TaxTMI 
TaxTMI 
2023 (9) TMI 1085
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....rs of the Preventive Unit visited the premises, verified the accounts and recorded statements. It was seen that appellants were clearing the good , namely, (1) Auto feeder (2) Chick Drinker and 3) Poultry cage under CTH 84361000 as poultry keeping machinery and had not charged any excise duty in the invoices, mentioning that the goods are 'exempted vide notification No.111/88 dt. 01.09.1988 as amended and CSN No.8436 Nil by Tariff". Along with such goods they also cleared various products like 'Hose PVC, 'Flexible Blue', Tee Joint Nipple' etc. without payment of duty classifying them also under CTH 84361000. The said chapter heading 8436 of Central Excise Tariff Act, 1985 is for "Other agricultural, horticultural, forestry, poultry keeping or bee keeping machinery including germination plant fitted with mechanical or thermal equipments; poultry incubators and brooders." It appeared to the department that the products namely Chick drinker, Auto feeder and Poultry cage have no mechanical function and being made out of plastic is not classifiable under 8436 and but merits classification under 3926 (Auto feeder, Chick drinker) and 3923 (Poultry cage) of CETA 1985. The miscellaneous par....
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....e plate. 3.3 In so far as the poultry cage is concerned, the same consists of cage top, cage bottom, cage side cover big, cage side cover small and cover--sliding cage. It is designed keeping in mind the space area required by each chick / bird, proper ventilation to avoid suffocation, prevention of injury to the birds and easy handling. The cage is specifically manufactured solely for use in the poultry industry. It is special box with doors and is used for shifting the baby chicks / poultry from the hatchery to the poultry farm, inside poultry farm during vaccination and from farm to dressing / processing unit. 3.4 The only reason assigned by the department in the adjudication order for classifying the chick drinker and auto feeder under 39269099 is that the same works merely on air locking mechanism and does not have any in built mechanism so as to classify as 'machines' under 84361000. According to the department, for an item to be classified under Chapter Heading (CETH) 8436, it has to be a machine which fits into the dictionary meaning and in the nature of 'some mechanical contrivances which by themselves or in combination with one or more mechanical contrivances by the com....
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.... cases, crates and similar articles: 39231010 ------ Plastic containers for audio or video cassettes, cassette tapes, floppy disk and similar articles 12.5% 39231020 --- --- Watch--box, jewellery box and similar containers of plastics 12.5% 39231030 ------ Insulated ware 12.5% 39231040 ------ Packing for accommodating connectors 12.5% 39231090 ------ Other 12.5% -- Sacks and bag (including cones) 39232100 ---- Of polymers of ethylene 18% 392329 ---- Of other plastics : 39232910 ------ Of poly (vinyl chloride) 18% 39232990 --- --- Other 18% 392330 --Carboys, bottles, flasks and similar articles: 39233010 ------ Insulated ware 12.5% 39233090 ------ Other 12.5% 39234000 -- Spools, cops, bobbins and similar supports 12.5% 392350 -- Stoppers, lids, caps and other closures : 39235010 ------ Caps and closures for bottles 12.5% 39235090 ------ Other 12.5% 392390 -- Other : 39239010 ------ Insulated ware 12.5% 39239020 ------ Aseptic bags 12.5% 39239090 ------ Other 12.5% 3926 OTHER ARTICLES OF PLASTICS AND ARTICLES OF OTHER MATERIAL....
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....e handling of the chicks is the primary function, the counting being merely a secondary function permitting to place in a box a fixed number of chicks predetermined in accordance with the size of the box. " 5. The Ld. Counsel submitted that all the impugned goods are meant for poultry farming and is not in the nature of general goods which can be used by others. The Chapter Heading 8436 covers Agricultural, Horticultural, Forestry, Poultry, Bee--keeping machineries. The tariff prescribes 'Nil' rate of duty for goods falling under Chapter Heading 8436. The HSN Explanatory Notes to Chapter Heading 8436 states that poultry keeping machines include, items such as Incubators, Hatchers, Brooders, Rearing and Laying units, Egg Candlers and Sexing & Vaccination equipments. Chapter 39 provides the classification for plastic articles. Note 2 (s) to Chapter 39 specifically provides that the said chapter excludes articles falling under Section XVI (machines and mechanical or electrical appliances). Chapter 3923 specifically deals with classification of plastic articles for conveyance or packing of goods such as caps and other closures etc. Chapter 3976 is the residuary entry for other article....
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....tc. is one of the other agriculture, horticulture or forestry machinery which is covered under CETH 8436.The chick drinker and the auto feeder for poultry are clearly akin to the automatic watering--troughs which is specifically covered under CETH 8436. Both these equipments or apparatus work on the principal of air locking mechanism and automatically release the water or the feed, on depletion of the same below the prescribed level. 11. It is submitted that the contention of the department that there is no inbuilt mechanism either in the chick drinker or auto feeder, besides the same being an irrelevant criteria, is factually incorrect as it works on the principal of air lock mechanism where due to the principal of the gravitational force, the feed or water is released on the basis of the consumption by the poultry. 12. The Ld. Counsel referred to para 41 of the order in original and argued that the adjudicating authority has relied on the dictionary meaning of 'machine/machinery' and the decisions in the case of Corporation of Calcutta Vs Chairman of Cossipore and Chitpore Municipality -- AIR 1922 PC 27, K.B. Dani Vs State of Karnataka -- 1979 44 STC 276 (Kar) and the case of C....
