2018 (12) TMI 854 - AT - Central Excise

Classification of conveyors & elevators for rice milling machinery under Chapter 8437; duty, interest, penalty demand unsustainable. Appeal allowed.

The Tribunal ruled that the conveyors and elevators, designed for rice milling machinery, should be classified under chapter heading No. 8437 of the ... Classification of goods - rice bucket elevator - rice conveyor - the appellants were classifying these goods under heading No. 8437 as “machinery used in Milling Industry” where the tariff rate is nil - according to the department these goods are classifiable under heading No. 8428, as “other lifting, handling, loading or unloading machinery - whether the impugned goods are classifiable under CETH 8428 or under CETH 8437 of CETA? Held that:- An identical issue decided in the case of Alpsco Graintech Pvt Ltd & Ors vs. CCE & ST-Chandigarh [2018 (12) TMI 478 - CESTAT CHANDIGARH], where this Tribunal has examined the issue and held on merit classification on the items in question under chapter heading No. 8437 of Central Excise Tariff Act, 1985. The conveyors and elevators specifically manufactured as the part of rice milling machinery alongwith other machinery of rice by the appellant merit classification under chapter heading No. 8437 of CETA, 1985 - demand of duty against the appellant alongwith interest is not sustainable - penalty not imposable. Appeal allowed - decided in favor of appellant. Issues: Classification of Rice Milling Machinery under Central Excise Tariff Act, 1985Classification of Items in Question:The issue revolves around the classification of Rice Milling Machinery items, specifically 'rice bucket elevator' and 'rice conveyor,' under Chapter Heading No. 8428 or 8437 of the Central Excise Tariff Act, 1985.Analysis:The dispute arises from the classification of the items under different headings by the department and the appellant. The department classified the goods under heading No. 8428, while the appellant classified them under heading No. 8437. The department confirmed the demand against the appellant, imposing penalties and interest. The appellant challenged this classification, citing a previous Tribunal order that favored classification under heading No. 8437.Judicial Interpretation:The Tribunal analyzed the relevant tariff headings, specifically 8428 and 8437, to determine the correct classification. The Tribunal noted that the conveyors and elevators in question were specifically designed for rice mills and were part of a combination of machines used in rice milling. The Tribunal referred to Section Notes 3, 4, and 5 of the Central Excise Tariff Act, emphasizing that the entire machinery, including conveyors and elevators, should be classified under heading 8437 for machinery used in milling industry.Precedents and Legal Principles:The Tribunal cited precedents, such as the case of Commissioner of Central Excise, Kanpur vs. Rationale Iron & Steel Co., highlighting that explanatory notes do not have the force of law and are only for guidance. The Tribunal also referenced the decision of the Hon'ble Apex Court in G. S. Auto International Ltd., which emphasized that items specifically made for a particular machine should be classified as part of that machine. The Tribunal distinguished the present case from Eminence Equipments Pvt. Ltd., where the items were of a general nature and not specifically designed for rice milling.Conclusion:The Tribunal concluded that the conveyors and elevators, being specifically manufactured for rice milling machinery, merit classification under chapter heading No. 8437 of the Central Excise Tariff Act, 1985. Consequently, the impugned order was set aside, and the demand of duty, interest, and penalty against the appellant was deemed unsustainable. The appeal was allowed with consequential relief, if any.This detailed analysis showcases the legal interpretation, precedents, and principles applied by the Tribunal in resolving the classification issue of Rice Milling Machinery under the Central Excise Tariff Act, 1985.