Classification of Goods cannot be changed merely because some parts were imported and cleared with a Separate Bill of Entry: CESTAT [Read Order]

The Chennai Bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ), in its recent judgement, has held that the classification of goods cannot be changed merely because some parts were imported and cleared with a separate bill of entry.

M/s.Kaveri Seed Company Ltd, the respondents imported 2 nos. of seed processing lines for the seed processing plant, each with an intake capacity of 10 tons per hour vide two Bills of Entry both dated 12.12.2008.  Among the Bills of Entry, the second Bill of Entry was for partial shipment/part delivery.

The respondent classified the goods under CTH 8437 as applicable to the seed processing machine and paid BCD @ 7.5% with ‘Nil’ CVD.  The Customs Receipt Audit (CRA) observed that part deliveries include elevators, conveyors, two-way valves, square packing bins, cyclofan, piping systems etc. which cannot be treated as seed processing machinery and hence cannot be classified under CTH 8437 and demanded duty of Rs.17,28,863/- under Section 28(1) of the Customs Act, 1962.

The adjudicating authority observed that the respondent has not complied with the procedure under Public Notice No.91/87 as applicable for such partial shipment. The adjudicating authority denied the benefit of classification under CTH 8437 and confirmed the demand. On appeal, Commissioner (Appeals) set aside the order passed by the adjudicating authority. 

It was alleged that the respondent has not followed the procedure laid down in Public Notice No.91/87. It was evident that the Proforma Invoice value and the goods imported vide three import invoices value filed under two bills of entry were tallying in all respects and formed two processing lines for processing seed.  Going by the fact that the two bills of entry were numbered consecutively on the same date, proves that the entire consignment came together in one lot. 

A Coram comprising of Ms Sulekha Beevi C.S, Member (Judicial) and Shri Vasa Seshagiri Rao, Member (Technical) observed that merely because some parts were imported separately and cleared under a separate Bill of Entry, the department cannot contend that the goods cannot be classified under CTH 8437.  The bench upheld the decision arrived at by the Commissioner (Appeals) and dismissed the appeal of the department.

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