TaxTMI 
TaxTMI 
2024 (12) TMI 364
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....s herein, had imported "Innopet Plasmax System 20Q" and its parts through Jawaharlal Nehru Customs House (JNCH) and for this purpose have filed Bill of Entry (B/E) No. 8836615 dated 13.11.2018, classifying the "Innopet Plasmax System20Q"machinery under Customs Tariff Item (CTI)8422 3000, its parts under CTI 8422 9090 and self-assessed the customs duty payable thereon by availing duty concession for basic customs duty at 5% adv. under Notification No.50/2017-Customs dated 30.06.2017. The said B/E was assessed by the proper officer of customs and the imported goods were cleared out of Customs control. Directorate of Revenue Intelligence, Lucknow Zonal Unit (DRI) had developed an intelligence to the effect that the appellants had imported the said machinery which performs coating function of PET bottles and therefore it is correctly classifiable as machinery having individual functions under CTI 8479 8999 and its parts under CTI 8479 9090 both attracting BCD of 7.5%. Accordingly, DRI had initiated investigation proceedings and upon completion of the same have issued Show Cause Notice (SCN) dated 23.12.2020, for revising the classification and demanding differential duty of customs in ....
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....emical Vapour Deposition (PICVD) coating, which creates a barrier against the passage of gas i.e., oxygen can no longer get in, and released carbon dioxide cannot get out. Consequently, the aerated water have a longer shelf life with no effect on their taste. Therefore, he submitted that advancement of technology as additional feature in the bottling line of machinery cannot change the classification of entire bottling line machinery. In view of the above, he submitted that the said coating machine cannot be categorized as a machine having independent function, and it is only a part of aerated water bottling machinery. Therefore, he claimed that the classification of the goods adopted by them under CTI 8422 3000 is correct and does not require any change. In support of their classification, they have cited the Section Notes 3, 4 & 5 of Section XVI of the Customs Tariff Act, 1975 and Rule 3(a) of General Rules of Interpretation. 3.3 In support of their stand, the appellants had relied upon the following judicial pronouncements: (i) Moorco (India) Ltd., Vs. Collector of Customs, Madras - 1994 (74) E.L.T. 5 (S. C.) (ii) Madras Rubber Factory Vs. Union of India - 1....
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....her law for the time being in force, duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, on goods imported into, or exported from, India. (2) The provisions of sub-section (1) shall apply in respect of all goods belonging to Government as they apply in respect of goods not belonging to Government." "Section 1. Short title, extent and commencement. - (1) This Act may be called the Customs Tariff Act, 1975. (2) It extends to the whole of India. (3) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint. Section 2. Duties specified in the Schedules to be levied. - The rates at which duties of customs shall be levied under the Customs Act, 1962 (52 of 1962), are specified in the First and Second Schedules. xxx xxx xxx xxx THE FIRST SCHEDULE - IMPORT TARIFF (Refer Section 2) THE GENERAL RULES FOR THE INTERPRETATION OF IMPORT TARIFF (GIR) Classification of goods in this Schedule shall be governed by the following principles: ....
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....classified under the heading which occurs last in numerical order among those which equally merit consideration. 4. Goods which cannot be classified in accordance with the above rules shall be classified under the heading appropriate to the goods to which they are most akin. 5. In addition to the foregoing provisions, the following rules shall apply in respect of the goods referred to therein: (a) Camera cases, musical instrument cases, gun cases, drawing instrument cases, necklace cases and similar containers, specially shaped or fitted to contain a specific article or set of articles, suitable for long-term use and presented with the articles for which they are intended, shall be classified with such articles when of a kind normally sold therewith. This rule does not, however, apply to containers which give the whole its essential character; (b) Subject to the provisions of (a) above, packing materials and packing containers presented with the goods therein shall be classified with the goods if they are of a kind normally used for packing such goods. However, this provisions does not apply when such packing materials or packing containers are c....
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....ariff provisions accompanying eight digit number and the rate of customs duty; (2) the list of tariff provisions is divided into Sections, Chapters and Sub-Chapters; (3) in column (3), the standard unit of quantity is specified for each tariff item to facilitate the collection, comparison and analysis of trade statistics." 8.1 From the plain reading of the above legal provisions, it transpires that in order to determine the appropriate duties of customs payable on any imported goods, one has to make an assessment of the imported goods for its correct classification under the First Schedule to Customs Tariff Act, 1975 in accordance with the provisions of the Customs Tariff Act by duly following the General Rules for Interpretation (GIR) and the General Explanatory notes (GEN) contained therein. The First Schedule to the Customs Tariff Act, 1975 specifies the various categories of imported goods in a systematic and well-considered manner, in accordance with an international scheme of classification of internationally traded goods, i.e., 'Harmonized Commodity Description and Coding System' (HS). Accordingly, goods are to be classified by taking into consideration ....
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.... a sub-classification of the immediately preceding description of the goods or article or group of articles which has "-" single dash. (GEN1) (vii) Where the description of goods is preceded by "---" or " ", the said goods shall be taken to be a sub-classification of the immediately preceding description of the goods or article or group of articles which has "-" or "--". (GEN1) 9.1 In the case before us, the contending classification of imported goods discussed in the impugned order is either under customs tariff item 842230 00or customs tariff item 847989 99 of the First Schedule to the Customs Tariff Act. The relevant tariff entries in the First Schedule to the Customs Tariff Act, 1975 are extracted as below: Tariff Item Description of goods (1) (2) 8422 DISH WASHING MACHINES; MACHINERY FOR CLEANING OR DRYING BOTTLES OR OTHER CONTAINERS; MACHINERY FOR FILLING, CLOSING, SEALING OR LABELLING BOTTLES, CANS, BOXES, BAGS OR OTHER CONTAINERS; MACHINERY FOR CAPSULING BOTTLES, JARS, TUBES AND SIMILAR CONTAINERS; OTHER PACKING OR WRAPPING MACHINERY (INCLUDING HEAT- SHRINK WRAPPING MACHINERY); MACHINERY FOR AERATING BEVERAGES - Dish washing ....
