No Liability to Pay Customs Duty for Clearance of Part of Dryer Prior to Rescinding of Central Excise Circular: CESTAT [Read Order]

The Ahmedabad bench of Customs, Excise and Service Tax Appellate Tribunal,(CESTAT) has held that prior to rescinding of the Central Excise circular dated 19.05.2010s, there is no liability to pay customs duty for clearance of part of the dryer.

Rippen Radiators & Heat Exchangers Pvt Ltd, the appellant submitted the issue on the classification of goods i.e. Parts of Drier/ parboiling parts namely Heat Exchanges, Drier Fan and Aluminium Fin Tubes cleared by the appellant for Rice Mill machinery. The department has classified the said goods under Chapter Heading 8419 which attracted duty at the appropriate rate whereas the appellant's plea was that the said goods were not chargeable to duty as the same were classifiable under Chapter Heading 8437 of the Central Excise Tariff Act, 1985. 

Shri Vikrant Kackaria, Counsel appearing on behalf of the appellant submitted that the classification of the goods in question has been decided against the appellant by the Larger Bench in the case of M/s. Jyoti Sales Corporation vs. CCE, Panchkula – 2016 (341) ELT 328 (Tri. LB) wherein it was held that parboiling plants and parts thereof are classifiable under Chapter heading 8419. 

The Division Bench in the case of M/s. Jyoti Sales Corporation vs. CCE, Panchkula – 2020 (374) ELT 936 (Tri. Chan.) it has been held that there was Circular No. 924/14/2010-CX wherein the said item was held classifiable under Chapter heading 8437 and attracted Nil rate of duty. 

The said Circular was withdrawn by the department on 15.05.2014 vide Circular No. 982/06/2014CX thus the Tribunal held that no duty can be demanded till the time the circular was withdrawn by the department. 

On the other hand, in support of classifying it under tariff heading 8419, it has been argued by respondent that Parboiling and drier plants perform the function of steaming and drying which are independent of milling and these occur before milling process.

Therefore it has been viewed that parboiling and drier plant are not essential and integral part of rice mill and therefore it would merit classification under heading 8419. It has also been opened that machinery performing specific functions like steaming or drying are specifically covered by heading 8419.

In the case of Auro Weaving Mills , the Himachal Pradesh High Court has also observed that the Board Circulars are binding on the department so long as they remain in operation and not open to department raise contention contrary to such circulars.

A two-member bench comprising of Mr Ramesh Nair, Member (Judicial) and Mr C L Mahar, Member (Technical) observed that for the period prior to 15-5-2014 if the appellants have classified their products in question under Chapter Heading No. 8437 of CETA, no demand is sustainable in terms of the Circular No. 924/14/2010-CX., dated 195-2010.

It was found that the period involved is 2011-12 to 2013-14 and during this period the circular dated 15.05.2014 was not in force but during the relevant period the Circular dated 19.05.2010 was prevailing and according to which the goods were classifiable under Chapter heading 8437. 

“In view of the said Circular dated 19.05.2010 the appellant was not liable to pay any duty for the clearances made prior to rescinding the Circular dated 19.05.2010.”,the CESTAT concluded by setting aside the impugned order and allowed the appeal.

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