TaxTMI 
TaxTMI 
2024 (12) TMI 364
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....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 respect of the subject B/E, under Section 28 (4....
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....t 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 - 1983 (13) E.L.T. 1566 (S.C.) (iii) Plasmac Machine Mfg. Co. Pvt. Ltd. Vs. C.C.R., 1991 (51) E.L.T. 161 (S.C.) (iv) Novopan India Ltd. V....
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.... 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: 1. The titles of Sections, Chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Sectionor Chapter Notes and, provided su....
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....ddition 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 clearly suitable for repetitive use. 6. For legal purposes, the classification of goods in the sub-headings of a heading shall be determined according to the terms of those sub-headings and any related sub headings Notes and, mutatis mutandis, to the above rules, on the understanding that only sub headings at the....
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.... 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 the scope of headings / sub-headings, related Section Notes, Chapter Notes and the General Rules for the Interpretation (GIR) of the First Schedule to the Customs Tariff Act, 1975. Rule 1 of the GIR provides that the classification of goods shall be determined according to the terms of the headings of the tariff and any relative Section notes or Chapter notes and thus, gives precedence to....
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....ation 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 machines: 8422 11 00 -- Of the household type 842219 00 -- Other 842220 00 - Machinery for cleaning or drying bottles or other containers 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 8422 4000 - Other packing or wrapping machinery (including heat-shrink wrapping machinery) ....
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....es (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 or drying bottles/containers. On the other hand, some of the machines imported being a part of complete bottling plant assembly line are for the function of bottle filling, bottle closing, labelling, packing, wrapping which find specific mention under the category of machines mentioned at (iii) above under (A). Other machines such as blow moulding machine, PET bottle coating machine, pallet conveyor system though does not find specific mention at (iii) above, being part of the aerated water bottling plant assembly line, are covered under the category of machines under (B) above. 9.3 Hence, in simple wor....
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....vered 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 group of other categories of machines ranging from soap cutting/moulding machine, car washing machine and machines for manufacture of chemical and pharmaceutical goods etc., these are specifically covered under various tariff entries of 8479 8910 to 8479 8970 of sub-heading 847989. The last residual category of 'other goods' under 'other machinery' of sub-heading 847989, are again grouped under tariff entry 8479 89 92 covering specifically briquetting plant and machinery for manufacture of briquettes from agricultural and municipal waste; and the tariff entry 8479 89 99 for covering 'other residual goods' which ....
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....tion 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.... 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 piping, by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defined function covered by one of th....
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....s; 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 electrically-operated types, whether or not domestic. The heading also covers machines of different types designed for cleaning or drying bottles or other containers, for filling or closing such containers (including machines for aerating beverages) and, generally, for packing (including heat-shrink wrapping) goods for sale, transport or storage. These include: (1) Machines (whether or not steam-operated) for cleaning, washing, rinsing or drying bottles, jars, cans, boxes, casks, milk churns, cream separator howls or other containers. These machines sometimes incorporate provision for disinfection or sterilisation. (2) Machines for filling containers (e.g., casks, barrels, cans, bottle....
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.... 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, not specified or included elsewhere in this Chapter. 8479.10 - Machinery for public works, building or the like 8479.20 - Machinery for the extraction or preparation of animal or fixed vegetable fats or oils 8479.30 - Presses for the manufacture of particle board or fibre building board of wood or other ligneous materials and other machinery for treating wood or cork 8479.40 - Rope or cable-making machines 8479.50 - Industrial robots, not elsewhere specified or included 8479.60 - Evaporative air coolers - Other machines and mechanical appliances: 8479.81 -- For treating metal, including electric wire coil-winders 8479.82 -- Mixing, kneading, crushing, grinding, screening, sifting, homogenising, emulsifying or stirring machines 8479.89 -- Ot....