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....0or 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. 9.2 It could be seen that by applying the GIR 1 - rule at (i) above, the position is made clear that Heading 8422 covers within its scope and ambit, mainly of two broad categories of goods for ascertaining proper classification: (A) first one having specific three sub-groups of machines are i.e., (i) Dish washing machines (ii) machinery for cleaning or dying bottles/ containers (iii) machinery for filling, closing, sealing or labelling, packing/wrapping, capsuling bottles, cans and similar containers; (B) the other broad category, in second one i.e., "machines for aerating beverages'. On careful perusal of the functions of the impugned goods and the scope of coverage of goods under the above category of machines, it transpires that these do not belong to the group of first two category of machines (i) and (ii) above under (A), as these do not have function of dish washing or for cleaning ....
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....ng. 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 functions, and not specifically included or covered elsewhere in Chapter 84, are alone covered here. Accordingly, the scope of coverage of goods under this heading could be considered as residuary in nature, for covering machines and appliances not elsewhere specified under Chapter 84. Further, on perusal broad categories of machines covered therein, it is found that different types of machines of varied nature such as the following are covered under this under heading 8479. These are:(i) machinery for public works, building etc., (ii) machinery for the extraction or preparation of animal or fixed vegetable fats or oils, (iii) presses for the manufacture of particle board or fibre building board of wood, (iv) rope or cable-making machines, (v) industrial robots (vi) evaporative air coolers (vii) passenger boarding bridges (viii) other types of machines and mechanical appliances. Further, the residual type machinery is covered under the 'other category' in sub-heading 847989; even amongst the various specific grou....
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....r 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' claimed by Revenue, one needs to look further into relative Section or Chapter notes. In this regard, we find that Section Note 1 to Section XVI covering Chapters 84 and 85, provide for the list of goods that do not get covered under the said Chapters. Besides, Section Note 2 providing for classification of 'parts' of machines or articles, are not relevant here for classifying the impugned machine. Thus, we find that Section Notes 3 to 5 to Section XVI generally guide classification of goods under Chapter 84 and 85. The relevant Section Notes are extracted as below: "SECTION XVI MACHINERY AND MECHANICAL APPLIANCES; ELECTRICAL EQUIPMENT; PARTS THEREOF; SOUND RECORDERS AND REPRODUCERS, TELEVISION IMAGE AND SOUND RECORDERS AND REPRODUCERS, AND PARTS AND ACCESSORIES OF SUCH ARTICLES NOTES : 1. This Section does not cover : .......................... 2. Subject to Note 1 to this Section, Note 1 Chapter 84 and to Note 1 to Chapter 85, parts of machines.... ....
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....f 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, 1975. 10. In order to further examine the classification in terms of HS explanatory notes of the WCO, which describe in detail the scope and coverage of the goods under the Customs classification, the extract of HS classification in respect of heading 8422 is given below: "Harmonized Commodity Description and Coding System Explanatory Notes 84.22 - Dish washing machines; machinery for cleaning or drying bottles or other containers; machinery for filling, closing, sealing or labelling bottles, cans, boxes, bags or other containers; machinery for capsuling bottles, jars, tubes and similar containers; other packing or wrapping machinery (including heat-shrink wrapping machinery); machinery for aerating beverages (+). This heading covers dish washing machines (for plates, glasses, spoons, forks, etc.), whether or not incorporating provision for drying, including electricall....
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....s 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 function is not to pack, wrap, etc., but to manufacture raw or semi-finished materials into finished products (e.g., combined cigarette making and packaging machines). PARTS Subject to the general provisions regarding the classification of parts (see the General Explanatory Note to Section XVI), the heading also covers parts of the above-mentioned machinery. It should be noted, however, that in the case of composite machines, parts of any component machine which would not on its own fall in this heading, are classified in their own appropriate headings, e.g., parts of weighing machines (heading 84.23), of carton or paper bag making machines (heading 84.41) or of printing machines (heading 84.43). 84.79 Machines and mechanical appliances having individual functions, ....
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....n 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 so that the machine can run without interruption. This device performs an individual function because it plays no part in the "sewing" function of the machine; as there is no other more specific heading, the chain cutter falls to be classified here. On the other hand, the function of a carburettor for an internal combustion engine is distinct from that of the engine but it is not an "individual function" as defined above because the operation of the carburettor is inseparable from that of the engine. Separately pre....
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....e 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 PET bottle, as the case before us. Hence, even as per HS explanatory notes we find that the impugned goods are not covered under sub-heading 8479 89. On the otherhand, HSN explanatory notes for heading 8422 covers under its scope various types of machines which are used in bottling of aerated beverages water incl....
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....re 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 plasmax coating machine and Filling machine are designed to be physically and electronically interconnected, in order to ensure that there is seamless transfer and processing of each PET bottle/container. The InnoPET plasmax coating machine, in the beginning when it is being set-up is operated in ....
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....sification, 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 stating that they are manufacturers of bottling line for bottled drinks industry and pioneers in PET bottle inspection unit. 10. The use of the machines in the factory of the appellant....
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.... 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 classification of the imported goods under CTH 8422 90 90. He explains that the coverage of CTH ....