Custom, Excise & Service Tax Tribunal
M/S Skf Boilers & Driers (P) Ltd vs The Commissioner Of Central Excise on 18 October, 2010
IN THE ,CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, FKCCI COMPLEX, K. G. ROAD,
BANGALORE 560009
Date of hearing : 18/10/2010
Date of decision : 18/10/2010
Central Excise Appeal No 967/2009
(Arising out of the Order-in-Original No. 09/2009 dated 31.08.2009, passed by the Commissioner of Central Excise, Mangalore)
1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether their Lordship wish to see the fair copy of the Order?
4. Whether Order is to be circulated to the Departmental authorities?
M/s SKF Boilers & Driers (P) Ltd., .Appellants
Vs.
The Commissioner of Central Excise .Respondents
Mangalore Present for the appellant : Mr K.S. Chandrasekhar, JDR Present for the respondent : None CORAM :
HONBLE MR. JUSTICE RMS KHANDEPARKAR, PRESIDENT HONBLE MR. P. KARTHIKEYAN, MEMBER (TECHNICAL) ORDER No /2010 PER : JUSTICE R.M.S. KHANDEPARKAR This appeal is taken up on board in terms of the order passed today in stay application No 658/2009.
2. We have heard learned counsel for the appellants and the learned spl counsel for the respondents. The issue involved in the matter essentially relates to the classification of the product. While it is the case of the department that the products are classifiable under Central Excise Tariff Heading(CETH) 8419 whereas it is the case of the assessee that the same are classifiable under CETH 8437.
3. Learned counsel for the appellants in that regard has drawn our attention to the Board Circular No 924/14/2010 CX dated 19th May 2010 wherein the Board after considering the matter in relation to the subject of classification of rice parboiling machinery has observed thus:
4.1 On examination of the issue, the Board observes that the General 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 piping, by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or Chapter 85, then the whole falls to be classified in the heading appropriate to that function. Chapter Note 2 to Chapter 84 :
Subject to the operation of Note 3 to Section XVI and subject to Note 9 to this Chapter, a machine or appliance which answers to a description in one or more of the headings 8401 to 8424, or heading 8486 and at the same time to a description in one or other of the headings 8425 to 8480 is to be classified under the appropriate heading of the headings 8401 to 8424 or under the heading 8486, as the case may be, and not under the headings 8425 to 8480.
Heading 8419 does not, however, cover :
(a) germination plant, incubators or brooders (heading 8436);
(b) grain dampening machines (heading 8437);
(c) ....
(d) ...
(e) ..... 4.2 Parboiling machinery, drier plant and rice mill in conjunction form the paddy processing. Thus such a plant can be considered as composite machines fitted together to perform the function of rice milling which is the principal function of such a combination. Thus in terms of the Section Note 3 & 4 even if one of the component/machinery is performing complementary functions, the classification of such component/machinery will be governed by the principal function being performed, and that in this case is rice milling.
4.3 Chapter Note 2 provides that if a machine can be classified based on description under heading 8419 and also under 8437, in that case it should be classified under 8419 only. Therefore, it would be seen that as per Chapter Note 2, the parboiling machine merit classification under heading 8419 but as per Section Note 3 and 4, the machinery merit classification under heading 8437. The Board observes that this controversy has been perceived by the HSN and at pages 1235 it has been mentioned that Chapter Note 2 which is known as rule of precedence for heading 8401 to 84.24 applies only to machines considered as whole. Composite machines or multifunction machines are required to be classified in accordance with Note 3 and Note 4 of Section XVI. As per this clarification available in the HSN, the parboiling machine and dryers 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.
4. Learned spl counsel appearing for the respondent has fairly conceded that taking into consideration the Boards Circular which is binding on the department, the appellants are justified in contending that the product in question is classifiable under CETH 8437.
5. In view of what is stated above, the impugned order which classifies the product under Chapter sub-heading 8419.89.90, 8419.31.00, 8419.89.90, 8419.50.10 and 8419.90.90 cannot be sustained and is liable to be set aside and accordingly we set aside the impugned order and remand the matter back to the adjudicating authority to finalize the classification bearing in mind the Board Circular dated 19th may 2010.
6. Accordingly, the impugned order is hereby set aside and matter is remanded for classification as stated above and consequential order if any in accordance with provisions of law. Appeal, accordingly stands disposed off.
(JUSTICE R.M.S. KHANDEPARKER) PRESIDENT (P. KARTHIKEYAN) MEMBER (TECHNICAL) /pnr/