CESTAT Chennai Sets Aside Reclassification Of Poultry Cage Components As Iron and Steel Structures

The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside the reclassification of weld mesh components used in poultry battery cages.

It held that the Revenue failed to explain how products admittedly manufactured exclusively for use in poultry battery cages could be treated as iron and steel structures under the Central Excise Tariff.

"The Revenue has not made any attempt in placing on record conceivable and convincing reasons as to how the goods under dispute could become structures or parts etc. under CETH 7308. Viewed thus, we are also of the opinion that the Department has seriously erred in rejecting the declared classification without proper justification and hence, the impugned order calls for interference," the bench of Judicial Member P. Dinesha and Technical Member M. Ajit Kumar observed.

The bench allowed an appeal filed by Sri Selvi Weld Mesh. It set aside an order that had reclassified the company's products from the category covering parts of poultry-keeping machinery to the category covering other structures of iron and steel.

The dispute concerned weld mesh components, including top mesh parts, bottom mesh parts, side partitions, centre partitions and door parts used in poultry battery cages. The company classified these products as parts of poultry-keeping machinery.

The Department proposed classifying them instead as other structures of iron and steel. It also demanded duty for the period from April 1, 2012, to June 30, 2017.

Before the tribunal, the company argued that the goods were manufactured exclusively for use in poultry battery cages based on orders placed by poultry farms. It maintained that the products had no general structural use. The company also contended that the Department had failed to demonstrate how the products fell within the category covering iron and steel structures.

The bench found that the show cause notice and the adjudication order discussed at length why the assessee's classification should be rejected. However, neither explained why the alternative tariff category was the correct one. It also noted that the Department's own findings recorded that the products were manufactured exclusively for use in poultry battery cages and supplied only for that purpose.

There was no dispute about the nature of the goods, the bench observed. They were made from galvanised iron wire and used only in poultry cages.

Yet, the Revenue had not explained how such products could be treated as structures comparable to bridges, lock-gates, towers, roofs, pillars, or other structural items covered under the tariff entry for iron and steel structures.

The tribunal therefore set aside the impugned order and allowed the appeal with consequential benefits.

For Appellant: Vikram Katariya, Chartered Accountant.

For Respondent: M. Selvakumar, Authorized Representative