Commissioner Of Customs (Import) vs. M/s Welkin Foods [Civil Appeal No. 5531 Of 2025] Dated 06 January 2026

SC held that a structural article does not acquire the character of a machine part solely based on intended or exclusive use, reaffirming the primacy of objective characteristics in customs classification.

BRIEF FACTS OF THE CASE

• The Respondent engaged in the business of mushroom cultivation, imported items such as aluminium shelving, along with a floor drain and an automatic watering system and declared and classified all three items under Customs Tariff Item (CTI) 84369900, which pertains to 'Parts of Agricultural Machinery' and attracts a NIL rate of customs duty.
• Upon audit scrutiny, the Customs Department accepted the classification of floor drains and watering system under CTI 84369900 but contended that the aluminium shelving should be classified under CTI 76109010 as 'Aluminium Structures', attracting 10% Basic Customs Duty, Countervailing Duty at 12.5%, Customs Cess at 3%, and Additional Customs Duty at 4%.
• The lower authorities held that the aluminium shelving was a structure to be fixed at a location and fell under CTI 76109010. It was noted that CTH 7610 covers all aluminium structures, regardless of end use. The goods, however, lacked the machine characteristics necessary for CTI 8436, and CTI 8436 does not encompass every component used in mushroom cultivation and confirming the demand with interest. The first Appellate authority further held that the goods could not be classified under Chapter 8436 merely because they integrate with other machinery.
• The Respondent preferred an appeal before the CESTAT, New Delhi, and the CESTAT allowed the Respondent's appeal and reversed the decision of the lower authorities and classified the goods under CTH 84369900. The Tribunal held that the shelving was specifically designed for mushroom cultivation, imported from a specialised supplier, and could not be used for any other purpose. The CESTAT noted that other imported items (drains and watering systems) accepted as CTI 84369900 must be integrated onto these shelves, which are designed with specifications permitting such integration. Applying the common trade parlance test, the Tribunal held that the goods are known as "mushroom growing racks", not generic aluminium structures. The CESTAT reasoned that Chapter 76 is generic for aluminium structures while Chapter 84 is specific for agricultural machinery, and since mushroom cultivation is an agricultural activity, the goods are mechanical appliances for agricultural purposes. The Tribunal classified the aluminium shelving under CTI 84369900 by applying General Rule of Interpretation 3 (GRI 3), holding that the more specific heading (Chapter 84 for agricultural machinery) should be preferred over the generic heading (Chapter 76 for aluminium structures). BRIEF FACTS OF THE CASE SC held that a structural article does not acquire the character of a machine part solely based on intended or exclusive use, reaffirming the primacy of objective characteristics in customs classification. KEY OBSERVATIONS OF THE HON'BLE BOMBAY HIGH COURT
• Being aggrieved by the CESTAT order, the Department filed the appeal before the Hon'ble Supreme Court and issue under consideration was whether the aluminium shelving imported by the Respondent should be classified as 'Aluminium Structures' under CTI 76109010 (attracting 10% basic customs duty plus other duties) or as 'Parts of Agricultural Machinery' under CTI 84369900 (attracting NIL duty)

