No Excise Duty On Manufacture Of Drip Irrigation System And Its Component Parts: CESTAT

S.K. Mohanty (Judicial Member) and M.M. Parthiban (Technical Member) observed that the impugned goods viz., polytubes, microtubes, HDPE pipes were used for Drip irrigation systems, the appropriate classification in terms of the CBEC circular dated 16.03.1998 would be under sub-heading no. 8424.91, and not under chapter heading no. 39.17,

In this case, the assessee/appellant is engaged inter alia, in the manufacturer of 'drip and sprinkler system' and 'parts thereof' in their factory at Jalgaon, by classifying the aforesaid products under Chapter Heading 84.24 of the First Schedule to the Central Excise Tariff Act, 1985.

A show cause notice was issued to the assessee proposing for demand of Central Excise duty on polytubes, micro tubes, HDPE pipes alleged to have been clandestinely cleared by the assessee. In adjudication the Commissioner of Central Excise had confirmed the entire differential duty.

The assessee submitted that the assessee has classified the Parts of Drip or Sprinkler Irrigation System like Polytubes, Micro tubes & HDPE pipes for the disputed period under Central Excise Tariff Heading (CETH) 8424.91 correctly, as it is the appropriate classification.

He further stated that under such classification, the impugned goods are chargeable to 'Nil' rate of duty under Notifications No.111/88-C.E. dated 01.03.1988; No.46/94-C.E. dated 01.03.1994 (Sr. No. 20) and No.56/95-C.E. dated 16.03.1995 (Sr. No. 17).

The Tribunal stated that “under the First Schedule to the Central Excise Tariff vis-à-vis the general explanatory notes to HSN, impugned goods viz., polytubes, microtubes, HDPE pipes as well as other goods such as valves, emitters, drippers, micro sprinklers, poly fittings, sand filters etc., forming part of the surface network dripper lines or the underground network distribution lines and branch lines, for carrying water from the control station to the irrigation zone, and spraying/sprinkling such water to the area of irrigation, is appropriately classifiable as part of the appliances used in agriculture, horticulture.”

The impugned goods or appropriately classifiable under heading 84.24 and more specifically under sub-heading 8424.91 of the First Schedule to the Central Excise Tariff Act and not under subheading 3917.00 as they do not remain as simple P.V.C. pipes and fittings, opined the bench.

In view of the above, the Tribunal allowed the appeal.

Case Title: Jain Irrigation Systems Limited v. Commissioner of Central Excise & Customs

Case Number: EXCISE APPEAL No. 137 of 2007

Counsel for Appellant/ Assessee: M.H. Patil a/w Padmavati Patel, Mansi Patil, Viraj Reshamwala & Abhijit Malankar

Counsel for Respondent/ Department: Manish Mohan, Commissioner (AR)

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