CESTAT Classifies 'Brush Cutters' As Hand Held Agricultural Tool

The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has classified the 'brush cutters' as hand-held agricultural tools.

The bench of P. Dinesha (Judicial Member) and M. Ajit Kumar (Technical Member) has observed that goods, which are handheld machines, would, at first sight, and by their popular name, 'brush cutter', be more suitable to be classified under CTH 8467. However, the goods, due to the dispute in their classification, need to be examined with support from the HSN. As per Explanatory Notes to heading 8467, the tools included under the heading are shown in a list and included at Sl. No. 19, portable brush-cutters with a self-contained motor, a drive shaft (rigid or flexible), and a tool holder, presented together with various interchangeable cutting tools for mounting in the tool holder. Whereas portable machines for trimming lawns, cutting grass in corners, along walls, borders, or under bushes that have a self-contained motor in a light metal frame and a cutting device usually consisting of a thin nylon thread are included in Sl. No. 18 of the list.

The assessee/appellant imported “Agricultural Reaper” of different models and filed Bills-of-Entry by classifying the same under Customs Tariff Heading (CTH) 8433 9000, which were assessed at the rate of BCD as applicable. Exemption for CVD was claimed under Notification No. 21/2012 (Sl. No. 2).

The department observed that the imported goods were portable machines with self-contained internal combustion engines mounted on a light metal frame and equipped with cutting devices and felt that the goods were classifiable under CTH 8467-2900, which attracted CVD at a rate of 12.5%. After due process, the original authority, having considered the case of the importer, proceeded to confirm the proposals made by him in the Show Cause Notice classifying the goods under CTH 8467. Similarly, in the case of earlier orders, the Commissioner (Appeals) too has upheld the classification as confirmed in the respective Orders in Original.

The department contended that the goods, as seen on the appellant's website and literature, are marketed as “brush cutters” to cut or trim bushes, hedges, weeds, plants, and grass. Brush cutters are primarily used for trimming or cutting rather than reaping, croplifting, gathering, picking, threshing, binding, or bundling. Their primary use is to remove unwanted growths like weeds, small cultivations, thick grasses, and hardy hedge plants. As per the advertisement, supply orders to government programs, and other selective material given by the appellant, the impugned goods are known as 'brush cutters' or 'weed cutters' and have been purchased for use in agricultural and horticultural fields.

The assessee contended that CTH 8433 covers harvesting and post-harvesting agricultural machinery and also includes machinery used in lawns, sports grounds, and parks. The List in HSN Explanatory HSN provides a list of items that may fall under 8467 and excludes items by their weight or size that cannot be used in hand. The goods cannot be used “in” hand.

The appellant relied on the decision of the Supreme Court in the case of Nizam Sugar Factory v. Collector, in which it was held that the allegation of suppression of facts against the appellant cannot be sustained since, when the first SCN was issued, all the relevant facts were in the knowledge of the authorities. Later on, while issuing the second and third show cause notices, the same or similar facts could not be taken as suppression of facts on the part of the assessee as these facts were already in the knowledge of the authorities.

The CESTAT upheld the penalty under Section 114A and distinguished Nizam Sugar and other judgments cited by the appellant. The tribunal noted that in those cases, it was the department that decided to finalize the matter after the issue of the first Show Cause Notice or, after having done so in a particular manner, chose to change the decision, reopening the matter on the plea of suppression of facts. Here, the cause of action in invoking Section 114A is the deliberate misclassification resorted to by the appellant in the Bill of Entry in spite of an order classifying the goods, which is contrary to the law and the self-declaration given in the Bill of Entry and is hence distinguished.

Counsel For Appellant: G. Shiva Kumar

Counsel For Respondent: M. Ambe

Case Title: M/s. Kisankraft Machine Tools Private Limited Versus Commissioner of Customs

Case No.: Customs Appeal No. 41118 of 2014

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