KEY OBSERVATIONS OF THE HON'BLE BOMBAY HIGH COURT

• The Hon'ble Supreme Court held that Chapter Heading 7610 is an eo nomine provision describing goods by their name without reference to use. Upon examining the objective characteristics and properties of aluminium shelving based on the Explanatory Notes, the Court found that the aluminium shelving fulfils all defining features of 'structures' as they remain in the same position once assembled, are composed of various prepared components joined by riveting, bolting, or welding, and feature protuberances with tapped holes for assembly. Therefore, the aluminium shelving is classifiable under CTH 76109010 as Aluminium Structures.
• The Court rejected the respondent's contention that the goods should be classified as 'parts of agricultural machinery' under CTH 84369900. For classification under Chapter Heading 8436, a two-fold criterion must be fulfilled: first, there must be agricultural machinery (machinery whose principal use is in an agricultural process), and second, the subject goods must be 'parts' of such machinery. The Court found that the "mushroom growing apparatus" does not qualify as 'machinery' as it is neither a composite machine (different machines not meant to be fitted together permanently) nor a functional unit (machines that work together towards a single, clearly defined function). Each component was held to perform its own independent task, with the only common element being its role in the broader mushroom cultivation process.
• The Court held that the aluminium shelving failed to qualify as 'parts' of the machines with which they are integrated post-importation. A "part" is an integral component essential to the article's completeness and functionality. The aluminium shelves do not meet this standard as each component/unit is self-contained and fully operational on its own. The mechanical and electrical functions of the machines do not rely on the aluminium shelves, which merely serve as a surface for the devices to perform their functions. The Court illustrated this with an analogy: a car needs a road to operate, but the road is not a 'part' of the car.
• The Court rejected the Respondent's reliance on Section Note 5 of Section XVI, which defines the term 'machines', clarifying that the definition is limited to the purposes of section notes and does not modify or broaden the scope of tariff headings themselves. If a specific heading refers solely to 'machinery', its scope is limited to 'machinery' and cannot encompass other types of goods like 'plant'. The Court emphasised that tariff headings must be interpreted strictly, and words cannot be added or omitted based on section notes meant only for interpretative purposes.
• The Hon'ble Supreme Court held that Chapter Heading 7610 is an eo nomine provision describing goods by their name without reference to use. Upon examining the objective characteristics and properties of aluminium shelving based on the Explanatory Notes, the Court found that the aluminium shelving fulfils all defining features of 'structures' as they remain in the same position once assembled, are composed of various prepared components joined by riveting, bolting, or welding, and feature protuberances with tapped holes for assembly. Therefore, the aluminium shelving is classifiable under CTH 76109010 as Aluminium Structures.
• The Court rejected the respondent's contention that the goods should be classified as 'parts of agricultural machinery' under CTH 84369900. For classification under Chapter Heading 8436, a two-fold criterion must be fulfilled: first, there must be agricultural machinery (machinery whose principal use is in an agricultural process), and second, the subject goods must be 'parts' of such machinery. The Court found that the "mushroom growing apparatus" does not qualify as 'machinery' as it is neither a composite machine (different machines not meant to be fitted together permanently) nor a functional unit (machines that work together towards a single, clearly defined function). Each component was held to perform its own independent task, with the only common element being its role in the broader mushroom cultivation process.
• The Court held that the aluminium shelving failed to qualify as 'parts' of the machines with which they are integrated post-importation. A "part" is an integral component essential to the article's completeness and functionality. The aluminium shelves do not meet this standard as each component/unit is self-contained and fully operational on its own. The mechanical and electrical functions of the machines do not rely on the aluminium shelves, which merely serve as a surface for the devices to perform their functions. The Court illustrated this with an analogy: a car needs a road to operate, but the road is not a 'part' of the car.
• The Court rejected the Respondent's reliance on Section Note 5 of Section XVI, which defines the term 'machines', clarifying that the definition is limited to the purposes of section notes and does not modify or broaden the scope of tariff headings themselves. If a specific heading refers solely to 'machinery', its scope is limited to 'machinery' and cannot encompass other types of goods like 'plant'. The Court emphasised that tariff headings must be interpreted strictly, and words cannot be added or omitted based on section notes meant only for interpretative purposes

AURTUS COMMENT

• The classification of goods, particularly parts, has long been contentious. Judicial precedents have identified several determining factors, including the manner of import, the condition of parts or kits at the time of import, the type of parts, and their intended use. Some decisions, such as Secure Meters Ltd. ¹ , have discarded the sole/principal use test and held that parts or accessories constituting an "article" under a specific heading must be classified under that heading. Conversely, in Westinghouse Saxby² , the Supreme Court held that the sole/principal use test takes precedence over exclusions created by chapter notes. The Court reasoned that where items, even if covered by exclusions, are suitable solely or principally for use with a main article, they must be classified along with that article; otherwise, the very purpose of group classification would be defeated. The distinguishing factor has always been whether the component/ item under consideration is tailor-made or specifically designed for a particular piece of machinery, and the scope of the exclusions created by the notes.
• A key reason the Supreme Court rejected the classification of certain goods as mere parts was the application of the eo nomine principle. This principle holds that if goods are specifically described and named under a particular chapter heading, they must be classified accordingly, rather than by reference to their ultimate intended use. That said, eo nomine is essentially a narrower reflection of Rule 1 of the General Rules of Interpretation (GRI) and applies only where goods are expressly identified in the tariff headings. In practice, however, most chapter headings use broad, generic terms that may not fully capture evolving technological developments. In such cases, a more nuanced approach is required—one that relies on classification by essential character, intended use, or analogy.

Footnotes

1 (2006) 145 STC 523

2 (2000) 119 STC 182

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