TaxTMI 
TaxTMI 
2026 (7) TMI 83
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....t.31.01.2013 confirming the demand of Central Excise duty for the period October, 2011 to July, 2012, vide Appeal No. E/26493/2013 and Shri Mullapudi Seshagiri Rao, Partner of the appellant company, is also in appeal against the same OIO in respect of imposition of penalty under Rule 26, vide Appeal No. E/26495/2013. 2. The brief facts relevant to the case are that the department felt that the appellants were engaged in manufacture of 'GI Wire Welded mesh and chain link mesh/ knitted wire mesh' but were not having registered themselves with the department nor have paid the Central Excise duty on such goods. On going through the manufacturing process, it was observed that using certain machine, they were converting galvanized wire into wire mesh of different sizes as per the requirement of the buyers and therefore, it was appropriately classifiable as 'wire mesh' under CETH 7314 20 90. Shri MSR, partner of the appellant, in his statement to the department explained the manufacturing process, wherein, he, inter alia, said that the said goods were being made as per the requirement of the poultry customers and the said good is nothing but 'poultry weld mesh', which is classifiable u....
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....e as the date of knowledge of the department is from the date the statement given by Shri MSR, Managing Partner of the appellant, and demand has been raised within the time limit prescribed. He also held that Shri MSR is the one, who dealt with the goods directly and it is not a case where he delegated his power to anybody and therefore, having dealt with non-duty paid goods, which are liable for confiscation and for the reasons of non-maintenance of daily stock accounts, non-issuance of proper invoices and non-filing of monthly returns, Shri MSR is also liable for personal penalty under Rule 26. 4. Learned Advocate for the appellants has submitted that they are manufacturing poultry cages of different sizes and types like single top/ bottom, double top/ bottom, partitions, doors, etc., which are specifically designed for poultry farming and the said product is also referred to as 'battery cages' or 'cages' and the said product was classified as per the trade practice under heading 8436 91 00 and not as article of iron and steel under heading 7314 20 90. In support, he has relied on HSN explanatory note to heading 7314 and also heading 8436. He has further relied on various judg....
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....le 25 as well as under section 11AC, which his not tenable since Rule 25 is subject to section 11AC. Therefore, separate order for confiscation, redemption or imposition of additional penalty under Rule 25 is not tenable. Further, Rule 25 does not empower to confiscate any immovable property and therefore, confiscation of land, building, plant and machinery, materials, conveyance and other things used by the appellant is illegal. 7. Insofar as appeals filed by Shri MSR against imposition of penalty under Rule 26, he has submitted that it is a well settled law that when the firm has been imposed with penalty, the imposition of separate penalty on partner is not tenable apart from the fact that there has not been any contravention on the part of the firm. 8. Learned AR, on the other hand, has submitted that the issue is no longer res integra as this Bench has recently in the case of Sri Balaji Weld Mesh Industries Vs CCE & ST, Guntur, vide Final Order No. A/30530/2025 dt.04.09.2025, inter alia, held that GI Wire Welded mesh is classifiable under heading 7314 and not under heading 8436. He has further submitted that the Hon'ble Supreme Court in the case of CC (Import) Vs Welkin ....
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....cles of heading 7307, 7312, 7315, 7317 or 7318 and certain other articles. Therefore, a conjoint reading of these section notes would indicate that these parts, which are falling under section XV, cannot be covered as parts under section XVI. 13. Therefore, the first issue is whether this product can be considered as parts of general use or otherwise. As per the statutory provisions, the impugned goods cannot be considered as parts of general use and therefore, there is no statutory bar that the said goods cannot be classified under section XVI. However, what is important is to analyze whether they can be considered as parts of poultry keeping machinery or poultry incubator and brooder. Admittedly, it cannot be considered as parts of poultry incubator or brooders. Therefore, the only possible entry would be that whether the impugned goods can be considered as poultry keeping machinery or otherwise. In this case, the appellant is suggesting that these parts have been specifically designed for poultry farmers and their use in poultry farms and they are also being used for making poultry cages and battery of poultry cages in such farms. Therefore, we have to examine whether the for....