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....f 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 presented carburettors are therefore to be classified as parts of engines in heading 84.09. Similarly, mechanical or hydraulic shock absorbers form an integral part of the machine or appliance in which they are to be incorporated. Separately presented shock absorbers therefore fall to be classified as parts of the machines or appliances on which they are to be mounted. (Shock absorbers for vehicles or aircraft fall in Section XVII). The many and varied machines covered by this heading include inter alia: (I) MACHINERY OF GENERAL USE This group includes, for example: (1) Vats or other receptacles (e.g., vats or tanks for electrolysis), fitted with mechanical devices (agitators, etc.), and which are not identifiable as being for any particular industry and are not heating, cooking, etc., apparatus of heading 84.19. Vats or other receptacles simply fitted with taps, level or pressure gauges or the like are classified according to their constitue....
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....ious types of machines which are used in bottling of aerated beverages water including machines for forming PET bottle, filling up the contents with beverages/aerated water and packing, wrapping of such bottles, and other additional operations incidental or secondary to packing etc. till they are completed in the manner that the aerated water/beverages are used for distribution and sale in the market. Thus, we find that machinery used for coating of PET bottles with improved technology i.e., Plasma Impulse Chemical 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, thereby, the aerated water/beverages have a longer shelf life with no effect on their taste, is covered by the above stated HS explanatory notes for classification under heading 8422. 11.1 We have also examined factual matrix of the case, by careful perusal of documents on record, including purchase order dated 20.03.2018 placed by the appellants on foreign manufacturer M/s KHS GmbH, Germany for supply of 'complete bottling plant - ASSP CSD line', operational manual, and actual pictures of the individual mac....
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....x coating machine, in the beginning when it is being set-up is operated in solo mode and once such setting up is completed, then it works along with blow moulding and filler machine under block mode. Such operational requirement of setting up the machine, does not enable it to be an independent function or machine having individual function, as claimed by Revenue. 11.4 Even if the Revenue's argument that the classification of InnoPET plasmax coating machine is disputable under two contending CTIs 84223000 or 8479 89 99, then in terms of GIR 3, classification shall be preferred under the heading which provides the most specific description to the heading rather than the one providing a more general description. Inasmuch as the tariff item 8422 3000 covering "machinery for aerating beverages" under a single '-' entry is more specific than the contending tariff item 8479 89 99 covering "other" under four ' 'entry, which is a sub-classification of "other" under triple '---' entry, which is again a sub-classification of "other" under double '--' entry, under a single '-' entry of "other machines and mechanical appliances". In other words, the GIR 3 mandates that the entry which is spec....
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....tory of the appellant is not in dispute. The manufacturing activity, as explained before us as well as before the adjudicating authority, is PET bottles are formed, inspected and filled with aerated water sealed, packed and cleared. The use of the machine which are imported, as explained by the learned Counsel, is just after the forming of the PET bottle. If that be so, we find that the explanatory notes to the HSN clearly support the case of the appellant. We reproduce the explanatory note of HSN to Chapter 84.... ... 12. From the above reproduced explanatory notes, it can be seen that the machines imported by the appellant being used in conjunction with form, fill and seal machine, merits classification under CTH 8422 30 00 and eligible for benefit of Notification No. 21/2002. 13. Similar view was expressed by the bench in the case of Aries Components Manufacturing Co. Ltd. v. Commissioner of Central Excise, Mumbai-II - 2004 (174) E.L.T. 238 (Tri.-Mumbai), wherein Revenue had sought classification of an inspection machine as an independent and stand-alone machine, findings negatived by the Tribunal in paragraph No. 4 which is reproduced. "4. It is also found - (a) Consi....
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....ling of bottles. Revenue denies the classification sought by appellant on the ground that the goods will fall under CTH 8481 80 90 without assigning any reason. ... 4. It does not appeal to common sense to appreciate how the goods imported was not connected to the machinery manufactured by the appellant. When Revenue had no finding that appellant was a trader of the imported goods without that being used in the manufacture of goods falling under CTH 8422 30 00, there cannot be denial of classification of the goods under CTH 8422 90 90." It is significant to note that Revenue had classified the machines for filling of bottles under CTI 8422 30 00 and therefore, the Tribunal had orders for classification of its parts under CTI 8422 90 90. We also find that the order of the Tribunal in the case of Associated Cement Companies Ltd. (supra) relied upon by the learned AR, is not relevant as in that referred case it relates to coating done on the material by imparting optical and electrical properties to the material for making it wear and tear resistant, which is entirely different from the factual matrix of the present case. 12.3 We also find that on the issue of classification of ....