Sneha Farms Pvt. Ltd. Vs Commissioner of Customs (CESTAT Hyderabad)
Summary: The dispute before the CESTAT Hyderabad concerned the customs classification of machinery and parts imported by Sneha Farms Pvt. Ltd. for poultry feed milling. The Assessee had presented its Bill of Entry classifying the goods under CTH 8436 10 00, on which Basic Customs Duty was levied at 7.5%. The accompanying documents included the Proforma Invoice, Bill of Lading, Purchase Order and Packing List.
The Customs authorities, after examination of the goods, took the view that they were classifiable under CTH 9406 00 93 rather than CTH 8436 10 00. The Adjudicating Authority, after granting the Assessee an opportunity of personal hearing, confirmed the reassessment under CTH 9406 00 93.
On appeal, however, the Commissioner (Appeals) did not uphold either the Assessee’s classification under CTH 8436 10 00 or the Adjudicating Authority’s classification under CTH 9406 00 93. Instead, the Commissioner (Appeals) held that the goods were classifiable under CTH 8479 90 90. Both the Revenue and the Assessee challenged that order before the Tribunal.
The Assessee submitted that CTH 8436 specifically covers machinery for poultry keeping and machinery for preparing animal feeding stuffs. It therefore contended that the specific entry under CTH 8436 10 00 should be considered before resorting to the residual classification under CTH 8479 90 90.
The Assessee further challenged the classification under CTH 9406 00 93, which relates to “Silos for storing ensilage”. It submitted that the imported goods were various parts of milling machinery used for manufacturing animal feed and were not silos. The Assessee also explained the meaning and use of “ensilage” and relied upon a certificate issued by the Professor and Head, Department of Animal Nutrition, Tamil Nadu Veterinary and Animal Sciences University, stating that ensilage cannot be done in metal silos.
The Assessee relied upon the Proforma Invoice, Packing List, Bill of Lading and Bill of Entry, all of which described the imported goods as parts of animal feed milling machinery. It argued that the Department had not produced contrary evidence showing that the goods were not parts of such machinery. It also submitted that the Commissioner (Appeals) had gone beyond the issue before him by adopting CTH 8479 90 90 without putting the Assessee on notice regarding the proposed reclassification, thereby violating principles of natural justice.
The Department, on the other hand, submitted that the imported goods were parts of silos and that proper examination had led the officials to that conclusion. The Department also relied upon the exporter’s website, which stated that the exporter was a manufacturer of silos. It contended that the Commissioner (Appeals) had erred in classifying the goods under CTH 8479 90 90 and sought restoration of the Adjudicating Authority’s classification under CTH 9406 00 93.
The Tribunal examined the purchase order dated 19.01.2011 for “Poultry Feed Milling Machinery”, the Proforma Invoice dated 10.08.2011 and the packing list prepared by the overseas exporter. It noted that these documents were before the Customs officials when the Bill of Entry was presented.
The Tribunal observed that, after examining the goods, the officials had directly held that the goods were “silos” without giving detailed findings explaining how that conclusion had been reached. The Adjudicating Authority likewise had not provided detailed findings explaining how the goods could be treated as silos when the Bill of Entry, Proforma Invoice, Bill of Lading and Packing List specifically described them as feed milling machinery.
The Tribunal noted that CTH 8436 contains a direct entry covering machinery used in poultry keeping and that CTH 8436 10 00 specifically covers machinery for preparing animal feed stuff. It further observed that the Department had not produced evidence showing that the imported goods were used for any other purpose.
With respect to CTH 9406 00 93, the Tribunal observed that the entry specifically covers “silos for storing ensilage”. It held that, for this classification to apply, the imported goods would have to be in the nature of silos and would also have to be used for storing ensilage. The Tribunal found that there was no categorical assertion establishing that the goods were silos and no evidence demonstrating that the imported goods had been used for storing ensilage. It therefore disagreed with the classification adopted by the Adjudicating Authority.
The Tribunal also rejected the classification under CTH 8479 90 90 adopted by the Commissioner (Appeals). It held that the Commissioner (Appeals) had arrived at an independent and different classification, going beyond the brief available to him without putting the importer on notice regarding the proposed reclassification. According to the Tribunal, this amounted to non-following of the principles of natural justice.
The Tribunal further held that, where the specific classification under CTH 8436 10 00 was available, the goods could not have been classified under CTH 8479 90 90. On these grounds, the impugned order of the Commissioner (Appeals) was dismissed.
Accordingly, the Tribunal allowed the Assessee’s appeal with consequential relief, if any, as per law, and dismissed the Revenue’s appeal. Both appeals were disposed of accordingly.
FULL TEXT OF THE CESTAT HYDERABAD ORDER
The Assessee has imported machinery and parts thereof in respect of poultry Feed Milling machinery. They have presented their Bill of Entry classifying the product under CTH 8436 10 00, wherein, the Basic Customs Duty is levied at 7.5%. Along with the Bill of Entry they have presented the copy of Proforma Invoice, Bill of Lading, copy of Purchase Order and the Packing List. After going through all the documentary evidence, it was opined that the goods are classifiable under CTH 9406 00 93 and not under CTH 8436 10 00. The Assessee sought Personal Hearing in the matter, wherein, the Adjudicating Authority, after giving them opportunity of being heard, confirmed the re-assessment of goods by classifying them under CTH 9406 00 93. On Appeal, the Commissioner (Appeals) has held that the imported goods are neither classifiable under CTH 8436 10 00 as claimed by the Assessee nor classifiable under CTH 9406 00 93 but actually they are classifiable under CTH 8479 90 90. Being aggrieved by such re-classification, both the Revenue and the Assessee are in Appeal.