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....ow. "16. We are unable to agree with the reasoning aforesaid. It seems to have escaped CESTAT, Bangalore that when CHSH 8436 at Page 1318 SHN referred to batteries it was in the context of large installations "equipped with automatic devices for filling the feeding troughs, cleaning the floor and collecting the eggs". A manufacturer of such batteries which are not merely a series of cages but are also equipped with automatic devices as aforesaid would definitely qualify as machinery and the Wire mesh partition used in such cages would be part of machinery and would be exempt under Heading 84.36. However a manufacturer of Wire mesh partitions and one of the uses of which Wire mesh partition may be for assembly as cages, cannot claim exemption under Heading 84.36 (supra). 17. What is significant is that Heading 84.36 refers to poultry keeping 'machinery'. A mere equipment or structure for "poultry keeping" would not qualify classification under Heading 84.36. To fall under Heading 84.36 the test, of being a machinery has to be satisfied. The Concise Oxford Dictionary 10th Edition defines 'machine' as an apparatus using or applying mechanical power and having several....
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....modify, apply or direct natural forces with the object in each case of effecting definite and specific result. The tank and its supporting structure were not found to satisfy the said definition. 20. A Full Bench of the Allahabad High Court in Engineering Traders v. State of U.P. 31 STC 456 held 'machinery' as meaning instruments designed to transmit and modify the application of power, force and motion. 'Machinery' was held to include all appliances and instruments whereby energy or force is transmitted and transformed from one point to another. 21. ...... 22. Applying the aforesaid test, there can be no doubt that the Wire mesh manufactured by the petitioner even if sold to a poultry farmer for assembling of cages for poultry or battery of such cages cannot qualify as machinery under Heading 84.36 and would be an article of iron and steel wire within the meaning of Heading 7314." 15. Therefore, the Hon'ble High Court of Delhi has examined the case laws as well as identical factual matrix and held that wire mesh manufactured by petitioner, even if sold to poultry farmer for further assembling of cages for battery or poultry, cannot be classified under....
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....e have also examined the case laws relied upon by the appellant in the case of Autotex Pvt Ltd Vs CGST (supra), wherein, the issue was classification of items like Auto feeder, chick drinker and poultry cage. The Tribunal observed that the poultry cage consists of cage top, cage bottom, cage side cover big, cage side cover small and coversliding cage, etc. It also referred to the HSN with regard to heading 8436, which, inter alia, explains about poultry keeping machinery, incubators and brooders. There is only one entry, which covers rearing and laying units or batteries, large installations equipped with automatic devices for filling the feeding troughs, cleaning the floors and collecting the eggs. In other words, as per HSN, heading 8436 covers batteries. Thereafter, the Tribunal considered the judgment in the case of Weld Fuse Pvt Ltd (supra), as also Alchemist Pvt Ltd (supra) and Shiva Poultry Equipment (supra). On appeal, the Hon'ble Supreme Court observed that they did not find any merit in the appeal and dismissed the Civil Appeal filed by the department. We note that in the case of Autotex Pvt Ltd (supra), admittedly, the disputed items were auto feeders, chick drinkers and....
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.... Secondly, the Court highlighted that when a party asserts a meaning of a term based on common or trade parlance, it must present satisfactory evidence to support that claim. A dispute over classification cannot be resolved without such evidence. 49. The issue of classifying 'soft-serve' served at restaurants or outlets, popularly known as 'McDonald's', under the Central Excise Tariff Act, 1985, was considered by this Court in Commissioner of Central Excise, New Delhi v. Connaught Plaza Restaurant Private Limited, reported in (2012) 13 SCC 639. The revenue contended that 'soft-serve' should be classified under Heading 21.05 (Ice cream and other edible ice). In contrast, the respondent argued that 'soft-serve' was classifiable under Heading 04.04 (Other dairy produce) or Heading 2108.91(Edible preparations not elsewhere specified or included). The Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi, relying on the technical meaning and specifications of the product 'ice cream', concluded that 'soft-serve' could not be classified as ice cream. The Tribunal declined to apply the common parlance test to determine the classification of 'softserve'. 50.....
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....sification of "soft-serve" under the appropriate heading. As aforesaid, the Tribunal has held that in view of the technical literature and stringent provisions of the PFA, "softserve" cannot be classified as "ice-cream" under Entry 21.05 of the Tariff Act. We are of the opinion, that in the absence of a technical or scientific meaning or definition of the term "ice-cream" or "softserve", the Tribunal should have examined the issue at hand on the touchstone of the common parlance test. 35. As noted before, Headings 04.04 and 21.05 have been couched in non-technical terms. Heading 04.04 reads "other dairy produce; Edible products of animal origin, not elsewhere specified or included" whereas Heading 21.05 reads "ice-cream and other edible ice". Neither the headings nor the chapter notes/section notes explicitly define the entries in a scientific or technical sense. Further, there is no mention of any specifications in respect of either of the entries. Hence, we are unable to accept the argument that since "soft-serve" is distinct from "ice-cream" due to a difference in its milk fat content, the same must be construed in the scientific sense for the purpose of classification.....
