Paddy Reaper Without Binder Not Eligible For Customs Duty Exemption: CESTAT Chennai

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on 18 March, held that paddy reapers imported without a binder attachment cannot claim concessional duty under Notification No. 12/2012-Cus., which applies only to “reaper-cum-binder” machines.

A Bench of Judicial Member P. Dinesha and Technical Member Vasa Seshagiri Rao partly allowed the appeal filed by VST Tillers Tractors Ltd., while also holding that confiscation and penalty cannot be imposed where there is no misdeclaration or intent to evade duty.

The Tribunal observed:

".......the exemption under Sl. No. 399(A)(iii) of the same notification is specifically available only to 'Reaper-cum-Binder', which is a composite agricultural machine performing both reaping and binding functions. Since the imported equipment admittedly consists only of paddy reapers without binder attachment, the benefit of the exemption cannot be extended merely because the equipment performs a similar or related agricultural function. The eligibility to exemption must be determined strictly with reference to the description in the notification."

The dispute arose when VST Tillers Tractors imported agricultural machinery described as “Paddy Reaper Model VS-4 PR” under a Bill of Entry dated 1 September 2014, claiming concessional duty as reaper-cum-binders.

Upon verification, the Department found the machines lacked the binder mechanism, denied the exemption, reassessed the goods at standard duty rates, and ordered confiscation with a redemption fine and penalty. The Commissioner (Appeals) upheld this view, prompting the appeal.

The Tribunal explained that the term “reaper-cum-binder” denotes a single machine performing both reaping and binding functions. The word “cum” shows both functions must exist together, and allowing the importer's claim would make “cum-binder” meaningless. Since the imported equipment lacked the binder attachment, it did not meet the conditions of the exemption notification.

"The imported paddy reapers without binder attachment are not eligible for the benefit of exemption under Notification No. 12/2012-Cus., Sl. No. 399A. Consequently, the imported goods are liable to assessment at the applicable tariff rate of duty and the consequential differential duty demand arising from the denial of the exemption benefit is upheld."

Accordingly, the Tribunal set aside the confiscation, redemption fine, and penalty, partly allowing the appeal in favour of VST Tillers Tractors.

For Appellant: Vikram Katariya, Consultant

For Respondent: Anandalakshmi Ganeshram, Authorised Representative