2008(03)LCX0068

In the Customs, Excise & Service Tax Appellate Tribunal, Chennai

Shri P.G. Chacko, Member (Judicial) and Shri P. Karthikeyan, Member (Technical)

Maa Durga Flour Mills P. Ltd.

Versus

Commissioner of Customs, Chennai

Final Order No. 221/2008 dt. 11.3.2008 certified on 18.3.2008 in Appeal No. C/69/2001

Advocated By -

Shri S. Murugappan, Adv. for Appellants
Shri N.J. Kumaresh, SDR for Respondent

Per P.G. Chacko :

This case involves a classification dispute. The appellants imported what they called "dampening system for mills". The bill of entry mentioned separately three components of the above system, viz. "Electronical control", "Measuring section" and "Water dosage unit", each classified under SH 9032.89 of the First Schedule to the Customs Tariff Act. The Assessing Officer assessed the goods accordingly, whereupon the assessee paid duty and cleared the goods. However, the assessee claimed reassessment of the goods under SH 8437.80 of the Customs Tariff Schedule. This claim was rejected by the original authority, which classified the above goods under SH 9032.89. Aggrieved, the party preferred appeal to the Commissioner (Appeals), but the latter did not disturb the classification. Hence the present appeal of the assessee.


2. In this appeal also, the assessee maintains that what they imported was a "dampening system for mills" and the same required to be classified under SH 8437.80. In support of this case, learned counsel relies on HSN Explanatory Notes under Heading 84.37. On the other hand, learned SDR would support the decision of the authorities by submitting that the goods imported by the assessee would appropriately be classifiable under Heading 90.32 inasmuch as certain regulating/controlling devices were also incorporated therein. We have considered these submissions and have also examined the catalogue placed on record. This catalogue gives a diagrammatic representation of the "Dampening System" as also a list of its components as follows:-

1) Measuring-/Control-unit ACU993/N
2) Voltage 110 - 250V AC
3) Water dosage complete
4) Water inflow
5) Water dosage panel (optional)
6) Water dosage heating (optional)
7) Grain inflow
8) Weigher, mechanical or electrical
9) Measuring section
10) Temperature probe
11) Humidity probe
12) Hectoliterweigher (flow)
13) Water inflow to dampening screw
14) Drive of dampening screw with feedback
15) e.g. paddle screw
16) Outflow of moistened grain.

The method of operation of the system is also given. It appears that the "measuring section" in the machine contains temperature and humidity measuring devices. These parameters of food grains (to be dampened) are measured so as to determine the quantity of water to be added for dampening the grains. The dampening of food grains is the principal function of the machine, which is done by the "water dosage unit" in the system. On a perusal of the relevant invoice, which is also available on record, we find that one piece each of "electronic control", "measuring section" and "water dosage unit" were imported by the appellants. It is not difficult to discern that item No. 1 in the above list represents the "electronic control unit' mentioned as the first item in the invoice; that the items mentioned at S. Nos. 3, 5 & 6 of the above list constitute the "water dosage unit' mentioned as the third item in the invoice; and that the items mentioned at S.No. 9 to 12 in the above list constitute the "measuring section' mentioned as item No. 2 in the invoice. In this context, we shall refer to the HSN Explanatory Notes under Heading 84.37. HSN Heading 84.37 is completely aligned with the Tariff Heading 84.37 which is reproduced below:-

In this context, it is also noteworthy that learned counsel has staked an alternative claim for classifying the goods under SH 8437.10 and has pointed out that "Grain dampening machines" are specifically covered under the first part of Heading 84.37 (machines for cleaning, sorting or grading seed, grain or dried leguminous vegetables). It is submitted that Grain dampening machines, whether or not incorporating heating or weighing apparatus, can only be classified under the first part of Heading 84.37, which means SH 8437.10. The HSN Notes also say that Heading 84.37 covers machinery used in the milling industry for cleaning, sorting or grading grain prior to milling. In this case, it is not in dispute that the goods imported by the assessee were intended for dampening of food grains prior to milling. That a few items mentioned in the list of components given in the catalogue were not found in the consignment imported by the assessee would not affect classification of the composite item as "Grain dampening machine" inasmuch as the HSN Notes say that such machine may or may not incorporate heating or weighing apparatus. S.No. 8 in the aforesaid list mentions weigher, mechanical or electrical; S.No. 2 of the list mentions Voltage 110-250 A.C; S.No. 4 in the list mentions Water inflow, while S.No. 7 mentions Grain inflow. Non-inclusion of such items in the imported machine would not materially affect classification of the item under the first part of Heading 84.37 in view of the HSN Notes. Thus, in our view, the goods imported by the assessee would appropriately be classifiable as "Grain dampening machine" under the first part of Heading 84.37 i.e., under SH 8437.10 rather than in the second part of Heading as "Other machinery". The claim of the Revenue to classify the item under Heading 90.32 must be rejected at the threshold inasmuch as this Heading covers 'automatic regulating or controlling instrument and apparatus'. What was imported by the assessee was a machine for dampening food grains. Of course, it incorporates temperature and humidity measuring devices whose functions are ancillary to the principal function of dampening of food grains. The imported machine per se was not meant to be used as an automatic regulating/controlling instrument or apparatus.


3. In the result, it is held that the goods imported by the assessee shall be classified under SH 8437.10 of the First Schedule to the Customs Tariff Act. The alternative plea made by the appellant's counsel stands accepted. Reassessment shall follow accordingly, with consequential reliefs. The appeal stands allowed to the aforesaid effect.

Dictated and pronounced in open Court.

Equivalent 2008 (086) RLT 0617 (CESTAT-Che.)

Equivalent 2008 (227) ELT 0301 (Tri. - Chennai)

Equivalent 2008 (130) ECC 0206

Equivalent 2008 (156) ECR 0206 (Tri.-Chennai)