2003(01)LCX0127
IN THE CEGAT, WEST ZONAL BENCH, MUMBAI
S/Shri Krishna Kumar, Member (J) and C. Satapathy, Member (T)
WESTERN HATCHERIES LTD.
Versus
COMMISSIONER OF CUS. (APPEALS), MUMBAI
Order No. 141/2003-WZB/C-III, dated 22-1-2003 in Appeal No. C/612/R/97
CASES CITED
Thermax Ltd. v. Commissioner — 1995(11)LCX0035 Eq 1996 (081) ELT 0417 (Tribunal) — Referred.................. [Para 2]
REPRESENTED BY : Shri Naresh Thacker, Advocate, for the Appellant.
Shri M.P. Sendo, JDR, for the Respondent.
[Order per : C. Satapathy, Member (T)]. - Shri Naresh Thacker, learned Advocate for the appellants states that the issue involved in this appeal relates to the classification of the impugned goods described under the relevant Bill of Entry as “outback environment system for poultry shed in knock down condition”. The appellants seek classification under sub-heading No. 8436.29 whereas the department has classified the impugned goods under sub-heading No. 8415.83. The Commissioner (Appeals) has upheld the classification done by the Additional Commissioner of the impugned goods under sub-heading No. 8415.83 as air-conditioning machinery without incorporating a refrigerating unit. The following reasoning has been adopted by the Additional Commissioner for classifying the product under sub-heading 8415.83 :-
“It is not in dispute that the items imported constitute a complete Unit and its function is to maintain a required temperature in a closed space may be a shed whether for poultry or cattle. The unit also consists of Heater, Fans, Cooling Unit Sensors and Controllers. The unit is sought clearance under OGL and under item 8436.29 of Customs Tariff. Chapter heading 8436.29 covers poultry keeping machines which according to Harmonised Commodity description and coding system Explanatory notes, covers (1) Rearing and laying units or “batteries” (2) Egg Candlers and (3) Automatic poultry pluckers. The unit imported does not fit into the description of the item covered by 8438.29. A unit which helps in generating and maintaining of a controlled conditions of temperature and humidity consisting of heaters, cooling units, fans, controllers, etc. cannot be considered as one described under Chapter 8436.29 and therefore it can be said without any doubt that the unit does not fall under heading 8436.29 of the Customs Tariff. If we accept the plea of the Importer then tomorrow a music system utilized for better yield of eggs from poultry would also have to be classified under the cited sub-heading. Obviously this line of argument is perverse and unacceptable.
The department’s contention is that the Unit is an Airconditioning machine falling under Chapter 8415.83 of HSN. Chapter 8415.83 covers Airconditioning machines other that (1) window or wall types, self-contained, (2) others, incorporating a refrigerating unit and a valve for reversal of the cooling/heat cycle and (3) others, incorporating a refrigerating unit. The heading covers certain apparatus for maintaining required conditions of temperature and humidity in closed spaces and applies only to machines (1) equipped with a motor driven fan or blower and (2) designed to change both the temperature and the humidity of air and (3) for which the elements mentioned at (1) and (2) are presented together. It is also amplified in the explanatory notes that from the structural point of view, the airconditioning machines of the heading 8415 must incorporate, in addition to the motor driven fan or blower for circulating the air at least the following elements :-
An air heating device and an air humidifier (generally consisting of a water spray) or an air de-humidifier; or a cold water coil or a refrigerator unit evaporator or some other type of cooling element with a separate device for changing the humidity of the air. Since the function of the Unit imported is to maintain a required condition of temperature and humidity and since it incorporates in addition to the motor driven fan on an heating device and an air humidifier, the description of the unit fits into the description of heading 8415. It can also be seen from the HSN notes that a condenser coil or a refrigeration coil is not a sine qua non. The lowering down of temperature in a closed space i.e. controlled area can also be achieved through spraying of water and using the air as the medium. The unit under reference works in a closed space and regulates the temperature and even has a alarm device for assisting in regulation of the temperature.
It has also a temperature raising device/system which forms a part and parcel of the unit.”
The appellants are challenging the classification under sub-heading 8415.83 on the following grounds :-
(1) “The Commissioner (Appeals) failed to appreciate that heading 84.36 of CTA directly, squarely and specifically covers “Poultry keeping machinery fitted with mechanical or thermal equipment.”
(2) The Commissioner (Appeals) failed to appreciate that it is undisputed that the said machine imported by the Appellants is used for keeping the poultry and therefore covered by heading 84.36 of CTA.
