TaxTMI 
TaxTMI 
2016 (11) TMI 767
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....nufactured by the assesses are classifiable under chapter heading 84.37 of Central Excise Tariff while the other line of decisions takes the view that such machines are classifiable under chapter heading 84.19. This Larger Bench of CESTAT has been constituted to resolve this conflict and to decide the appropriate classification of the par boiling machine and dryer. 2. In the case of Jyoti Sales Corporation versus Commissioner of Central Excise, Panchkula reported in 2011 (272) E.L.T. 689 (Tri. - Del.), par-boiling machine and dryer were classified under 8419 of Central Excise Tariff. On the other hand, in the case of SKF Boilers and Driers Private Limited versus Commissioner of Central Excise, Mangalore reported in 2011 (264) E.L.T. 425 (Tri. Bang.), the classification of the same machines were ordered under 84.19. 3. The two competing Tariff Headings are reproduced below for ready reference: 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, distillin....
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....t air ducts. The air enters the grains from an open-bottomed intake duct and flows through the grains to four surrounding exhaust ducts. The ducts are connected to an exhaust plenum. Hot air is blown by a centrifugal air blower connected to inlet or exhaust ports. 5. CBEC has issued two clarifications on the subject dated 19.05.2010 and a revised one on 15.04.2014 which have been relied upon by the adjudicating authorities as well as the Tribunal in the earlier orders. The same are reproduced below for ready reference. Circular No. 924/14/2010-CX., dated 19-5-2010 "Subject : Classification of Rice parboiling machinery - Regarding. It has been brought to the notice of the Board that classification of Rice parboiling machinery is being disputed in certain jurisdictions. Two tariff headings under consideration for its classification are 8419 or 8437. It has been represented by the Rice Mill Machinery Manufacturers Association that the practice so far followed by the department was not to charge excise duty for many years but suddenly it has been sought to charge duty on these machines by proposing classification under heading 8419. The matter has been exa....
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....ification under heading 8419. 4.1 On examination of the issue, the Board observes that the Genera/ rules for interpretation of Central Excise Tariff provide that "for legal purposes, classification 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". Therefore the classification of these goods should be determined in terms of the headings read with the relevant section and chapter notes. Section Note 3&4 to Section XVI and chapter Note 2 to Chapter 84 are relevant for present issue and these are reproduced below : Section Note 3 and 4 to Section XVI "3. Unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines designed for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function. 4. Where a machine (including a combination of machines) consists of individual components (whether separate or interconnected by pip....
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....s 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 parboiling machinery is soaking of grain, which is in nature of dampening; hence this also support the classification of parboiling machinery under heading 8437. 5.0 Therefore, Board is of the view that Rice parboiling machinery and drier which are essentially for use in conjunction with the rice mill will merit classification under heading 8437. 6.0 Trade & industry as well as field formations may please be informed suitably. 7.0 Receipt of this order may please be acknowledged. 8.0 Hindi version will follow" Circular No. 982/06/2014-CX., dated 15-5-2014 Subject : Classification of rice par-boiling machinery - Regarding. I am directed to draw your attention to Circular No. 924/14/2010-CX, dated 19-5-2010 [2010 (253) E.L.T. (T47)] on the subject of classification of rice par-boiling machinery und....
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....le under 84379020 which covers parts of rice milling machinery. This view was consistently taken by Revenue. The same view also stands taken by the Tribunal in the case of SKF Boilers & Driers (P) Ltd. vs. CCE, Mangalore reported in 2011 (264) 425 (Tri. Bang.). He further argued that this view was also conveyed by the Board in their Circular No. 924/14/2010-CX. dated 19/5/2010. He also fairly admitted that the Tribunal in the decision in the case of Jyoti Sales Corporation vs. CCE, Panchkula reported in 2011 (272) E.L.T. 689 (Tris - Del.) has taken a different view and has held that parboiling machine as well as dryer will be rightly classifiable under 8419. 7. We wish to record here that in the decision in Jyoti case the Tribunal's own decision in the case of SKF Boilers has been differentiated (para 9 of the Jyoti decision) with the observation that the decision in that case to classify the goods under CETH 8437 was delivered on concession made by the Departmental Representative taking into account the Board Circular dated 19.5.2010 classifying the goods under CETH 8437 which is binding on the Department and such a decision cannot lay down any binding precedent. We agree w....
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....fied such machines under 8419. This view has also been taken by the Tribunal in the Jyoti Sales Corporation case (supra). 9. The learned DR also rebutted the argument that such machines were part of a rice mill. His submission is that the machinery needs to be classified in the Central Excise Tariff in the form in which it is cleared from the factory where it is manufactured. In the present case the factory from where parboiling machine/dryer are manufactured, does not manufacture and clear the entire rice milling plant. Hence, even if ultimately these machines are used at some stage in the rice milling plant, it would be appropriate to classify them on the basis of the function it performs. It is not disputed that these machines perform the function of soaking, steaming and drying of paddy. Such functions are squarely covered in the Tariff Heading 8419. These machines also cannot be considered as grain dampening machines which are excluded from the purview of 8419 in terms of Chapter Note 2 to Chapter 84, in as much as the role of these machines is much more than mere dampening. He concluded with the submission that there will be no application of Section Note 3 to Section XVI ....
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....where such machines are classified, we are led to the heading 8419. This heading covers machinery or plant, whether or not electrically heated, for the treatment of materials by a process involving a change of temperature such as heating, cooking, roasting, distilling, rectifying, sterilising, raster pasteurising, steaming, drying etc. We do find that the functions performed by the par boiling machine and dryer are squarely covered in this heading 8419. 13. It has been argued before us that 8419 excludes grain dampening machines whose classification is indicated as 8437. It has further been argued that the process undertaken in the making of parboiled rice is akin to grain dampening machines. We are not persuaded by this argument. The process carried out in the par boiling machine is far more than grain dampening. It involves not only soaking but also steaming and drying. Clearly such a machine cannot be described as grain dampening machine. 14. When we look at the two clarifications issued by the Board dated 19.5.2010 and the subsequent clarification dated 15.5.2014, we find that initially the Board had suggested classification of the par boiling machine under 84 7 consideri....