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.... (Emphasis Supplied) 51. The Court in Connaught Plaza (supra), after examining the tariff headings and relevant section and chapter notes, concluded that the term "ice cream" should be interpreted using the common parlance test rather than adopting a scientific or technical meaning. Notably, the Court applied the common parlance test not only because there was no specific definition, but also because the statutory context, including the heading, section, and chapter notes, provided no guidance on how to interpret 'ice cream'. In this context of statutory flexibility, the Court employed the common parlance test to determine whether "soft serve" qualifies as "ice cream" under the Central Excise Tariff Act, 1985. Furthermore, notably, the Court also held that mere marketing alone could not lead a subject item to develop a separate meaning distinct from its common parlance. 52. In Commissioner of Customs and Central Excise, Amritsar (Punjab) v. D.L. Steels & Ors, reported in (2023) 17 SCC 358, this Court examined a classification dispute concerning dried pomegranate seeds, locally known as "anardana". The respondent had imported "anardana" from Pakistan. Heading 08....
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....ver, while the word "edible" seems simple, it warrants elaboration as over-simplification will be problematic. 19. Ben Baumgartner, in his article, has referred to several judgments of different courts in the United States of America to argue that the decisions have culminated in the various tests and parameters to determine the meaning of the word "edible". These are extracted below: "Thus, courts have turned to, and parties have argued for, various other tests to determine whether a good is edible. Such tests include : (1) whether the good appears edible to the senses, (2) whether the good provides nourishment, (3) whether the good's constituent parts are edible, (4) whether the good is principally used as food, (5) whether the good may be eaten without harmful effects, (6) whether the good is "habitually eaten", and (7) whether the good is actually eaten. This comment argues that a good should be considered edible if it can be eaten without harmful effects, but that whether the good is "habitually eaten" should control if testing the good is dangerous, and if neither of these tests yiel....
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....s eaten as a fresh fruit. The conventional utilisation of the wild pomegranate fruit lies in drying the seeds along with pulp to make "anardana". The wild pomegranate fruit is widely found on the hilly slopes of the Himalayas. It contains high acid content along with other quality characteristics, which distinguishes it from the pomegranate fruit which is consumed as a fresh fruit. The dried wild pomegranate arils have a distinct tart and sour flavour, owing to the high acid content, which gives it the commercial value. "Anardana", therefore, can be defined as sun-dried seeds of ripe sour pomegranate, and is predominantly used as an acidulant in Indian and Persian cuisines, and for its health benefits in the Ayurvedic system of medicine. xxx 31. In the context of the present case, once we accept the finding of fact recorded by CESTAT that "anardana" is a dried product of local "daru" or wild pomegranate, which grows in mid hill conditions and which fruit in its fresh form is different from the pomegranate included in Clause 7 to Heading 08.10, as this wild pomegranate is not consumed as a fresh fruit, the contention of the Revenue must fail. [...]" (Emphasis Su....
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....hnical sense as therein the said stone has been described as of an apparent specific gravity of 2.5 or more. Therefore, the word 'marble' has to be interpreted, in our considered opinion, in the scientific or technical sense and not in the sense as commercially understood or as meant in the trade parlance. There is no doubt that the general principle of interpretation of tariff entries occurring in a text (sic tax) statute is of a commercial nomenclature and understanding between persons in the trade but it is also a settled legal position that the said doctrine of commercial nomenclature or trade understanding should be departed from in a case where the statutory content in which the tariff entry appears, requires such a departure. In other words, in cases where the application of commercial meaning or trade nomenclature runs counter to the statutory context in which the said word was used then the said principle of interpretation should not be applied. Trade meaning or commercial nomenclature would be applicable if a particular product description occurs by itself in a tariff entry and there is no conflict between the tariff entry and any other entry requiring to reconcile and ha....