2. In the present Appeals before us, as per the Revenue, the OIA is required to be set aside, wherein, the Commissioner (Appeals) has held that the goods are classifiable under CTH 8479 90 90 and the same should be classified under CTH 9406 00 93 as per the OIO passed. On the other hand, the Assessee submits that the OIA is required to be set aside and it should be held that the goods in question are classifiable under CTH 8436 10 00.
3. The learned Advocate appearing on behalf of the Assessee submits that CTH 8436 very clearly speaks of “the machineries in respect of poultry keeping and machineries for preparing animal feeding stuffs”. Therefore, this specific entry has to be considered first before going to the residual entry under CTH 8479 90 90 as has been done by the Commissioner (Appeals).
4. He further submits that the Adjudicating Authority has held that the goods are falling under CTH 9406 00 93. He submits that CTH 9406 pertains to “Prefabricated Buildings”. Under CTH 9406 00 93, which is the classification accepted by the Adjudicating Authority, the same pertains to “Silos for storing ensilage”. The Assessee’s submission is that the goods which have been imported are not ‘Silos’ at all. They are various parts of the milling machines used in the machinery, wherein, animal feeding items are manufactured. Further “ensilage” means “preserving the green food for livestock in an undried condition in airtight conditions, either in a storage silo (an airtight pit), or in plastic wrapping”, which basically is used in European countries to preserve the green grass in intact condition for usage of the same subsequently in the winter months. He also produces copy of the Certificate issued by Professor and Head, Department of Animal Nutrition, Tamil Nadu Veterinary and Animal Sciences University, wherein, in respect of ensilage operation, it has been clarified that ensilage cannot be done in metal silos.
5. He takes us through the copies of the proforma invoice, packing list, Bill of Lading and Bill of Entry, wherein, it is clearly mentioned that the goods imported are parts of the animal feed milling machinery and he submits that the Department has not come up with any counter to say that the imported goods do not result in being part of such machinery. Therefore, he submits that there is absolutely no possibility of goods falling under CTH 9406 00 93. Further, he submits that when there is specific entry under CTH 8436 10 00 towards machinery for preparing animal feeds, the general entry under CTH 8479 90 90, as arrived at by the Commissioner (Appeals) cannot be preferred. Further, the Commissioner (Appeals) has gone beyond the issue before him and has come to this conclusion without giving any notice to the Assessee and hence, even on this count, the OIA is required to be dismissed.
6. In view of the foregoing, he prays that his Appeal may be allowed and the Appeal filed by the Department may be dismissed.
7. Learned AR appearing on behalf of the Department submits that the goods imported were part of ‘Silos’ and only on account of proper examination of all the goods imported, the officials have come to the conclusion that the goods are part of ‘Silos’ only. Therefore, the goods imported cannot be classified under CTH 8436 10 00 as claimed by the Assessee. They also rely on the website of the exporter, wherein, it is stated that the exporter is manufacturer of ‘Silos’. Further, they submit that the Commissioner (Appeals) is in error in going into a different direction and holding that the imported goods are machinery only and has classified the same under CTH 8479 90 90. In view of the foregoing, he submits that the OIA is required to be set aside and the OIO passed, holding that the goods fall under CTH 9406 00 93, should be restored.
8. Heard both sides and perused the documents. Admittedly, the Assessee has placed the purchase order dated 19.01.2011 for “Poultry Feed Milling Machinery”. For these items, the exporter has raised the proforma invoice on 10.08.2011. The packing list has been prepared by the overseas exporter for various items falling under these categories of the goods. All these documents were before the Customs Officials when the Bill of Entry was presented based on the Proforma Invoice issued by the exporter. After examining the goods, it is seen that the officials have directly held that the goods are found to be “silos” without giving any detailed findings as to how they have arrived at this conclusion. The Adjudicating Authority in the OIO has not given any detailed findings as to how the conclusion can be drawn that the goods are ‘silos’ when the description given in the Bill of Entry, Proforma Invoice, Bill of Lading, Packing list, etc., specifically speak of feed milling machinery. We observe that there is direct entry at CTH 8436 which speaks of machineries used in poultry keeping. Further, CTH 8436 10 00 speaks of machinery for preparing animal feed stuff. The Department has not come out with any evidence that the imported goods have been used for any other purpose. So far as the Department’s classification at CTH 9406 00 93 is concerned, it specifically speaks of “silos for storing ensilage”. If this CTH is to be followed, not only the imported goods should be in the nature of “silos” but also they should be used for “storing ensilage”. As can be seen from our discussion above, first of all, there is no categorical assertion that the goods in question fall under “silos”. Further there is nothing to show by way of evidence that the imported goods have been used for “storing ensilage”. Therefore, we do not agree with the classification arrived at by the Adjudicating Authority.
9. Coming to the classification arrived at by the Commissioner (Appeals), he has come to an independent and different classification which amounts to going beyond the brief available to him, without putting the importer to notice about this re-classification proposal. This also amounts to non-following of principles of natural justice. It is also clearly seen that when the specific classification is available at CTH 8436 10 00, he could not have classified them under CTH 8479 90 90. Therefore, the impugned OIA is dismissed on this count.
10. In view of the foregoing, we allow the Appeal filed by the Assessee with consequential relief, if any, as per law. We dismiss the Appeal filed by the Revenue.
11. Both the Appeals are disposed of thus.
(Dictated and pronounced in the Open Court)
