Classification of CTC tea processing machines and eligibility for exemption notification.

PJ/Case Law/2013-14/1964

Case:- VINEET BAGARIA Vs COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II

Citation:-2013 (294) E.L.T. 605 (Tri. - Kolkata)

Brief facts:-Briefly stated the facts of the case were that the applicants were engaged in the manufacture of CTC tea processing machines and classified the same under Tariff Item No. 84388040 and claimed exemption from payment of duty under Notification No. 6/2006-C.E., dated 1-3-2006 (Sl. No. 10 of the table). The department issued a demand notice, denying benefit of the said notification on the ground that the CTC tea processing machines fall under chapter sub-heading 84388090.

Appellant’s contentions:- Ld. Consultant for the applicant submitted that they had been manufacturing the said goods and describing it as leaf cutting machines in all their records/clearance documents and the same was marketed as leaf cutting machine only. The ld. Consultant further submitted that they had produced necessary certificates of Chartered Engineers establishing the fact that the said leaf cutting machine was exclusively used for cutting of tea leaves. Further his submission was that when there was a specific entry available in the Central Excise Tariff Act, it was incorrect to resort to residuary entry in view of Rule 3A of Classification Rules and also under the relevant Note 3 of Section XVI of Central Excise Tariff Act. The ld. Consultant submitted that even though in the impugned order, the adjudicating authority had made an observation that the said machine had been discharging multiple functions, but no evidences nor any materials were placed for arriving at such a conclusion. Thus, he said that the decision arrived at by the ld. Commissioner, was without any substance and hence they had a strong prima facie case on merit.

Respondent’s contention:- Ld. AR for the Revenue reiterated the findings of the Ld. Commissioner that CTC tea processing machines fall under chapter sub-heading 84388090 thus, exemption from payment of duty under Notification No. 6/2006-C.E., dated 1-3-2006 (Sl. No. 10 of the table) could not be claimed.

Reasoning of judgment:- Heard both sides and perused the record. The Bench found that the applicant was denied benefit of Notification 6/2006-C.E., dated 1-3-2006 for the CTC tea processing machines cleared by them for home consumption as well as for export. They found that in the clearance documents the said leave cutting machine had been classified under chapter 84388040 and the department consistently accepting the said classification. There was no material suppression, on the function of the said machine. Besides, the applicant had submitted Chartered Engineer’s certificate in support of their claim that the said machines were used for the purpose of leaf cutting only. Also they had produced certificates from the consumer research associations and consumers forum establishing that their machines were used for the purpose of cutting tea leaves. In these circumstances they found that the applicants had been able to make a prima facie case for total waiver of pre-deposit of dues adjudged. In these circumstances, the pre-deposit of all the dues adjudged was waived and recovery thereof was stayed during pendency of the appeal.

Decision:- Stay petition allowed.

Comment:- The analogy drawn from the case is that since CTC tea processing machines were used for the purpose of cutting tea leaves, therefore they fall under chapter 84388040 and thus exemption from payment of duty under Notification No. 6/2006-C.E., dated 1-3-2006 (Sl. No. 10 of the table) would be primarily available and consequently stay application was allowed.

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PJ/Case Law/2013-14/1964

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