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....ry other materials (eg. Pumps wholly of plastics) and parts of plastics, of wood, precious metal etc. Thus machines need not be always of metal it can be made of plastic, wood too. The adjudicating authority has classified the goods under Chapter 39 for the reason that the impugned goods are made of plastic which is erroneous. 17. It is urged that as per Note to Section XVI, Chapter Notes & HSN Explanatory Notes the appellant has correctly classified the goods under 8436. 18. The Ld. Counsel submitted that the adjudicating authority has placed reliance on the Board Circular and the decision in the case of Azra Poultry Equipments Vs UOI -- 2015 (323) ELT A21 (SC). The Board circular does not put forward the correct classification. The Hon'ble Apex Court in the case of Azra Poultry had allowed the SLP to be withdrawn so as to pursue the matter with the Commissioner (Appeals) to consider the merits of the case, uninfluenced by any observation of the Delhi High Court, and therefore the reliance placed by the adjudicating authority on the judgment of the Hon'ble High Court is erroneous. 19. The adjudicating authority failed to consider the reliance placed by the appellant on the deci....
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....090 as held by the department ? (3) whether the demand of duty, interest and penalties are sustainable. 25. The Ld. Counsel has explained the nature and functioning of the impugned goods, namely Chick drinker, Auto Feeder and Poultry cage. The allegation in para 9.3 of the SCN is that the goods do not have mechanical function and therefore cannot be classified as poultry machinery under 84361000. It is also alleged that as the goods are made of plastic they would come under chapter 39 which covers articles of plastic. 26. It would be convenient to refer the image of the goods under dispute for better appreciation of facts. 27. In regard to the first item, chick drinker, the Ld. Counsel has submitted that there is a water flow regulating mechanism in the top cone which functions by an air locking mechanism. As and when the chicks drink water, and the water level decreases, the water gets filled into the bottom plate from the top cone. In the case of Auto Feeder, it is designed in such a way that the feed comes down slowly from the feeder cone to the bottom plate as the chick has the feed, and the bottom plate will have the requisite feed always. The feed is filled manually from ....
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....h the above goods are also to be classified under CETH 39269099 / 39231090. As we have already held that the Chick drinker, Auto feeder, and Poultry cage are rightly classifiable under CETH 84361000, we hold that these miscellaneous products cleared along with and corresponding to the finished products are also to be classified under CETH 84361000. We hold that the appellant is eligible for the benefit of 'nil' rate of duty. Our conclusion is also supported by the decision of the Tribunal in the case of Shiva Poulty Equipments Vs CCE -- 2017 (7) GSTL 243; Alchemists Ltd. Vs CCE -- 2017 (5) GSTL 285, and Weld Fuse Pvt. Ltd (supra). 29. The Commissioner has relied on the Board Circular No.36/90--CX.4 dated 31.08.1990 in which it is clarified that 8436 will cover only 'Poultry keeping Machinery', but not equipment which does not have any mechanical function. The Hon'ble Delhi High Court in the case of Azra Poultry Equipments Vs -- UOI 2015 (323) ELT 88 (Del.) was pleased to apply the circular to hold that the wire mesh manufactured and sold to poultry farmer cannot qualify as machinery under 84.36. On appeal, the Hon'ble Apex Court remanded the matter to the adjudicating authority to....
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.... on its merit uninfluenced by any observation by the Delhi High Court. We also find that the Commissioner of Central Excise, Hyderabad vide his separate Order-in-Original dated 16-5-2014, in the case of Weld Fuse Pvt Ltd. (supra) has taken note of the above developments and has decided that welded wire mesh, used in the poultry farms, is properly classifiable under Item No. 8436 91 00. 6. The goods manufactured by the appellant are in the form of Welded Wire Mesh and are supplied to poultry farms and claimed to be specifically designed parts of poultry keeping machinery. If the goods are considered as simple products of Iron & Steel, the classification indicated is Heading 7314. Further, we find that in the cases discussed above, where the classification of similar goods have been examined, it has been decided that the goods in question are more appropriately classifiable as parts of poultry machinery falling within the scope of Tariff Item No. 8436 91 00. For clear understanding of the above conclusion, we reproduce Paras 16 and 17 of the order dated 16-5-2014 passed by the Commissioner of Central Excise, Hyderabad, which read as under : "16. The assessee's plea regarding earl....
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.... subsequent periods. It is pertinent to note that CTH 8436 91 00 dealing with parts in the tariff in the column for unit 'Kg' is mentioned. In respect of specific machinery and equipment 'u' unit is mentioned indicating thereby that in respect of parts of poultry incubators and broodes, the standard unit is 'kilogram'. The standard unit is indicative of the nature of product. In the case, it is not individual part of machinery but wire mesh. The HSN Explanatory Note for poultry keeping machines, incubators and broodes specifies batteries, large installations equipped with automatic devices for filling the feeding trays, clearing floors and collecting eggs. The installation is very large and wire mesh supplied by the assessee forms part of said batteries which are attached to various other mechanical devices to make a functional poultry keeping machine. Since the claim of the assessee is only to classify the product as part of such overall machinery, there could be no sustainable ground to deny the same only on the ground of absence of mechanical function of the said parts. All parts of machinery will not have individual mechanical functions. The Board's clarification vide Circular ....