2015(12)LCX0093

IN THE CESTAT, SOUTH ZONAL BENCH, CHENNAI

S/Shri R. Periasami, Member (T) and P.K. Choudhary, Member (J)

SUYOG AGRO POULTRY PRODUCTS P. LTD.

Versus

C.C. (SEA-IMP.), CHENNAI

Final Order No. 41645/2015, dated 4-12-2015 in Appeal No. C/41852/2013-DB

Advocated By -

Shri Shrikanth Kamath, Advocate, for the Appellant.
Shri M. Rammohan Rao, DC (AR), for the Respondent.

[Order per : P.K. Choudhary, Member (J)]. -

The appeal was dismissed vide Final Order No. 40401/2014, dated 16-7-2014, for non-compliance of stay Order No. 40895/2014, dated 11-6-2014, wherein the appellant was directed to make a pre-deposit of Rs. 1,17,413/- within a period of four weeks. Subsequently, the appellant filed miscellaneous application on 1-8-2014, stating that the order rejecting stay was received by the appellant belatedly on 3-7-2014 and on receipt of the stay order, the appellant deposited an amount of Rs. 1,17,413/- on 30-7-2014 and the appellant prayed for restoration of the appeal. Vide miscellaneous Order No. 41798/2014, dated 24-10-2014, the appeal was restored to its Original number.


2. The brief facts of the case are that the appellants have imported "Paddle Wheel Aerators" and parts vide Bills of Entry No. 472639, dated 3-4-2010 and 605224, dated 24-8-2010 classified under CTH 8436 80 90 and the same were cleared on payment of appropriate duty. During post-Audit of said B/Es, the department raised objections on classification of the said goods as agricultural machinery. Accordingly, two demand notices were issued for reclassification under 8479 and 8999 and demanded differential duty. The Dy. Commissioner of Customs (Appraising - Group 5), Seaport, in his Order No. 16411/2011, dated 24-6-2011, classified 'Paddle Wheel Aerators' under CTH 8479 89 99 and parts under CTH 8479 90 90 and confirmed the differential duty along with interest.
The Commissioner (Appeals) upheld the order of the lower adjudicating authority The Id. counsel Dr. Shrikanth Kamath, advocate appearing on behalf of the appellant company M/s. Suyog Agro & Poultry Products Pvt. Ltd., submitted that 'Paddle Wheel Aerator' imported by the appellants are for use in the aquaculture and/or fish farming and the same are classifiable under CTH 8436 80 90. He further submitted that the paddle wheel aerators cannot perform any specific action but increase oxygen levels in aquatic farms or shrimps. Since this is specifically related to aquatic farms, paddle wheel aerators rapidly destratifies a pond through strong water circulation and aeration by spraying water into the air as well as dragging air into the water creating large surface areas of air/water interface allowing efficient gaseous exchange (oxygen in and harmful gas out). The combined effect of strong circulation and aeration allows the formation of the imported oxidized surface sediment layer. None of the other aeration systems either perform all these functions or do them as effectively. He submitted copy of "National Policy for Farmers 2007" issued by the Department of Agriculture & Co-operation, Ministry of Agriculture, and he drew attention to Paras 3.2, 4.1, 4.5.1, 4.5.2 of the policy and submitted that the definition of farmer includes all agricultural operations and poultry, livestock rearers, fishers and bee-keepers, etc. He submitted that the above policy clearly confirms fisheries and aquaculture farming are part of agricultural activities.

3. Ld. AR Shri M. Rammohan Rao, DC, relied on Para 4 of the OIO and also reiterated the findings of the adjudicating authority in Paras 10-12 of the OIO. He further submitted that entries in Chapter Notes 8436 are specific. Aqua-culture is not listed in Classification 8436 or in HSN. Rules of interpretation are applicable as paddle wheel aerators has independent function and does not find mention in 8436 and classifiable under 8479. He further submitted that CTH classification is w.r.t goods and not w.r.t. farmers as argued bv the Id. advocate.


5. Ld. advocate in his counter, mentions that Chapter Heading 8436 and under 8436 80 other machineries. So it is very clear and does not exclude aq-uaculture machinery. It is only exhaustive list. The ld. advocate also submitted that no evidences have been brought on record to show paddle wheel aerators are used elsewhere. HSN is two decades old and hence fisheries and aquaculture farming has not been included in the HSN and these paddle wheel aerators are sold directly to the farmers. He further submitted that principles of 'ejusdem generis' and 'noscitur a sociis' are applicable to the present case and submitted that imported paddle wheel aerators are classifiable under Chapter Heading 8436 of CTH and all the sub-headings have to be read conjointly and not in isolation. He further submitted that where 2 or more words having similar meaning are grouped together in a statute, the principles of 'ejusdem generis' and 'noscitur a sociis' can be resorted which are rules of interpretation of statutes.

6. Heard both sides and on perusal of the records, we find that the short issue involved in this case relates to classification dispute whether the paddle wheel aerators and its parts imported and cleared are classifiable under Chapter 8436 as other agricultural, horticultural machines or under Chapter 8479 as machines having individual functions not elsewhere specified as held by the department. We find that the appellant had imported paddle wheel aerators under Bills of Entry mentioned above and classified under Chapter 8736 80 90. It is not disputed that the paddle wheel aerators are used in aquaculture and its activities are part of aquaculture. Aquaculture is also known as aqua farming, i.e., farming of aquatic organisms such as fish, crustaceans, molluscs and aquatic plants. It is relevant to see the description given against the CTH 8436 which reads as follows : -

The Customs Tariff Heading 8436 is fully aligned with HSN explanatory notes to Chapter 8436. The note to Ch. 8436 of HSN is reproduced as under : -
"The heading covers machinery, not falling in headings 84.32 to 84.35 which is of the type used on farms (including agricultural schools, cooperatives or testing stations), in forestry, market gardens, or poultry-keeping or bee-keeping farms or the like. However, it excludes machines clearly of a kind designed for industrial use."


