2026-VIL-1156-CESTAT-HYD-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Classification of GI Wire Welded Mesh - The adjudicating authority classified the goods under CETH 7314 20 90 as articles of iron and steel, whereas the appellant contended that the goods should be classified under CETH 8436 as parts of poultry keeping machinery - Whether GI welded wire mesh can be considered as poultry machinery or parts of poultry keeping machinery, or whether it should be classified as articles of iron and steel under heading 7314 – HELD - From analyzing the definition of machinery from various judicial precedents, a machinery must consist of fixed and moving parts that work together to perform a function, and that a mere structure or equipment for poultry keeping, even if ultimately intended for use in poultry farms, does not qualify as machinery under heading 8436. In Azra Poultry Equipments versus Union of India case the Delhi High Court held that wire mesh manufactured, even if sold to poultry farmers for assembling cages or batteries, cannot qualify as machinery under heading 8436 and would be an article of iron and steel within heading 7314 - The form in which the wire mesh is cleared from the factory is that of a structure without moving parts, and therefore it cannot be considered as part of machinery meant for poultry keeping - The impugned goods are to be classified under heading 7314 and not under heading 8436. The demand of Central Excise duty is upheld within the normal period. Penalty under section 11AC as well as under Rule 25 read with section 11AC is set aside – The appeal is partly allowed - Extended Period of Limitation - Invokability of extended period in classification disputes involving interpretation of tariff headings - Whether the extended period of limitation can be invoked by the department in a case involving classification disputes and interpretation of tariff headings – HELD - The entire issue relates to interpretation of contrasting tariff headings, which is a complex matter of statutory interpretation, and there is no evidence of any deliberate attempt to not pay duty or willfully misclassify the product – Further, the issue of classification concerning poultry equipment was pending before the High Court since 1991 and was only finally decided in 2012, indicating the complexity and ambiguity that existed in the interpretation of the relevant headings - The appellant's belief that the goods were attracting a nil tariff rate was bonafide, and there was no deliberate intention to wrongly classify the product. Therefore, the conditions necessary to invoke the extended period are not satisfied. The extended period of limitation cannot be invoked, and consequently, penalty under section 11AC is also not invokable - Penalty under Rule 25 and Confiscation - Whether penalty under Rule 25 and confiscation of immovable and movable property can be sustained when the extended period of limitation is not invokable – HELD – Penalty under Rule 25 read with section 11AC and confiscation of plant, building, machinery, materials, and conveyance cannot be sustained. The appellant's submission that Rule 25 does not empower confiscation of immovable property and that separate order for confiscation is not tenable when extended period cannot be invoked is correct. Since extended period cannot be invoked and the appellant's action was bonafide, the imposition of penalty under Rule 25 based on the extended period is not sustainable - Personal Penalty on Partner Under Rule 26 - Whether personal penalty can be imposed on the partner under Rule 26 when the firm itself has not been found to have committed any deliberate contravention and the action is bonafide – HELD - Since the appellant's conduct was bonafide and based on a reasonable interpretation of the applicable tariff headings, the imposition of personal penalty on the partner is not justified - Service Tax on Erection, Commissioning and Installation Service - Levy of service tax on erection, commissioning and installation activities performed at the buyer's premises - Whether service tax is leviable on the activities of erection, commissioning and installation of wire mesh performed by the appellant at the poultry farm premises – HELD - Service tax is leviable on such erection, commissioning and installation activities. The appellant was clearly engaged in doing certain erection, installation and commissioning work at the poultry farms, and therefore, as held by the adjudicating authority, such activities squarely fall under the category of erection, commissioning and installation service. The levy of service tax on such activities is justified and sustainable. The demand of service tax and penalty under section 78 is upheld.
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