Classification of rice par-boiling machinery - Long Story
THIS an extract from DDT 2354 16 05 2014
NEARLY four years ago, after a detailed examination, the Board had come out with a Circular No. 924/14/2010 -CX dated 19.05.2010 clarifying that Rice parboiling machinery and drier which are essentially for use in conjunction with the rice mill will merit classification under heading 8437. Admittedly, the Tariff Rate of duty for this heading is Nil.
Incidentally, this clarification was issued pursuant to a representation made by the Rice Mill Machinery Manufacturers Association that the practice so far followed by the department was not to charge excise duty for many years but suddenly it has been soughtto charge duty on these machines by proposing classification under heading 8419.
Now, the Board has had a re-think consequent to a decision dated 15.03.2011 of the CESTAT, Delhi in the case of M/sJyotiSales Corporation 2011-TIOL-1498-CESTAT-DEL wherein the Bench had after bringing out a subtle distinction in the goods under reference vis-à-vis that discussed in the Board Circular dated 19.05.2010 concluded that par-boiling plant and drier plant are rightly classifiable under heading 8419.
So, after more than three years, the CBEC shifts the goalpost and says that rice par-boiling machine and dryer would merit classification under CETH 8419 as per Note 2 to Chapter 84.
The earlier Circular No. dated 19.5.2010is rescinded by the Board and it is directed that classification of rice par-boiling machine and dryer should be made under CETH 8419.
Interestingly, the CBEC also instructs the field formations to take necessary action to protect the revenue interest in respect of past clearances.
Classification of rice par-boiling machinery - Board Wins with 8419
After two and a half years, a Larger Bench of the CESTAT recently confirmed the classification under Heading 8419. This Larger Bench has been constituted as per the directions of the Supreme Court in Civil Appeal No. 8612/2011 in the case of Jyoti Sales Corporation. The Apex Court noted that there is a conflict in judicial opinion expressed by two coordinate benches of the Customs, Excise and Service Tax Appellate Tribunal. One line of decisions rendered by the Tribunal holds that par boiling machine and dryer manufactured by the assesses are classifiable under chapter heading 84.37 of Central Excise Tariff while the other line of decisions takes the view that such machines are classifiable under chapter heading 84.19. This Larger Bench of CESTAT has been constituted to resolve this conflict and to decide the appropriate classification of the par boiling machine and dryer.
And the verdict is in favour of Revenue at 8419.
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