It is evident from the above, sub-heading 8436 covers all other agricultural, horticultural machines and also includes poultry keeping machines, bee-keeping machines, poultry incubators, and brooders, etc. Therefore, it is evident that poultry, bee-keeping are considered other agricultural activities. The only ground on which both the adjudicating authority and LAA rejected the classification of the said goods under 8436.80 is that, the word fisheries or aquaculture not described either in Ch. 8436 or its 8 digit tariff headings or in HSN explanatory notes and also not considered in the Govt, of India Agricultural Policy, on the ground that Govt, policy is not relevant criteria for classification of the imported goods under Customs Tariff.


7. On perusal of the findings of L.A. at Paras 10 and 11 of the OIO clearly described the functions of paddle wheel aerators and also accepted the said machine improves the dissolved oxygen level in ponds in the aquaculture. But, he held that, it has nothing to do with agriculture. The above finding is without any basis and not backed with any facts. If the above view is accepted, then the bee-keeping and poultry keeping machines are also to be outside the scope of Ch. 8436 as other agricultural machines. The description of machinery under Ch. 8436 is very wide and inclusive definition. The word 'includes' is not restrictive but only illustrative and covers all other agricultural machineries not otherwise covered under Ch. 8432 to 8435. This chapter Heading 8436 is further classified to 6 digits and 8 digits tariff headings and the 6 digit sub-heading 8436 00 covers machinery for animal feed and 8436 20 for poultry incubators, etc., and 8436 80 covers all other machinery. The impugned goods are rightly classified under 8436 80.

8. As regards the Revenue's contention that machinery for aquaculture does not fall within the scope of meaning of agriculture, we find that the meaning of agriculture covers not only cultivation of land and growing crops but includes animal husbandry, raising of livestock, etc. The very fact, Govt, of India, Ministry of Agriculture enacted Coastal Aquaculture Authority Act, 2005 and the Regulatory Authority was created under this Act, which deals with improvement of Aqua farmers in shrimp farming and fisheries. This confirms that aqua farming by farmers is integral part of agricultural activity. In this regard, it is relevant to see the National Agricultural Policy for Farmers, 2007 relied by the appellant which is issued by the Department of Agriculture and Co-operation, Ministry of Agriculture. The relevant paras are reproduced as under :


"3.2 Definition of Farmer
For the purpose of this Policy, the term "FARMER" will refer to a person actively engaged in the economic and/or livelihood activity of growing crops and producing other primary agricultural commodities and will include all agricultural operational holders, cultivators, agricultural labourers, sharecroppers, tenants, poultry and livestock rearers, fishers, beekeepers, gardeners, pastoralists, non-corporate planters and planting labourers, as well as persons engaged in various farming related occupations such as sericulture, vermiculture, and agro-forestry. The term will also in-clude tribal families/persons engaged in shifting cultivation and in the collection, use and sale of minor and non-timber forest produce.

2.2. Fisheries
3.
4.5.1 Both coastal and inland fisheries provide employment and livelihood to millions of families. There is considerable scope for improving the income of fishermen families on an environmentally sustainable basis by encouraging scientific fish rearing, harvesting and processing. In the area of public policy, there is a need for well-planned aquarian reforms in order to provide landless labour families access to village ponds and Other water bodies in the public domain for aquaculture.

4.5.2 The NFDB has been established by the Government of India to bring major activities relating to fisheries and aquaculture for focused attention and professional management. The guiding principles for the NFDB would be ecology, economics, gender equity, employment generation and advising the State Governments to facilitate rational and equitable allocation of public water bodies and reservoirs for practicing modern aquaculture.


4.5.3 Following steps will be taken to promote modern aquaculture prac-tices and value addition :

(i) "Fish for All" training and capacity building centres to impart training
to fisher families and timber women in all aspects of the cap-ture/culture/consumption chain, quality literacy for hygienic handling and other aspects.


(i) Provision of small dredgers for ensuring the efficiency of fish-landing centres.

(ii) Centralized services to support the decentralized capture and culture fisheries sectors.


(iii) Inland aquaculture, including the culture of ornamental fish and air-breathing fish, by providing necessary space in ponds and reservoirs."

9. Further above definition of "farmer" includes poultry, livestock rear ers, fisherman, bee-keepers, pastoralists, etc. The aquaculture, aqua farming, shrimp farming are synonyms of fishery. The above definition is issued under the provisions of Act for framing the Agricultural Policy and it is binding on oth er departments including customs. Since there is no dispute that the paddle wheel aerators used in aqua farming by aqua farmers for cultivation of fish/shrimps, etc., we are of the considered view that these are rightly to be considered as other agricultural machineries and rightly classifiable under Ch. 84360 90. When the item can be classified by specific description with specific function as other agricultural machines, the question of classifying the goods under residual entry "8479" is not justified and not acceptable. In view of the above findings, we hold that the impugned goods "paddle wheel aerators and its parts" are rightly classifiable under Ch. 8436 80 90 of CTA and not under Ch. 8479 90 90 and eligible for exemption. Therefore, the differential duty demanded is liable to be set aside.

10. in view of the forgoing discussions, we hold that paddle wheel aerators are used for fisheries/aquaculture and are classifiable under chapter Heading 8436 of the CTH. Accordingly, the impugned order is set aside and the appeal is allowed with consequential relief.
(Order pronounced in the open Court on 4-12-2015)

Equivalent 2016 (335) ELT 0350 (Tri. - Chennai)