(3) The Commissioner (Appeals) failed to appreciate that the said machine is different and distinct from air conditioning machine in as much as the primary function of the said machine is not for maintaining temperature and/or humidity.
(4) The Commissioner (Appeals) failed to appreciate that the said machine does not contain an air heating device or a cold water coil or any other type of cooling element with separate device for changing humidity of the air and therefore, even as per Explanatory note to heading 84.15 of HSN, the same cannot be classified under heading 84.15 of CTA.
(5) The Commissioner (Appeals) failed to appreciate that the said machine is an Evaporative Cooling System where water is sprayed through nozzle fitted on roof with high pressure of 200 PSI to form fine mist particles which before settling on the ground are mixed in air and pulled alongwith the length of the shed by fans mounted at one end of the shed, which keeps surrounding area cool for the poultry.
(6) The Commissioner (Appeals) failed to appreciate the true scope and meaning of sub-heading 84.36 covers all types, forms, varieties and machines used for Poultry keeping.
(7) The Commissioner (Appeals) failed to appreciate that the classification of goods is to be determined on the basis of trade/commercial parlance.
(8) The Commissioner (Appeals) failed to appreciate that no trade commercial parlance the said goods are not known, marketed and sold as Airconditioning machines.
(9) The Commissioner (Appeals) failed to appreciate that Heading 84.36 more specific in that it relates to Poultry keeping machines and therefore, as per Rule 3 (a) the same shall prevail over Heading 84.15.
(10) The Commissioner (Appeals) failed to appreciate that in the event both the Heading merit equal construction, the latter i.e. Heading 84.36 shall prevail over Heading 84.15, as per Rule 3(c) of the Rule for Interpretation.
(11) The Commissioner (Appeals) failed to appreciate that as per ratio of the decision of the Hon’ble Tribunal in Thermax Limited v. Central Excise [1996 (081) ELT 417]. The said machine is correctly classifiable under Heading 84.36.
(12) The Commissioner (Appeals) failed to appreciate that in as much as the said machine is classifiable under Heading 84.36, the same is freely permissible for import and therefore, the confiscation thereof is illegal and bad in law.
(13) The Commissioner (Appeals) failed to appreciate that since the import of the said machine is bona fide the imposition of fine is uncalled and unwarranted in facts and circumstances of the present case as per the judgment of Hon’ble Supreme Court in Akbar Badrudin Jiwani v. Collector [1990 (047) ELT 161].”
2. Shri. M.P. Sendo, learned J.D.R. appearing for Revenue supports the orders of the lower authorities and states that the decision in the case of M/s. Thermax Ltd. is not applicable to the facts of the present case as the imported goods are different from the goods considered in that case.
3. We have gone through the Technical Literature relating to the impugned goods under input. The same reads as under :-
“OEC System comprises of following items :-
Shed Controllers, Ventilation, heater, cooling system and sealing curtains, brooding curtains and fitting for these.
Basically OEC System is exclusively used for poultry shed for keeping the poultry birds at comfortable temperature and humidity through out the year by which poultry people get better production results.
All these items mentioned in packing list are basically parts in knocked down condition which are assembled at poultry shed to complete the OEC System.
- Shed controlled to control overall system based on temperature and humidity sensor, feedback controller, controller temperature and humidity in shed constant.
- Ventilation means fans which are mounted at one end of the shed and sucks the air there by creating vacuum or negative pressure and hence fresh air is pulled in from opposite end.
- Heaters are used for heating inside the shed.
- Cooling system consists of foggers through which a fine mist is produced inside the shed and by which air is cooled.
- Curtain has an exclusive use for sealing when vacuum taken place, so that shed is closed from sides.”
4. The aforesaid description of the product read with the Explanatory Notes to the HSN referred to by the Additional Commissioner indicate appropriate classification for the impugned goods under sub-heading No. 8415.83 rather than under sub-heading 8436.29. As such, we uphold the classification determined by the lower authorities.
5. However, considering the fact that the impugned goods are meant for use for poultry keeping by the importers, and the fact that the Commissioner (Appeals) has already waived the penalty, we order reduction of the redemption fine from Rs. 1,50,000/- to Rs. 10,000/-.
6. Appeal is dismissed except for the modification in the quantum of redemption fine as indicated above.
Equivalent 2003 (154) ELT 0553 (Tri. - Mumbai)