2013 (9) TMI 104 - AT - Customs

Appeal Success: Valves Classified for Agriculture Under CTH 8424, Not 8481

M/s JAIN IRRIGATION SYSTEMS LTD Versus COMMISSIONER OF CUSTOMS (IMPORT) NHAVA SHEVA

The Tribunal allowed the appeal, classifying imported valves under CTH 8424 for agricultural use, contrary to the department's classification under CTH ... Classification of Goods - Benefit of Notification No. 56/95 - Appellants filed two Bills of Entry for clearance of goods Globes/Angle Valves and Cylinder Valves for use in agriculture and/or horticulture purpose claiming the classification of the goods under Entry No.84248100 of the Second Schedule to the Customs Tariff Act, 1975 - Revenue classified the goods under CTH 8481 8090 - Held that:- It was a settled law that the department having accepted the principles laid down in earlier case cannot be permitted to take a contra stand in subsequent cases - Relying upon BIRLA CORPORATION LTD. Versus COMMISSIONER OF CENTRAL EXCISE [2005 (7) TMI 104 - SUPREME COURT OF INDIA] - In the appellants' own case held that valves for use in agriculture and or horticulture are classifiable under heading 8424 and the department did not challenge the same and accepted the order and the order reached finality. An underground network (distribution lines and branchlines which carry the water from the control station to the irrigation zone) and also surface network (dripper lines incorporating the drippers) constitute irrigation system and the above note also emphasises that such system are classifiable under heading 84.24 as functional units within the meaning of Note 4 to Section XVI - The parts thereof were also brought under the Section and the parts as were referred to above include reservoirs for sprayers, spray nozzles, lances and turbulent sprayer heads, to form the irrigation system as they carry out functions of the ground net work for distribution of water and surface network - The irrigation system basically was of these pipes and the other items referred to above, which carry out the functions of distribution and dispersing or spraying in terms of the description under Chapter 84.24 and the said sub-heading 8414.10 dealing with removable appliances of the kind used in agriculture or horticulture - parts thereof were covered by sub-heading 8424.91 - the appellants' claim for the benefit of exemption Notification for the items falling under Heading 84.24 claiming nil rate of duty under Notification No. 56/95 was justified – Order set aside – Decided in favour of Assessee. Issues:Classification of imported goods under Customs Tariff Act, 1975 - Applicability of Section Notes - Interpretation of HSN Explanatory Notes - Contradictory orders and precedence of judgments.Detailed Analysis:1. Classification Dispute:The appeal was filed against the order classifying imported valves under CTH 8481 8090 instead of CTH 8424 as claimed by the appellants. The appellants argued that the valves were specifically designed for irrigation, falling under CTH 8424. The department relied on Rule 1 and Section Notes for classification, asserting that valves for pipes are covered under heading 8481. The department emphasized that valves regulate the flow of liquids and gases, hence classified under heading 8481.2. Precedence of Judgments:The appellants cited a previous order by the Commissioner of Customs classifying similar valves under CTH 8424 for agricultural use. They contended that this order was not appealed against and reached finality, thus should be followed. The department argued that the Supreme Court's decision on interest deduction did not apply to the classification issue. They highlighted tribunal decisions supporting classification under heading 8481 for valves.3. Interpretation of HSN Explanatory Notes:The Tribunal examined the HSN Explanatory Notes to determine the classification of goods. It was noted that the irrigation system components, including valves, were classified under subheading 8424. The Tribunal referred to a previous case where valves for agriculture were classified under CTH 8424, which was accepted by the department. The Tribunal emphasized that the parts used in agriculture or horticulture purposes fell under heading 8424.4. Decision and Rationale:After considering submissions and records, the Tribunal found merit in the appellants' claim for classification under CTH 8424 due to the specific use of valves in irrigation systems. The Tribunal referred to the explanatory notes emphasizing the classification of irrigation system components under heading 8424. The Tribunal upheld the appellants' classification claim based on the previous order and the nature of the goods used for agricultural and horticultural purposes.In conclusion, the Tribunal set aside the Order-in-Appeal and allowed the appeal in favor of the appellants, emphasizing the specific use of the imported valves for agriculture and horticulture, leading to their classification under CTH 8424. The judgment highlighted the importance of interpreting classification rules in line with the intended purpose and specific characteristics of the imported goods.