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....ed by all persons in the trade, inasmuch as the said commercial meaning would militate against the statutory context of the said exemption notification issued in June 1962. The word 'hank' as used in the notification meant a 'coil of yarn' and nothing more. 45. In Collector of Central Excise v. Krishna Carbon Paper Co. it has been observed by this Court that it is a well settled principle of construction that where the word has a scientific or technical meaning and also an ordinary meaning according to common parlance, it is in the latter sense that in a taxing statute the word must be held to have been used, unless contrary intention is clearly expressed by the legislature. It has also been observed that whether the general principle of interpretation was applicable or not depended on the statutory context. [...] xxx 48. On a conspectus of all these decisions mentioned hereinbefore the position which thus emerges is that when the expression 'marble' has not been defined in the Customs Tariff Act as well as in the Customs Act or in the relevant notification regarding the restriction on import of marble in the List of Restricted Articles, it is necessary t....
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....e omission of the words travertine, ecaussine and other calcareous monumental or building stones of an apparent specific gravity of 2.5 or more and alabaster from the ITC Schedule in Entry 62 of Part B, Appendix 2 of Import and Export Policy for April 1988 - March 1991. The only natural meaning that follows from this is that Entry 62 is confined only to marble as it is understood in a petrological or geological sense and as defined by the Indian Standards Institute and not as mentioned in the opinion given by the Indian Bureau of Mines on visual observation and it does not extend to or apply to other calcareous stones mentioned in the ITC Schedule. Moreover, the commercial nomenclature or trade meaning cannot be given to marble inasmuch as such a meaning if given will render otiose, redundant the terms travertine, ecaussine, alabaster and other calcareous monumental or building stone of an apparent specific gravity of 2.5 or more whether or not roughly trimmed or merely cut by sawing. [...]" (Emphasis Supplied) 54. The Court in Akbar Badrudin (supra) declined to interpret the words by applying the common parlance test, as doing so would have rendered certain other terms....
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....nary sense approach would not be applicable. 36. However, we find that the reliance presently placed by the Revenue upon the "common parlance test" is utterly misplaced. The said test would have to be understood in the proper perspective and cannot be brought into play when there is no ambiguity and there is no difference in the clear heading in the First Schedule and the corresponding entry in the HSN. In Commissioner of Central Excise, New Delhi v. Connaught Plaza Restaurant P. Ltd., New Delhi, this court observed that classification of excisable goods shall be determined according to the headings and corresponding Chapter or Section Notes but where these are not clearly determinative of the proper classification, the same shall be effected according to the general rules of interpretation and according to the common parlance understanding of such goods. It was pointed out that fiscal statutes are framed at a point of time but are meant to apply for significant periods of time thereafter and they cannot, therefore, be expected to keep up with nuances and niceties. It was held that the terms of the statutes must be adapted to developments of contemporary times rather than ....
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....e chapter headings, chapter notes, and section notes. It is only when (i) no clear pathway exists to determine classification under a chapter heading, i.e., absence of a definition or criterion, and (ii) there is ambiguity regarding the meaning and scope of a tariff item, that the possibility of invoking the common parlance test arises. 57. In Chemical and Fibres of India Ltd & Ors. v. Union of India & Ors, reported in (1997) 2 SCC 664, this Court was faced with the question of whether polymer chips manufactured by the assesses and used by them in the production of nylon yarn could be classified, for the purpose of levying excise duty, under Item 15A in Schedule I to the Central Excises and Salt Act, 1944, as it stood during the period from 1962 to 1972. Item 15-A was amended in 1964. Before its amendment, the heading of the item read: Plastics, All Sorts. It was the contention of the assesses that the polymer chips manufactured by them were not known in the trade as plastics and, therefore, could not be classified under Entry 15A. It was argued on behalf of the Revenue that the chemical composition of the polymer chips is similar to that of the material ....
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.... (ii) refers, inter alia, to polyamides. The Court acknowledged that after the amendment, the tariff item included technical and scientific terms and, therefore, resolved the disputes by interpreting the meaning of the words used therein with the assistance of technical literature and dictionaries." 18. In the case of CC (Import) Vs Welkin Foods (supra), though it is in the context of imported goods, the ratio laid down for classification of goods is equally applicable for classification of Central Excise Act in view of alignment between Central Excise Tariff and Customs Tariff, as also different principle of classification analyzed by Hon'ble Supreme Court for arriving at the conclusion. 19. Therefore, in the given factual matrix, even though the said goods could have been ultimately intended for use in poultry farm or for manufacturing of poultry cages, etc., that, in itself, cannot decide the classification of the said goods as parts of poultry keeping machinery. It is basically a structure, which is further used for making certain cages, in association with other materials and such cages can be further used for making batteries, etc. In this case, there is no clear statut....