provided under the HS as above, covers machines for coating of welding electodes, coating of photo sensitive emulsion on to a backing machine, and this donot cover coating machines for PE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beverages/ aerated water work in tandem, both by the process and the capacity for handling the aerated beverages/water. Further, the individual machines of KHS filler at page 19, Blomax, Plasmax machines at page 20 and labeler machine and shrink pack machine at page 21 indicate that these machines are interconnected by transmission devices like conveyors, interconnected by electric cables and computers to provide an automatic assembly line of filling aerated beverages/aerated waters. Thus, once the manufacturing process starts after initial setting up of these machinery, a predetermined number of product i.e., 766 PET bottles of 250ml per minute (BPM) or about 46,000 containers per hour of 250ml bottles are produced in such continuous processing, starting from blow moulding of PET bottles, coating of such PET bottles, aerated beverages/aerated water filling, labelling, shrink packing in order to finally make the aerated beverages/ aerated water contained in PET bottles made available at the end of such assembly line, for clearance out of the factory. 11.3 Besides the above, the data-sheet of the above operating instructions also clearly provide that Blow moulding machine, InnoPET ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue authorities are of the view that this machine would merit classification under CTH 9031. Adjudicating authority after following the due process of law held that machines are classifiable under CTH 9031; concluded that there was misdeclaration of the classification, accordingly confiscation of imported machine was ordered with an option to redeem the same on payment of redemption fine and also imposed penalties. 7. Revenue is seeking classification of the machine under CTH 9031 while it is a case of the appellant that the said machine merits classification under CTH 8422 claiming benefit of Notification No. 21/2002-Cus. serial number 537. 8. In order to address the dispute, the rival tariff entries are reproduced. 8422 30 00 - Machinery for filling, closing, sealing or labelling bottles, cans, boxes, bags or other containers, machinery for capsuling bottles, jars, tubes and similar containers; machinery for aerating beverages. 9031 Measuring or checking instruments, appliances and machines, not specified or included elsewhere in this chapter, profile projects. 9031 20 00 - Test benches 9. We notice from the records that the manufacturer and exporter has given a certificate s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we hold that the impugned order is unsustainable and liable to be set aside and we do so. The machines are correctly classifiable under CTH 8422 30 00 and eligible for benefit of Notification No. 21/2002-Cus., as applicable. The impugned order is set aside and appeal is allowed as indicated hereinabove. 12.2 We further find that the Co-ordinate Bench of the Tribunal in the case of KHS Machinery Pvt. Ltd. Vs. Commissioner of Customs ACC, Mumbai - 2018 (363) E.L.T. 358 (Tri. - Mumbai) have held that parts of the machine connected with the function of filling of bottles are classifiable under CTI 8422 9090. The relevant paragraphs of the said order are extracted and given below: NCM filling valves were imported by appellant under Bill of Entry No. 769284, dated 22-9-2006 classifying that under CTH 8422 90 90. But such classification was denied by Revenue and brought that under CTH 8481 80 90. The machinery manufactured by appellant was falling under CTH 8422 30 00. The valve imported was to serve the purpose of the machinery so manufactured by the appellant. The aforesaid goods mentioned in Bill of Entry was an essential part of the above machinery. Therefore appellant sought classif ..... 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