SC: Mushroom-Growing Aluminium Shelves Are “Structures”, Not Agricultural Machinery Parts

M/s Welkin Foods imported aluminium shelving units specially designed for mushroom cultivation, with an automatic watering system and floor drainage equipment. The Customs authorities accepted the classification of the watering system and drains as “parts of agricultural machinery” under CTI 84369900, but disputed the classification of the aluminium shelves. The Revenue held that the shelves were classifiable as “Aluminum Structures” under CTI 76109010, attracting a higher rate of duty.

The Adjudicating Authority and the First Appellate Authority upheld the Revenue’s view. However, the CESTAT allowed the importer’s appeal, holding that the shelves were classifiable as agricultural machinery parts based on their end-use and common trade parlance. Aggrieved, the Revenue carried the matter to the Supreme Court.

Issue Before SC: Whether aluminum shelving units specifically designed for use in mushroom cultivation are classifiable as “Parts of Agricultural Machinery” under CTI 84369900 or as “Aluminium Structures” under CTI 76109010.

SC Held: The Supreme Court allowed the Revenue’s appeal and set aside the CESTAT’s order. The Court said that classification under the Customs Tariff must be determined based on the condition of goods at the time of import. It held that the aluminum shelves, being stationary items without any mechanical or moving parts, did not qualify as a “machine” or as “parts” of agricultural machinery.

The Court clarified that end-use is relevant only when expressly incorporated in the tariff entry, which was not the case here. It further held that the common parlance test cannot override the General Rules of Interpretation or the HSN Explanatory Notes when the Indian tariff is fully aligned with the HSN. Since the shelves functioned merely as fixed support structures, they fell within the HSN description of “Aluminium Structures” under CTI 76109010.

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