Mushroom growing apparatus cannot be classified as ‘agricultural machinery’

Mushroom growing apparatus cannot be classified as ‘agricultural machinery’ under Customs Tariff Heading 8436.

In a recent judgment, Hon’ble Supreme Court has held that mushroom growing apparatus cannot be classified as ‘agricultural machinery’ under Chapter Heading 8436 under Customs Tariff.

ABCAUS Case Law Citation:
4977 (2026) (01) abcaus.in SC

In the instant appeal, the Commissioner of Customs had challenged the order passed by the CESTAT allowing the appeal and holding that the aluminium shelves imported by the respondent should be classified under Customs Tariff Item 84369900, as ‘parts’ of agricultural machinery, as opposed to Customs Tariff Item 76109010, as aluminium structures.

The respondent initially the declared and classified the Aluminium Shelving for Mushroom Growing, Floor Drain for Mushroom Growing  and Automatic Watering System for Mushroom Growing imported by the respondent company under Custom Tariff Heading 84369900 as ‘parts’ of agricultural machinery.

However, the Audit Scrutiny revealed that the aluminium shelving was a type of aluminium structure and not a ‘part’ of any agricultural machinery & therefore, the revenue ought to have classified the subject goods under CTI 76109010, which would attract a basic customs duty rate of 10%, a countervailing duty rate of 12.5%, customs cess at 3%, and additional customs duty at 4%.

It resulted into a short levy of duty recoverable under Section 28(1) of the Customs Act, 1962, along with interest under Section 28AA of the Act, 1962.

However, CESTAT disagreed and allowed the appeal of the respondent company. relied on the following aspects of the matter: (i) the respondent is involved in mushroom cultivation and got the subject goods imported from a party who exclusively deals in structures specific to the mushroom cultivation industry; (ii) the subject goods are specifically designed to integrate with other machinery used in mushroom cultivation and are not simply aluminium shelves but mechanical appliances used for agricultural purposes; (iii) the subject goods are essential for mushroom growing and are designed as part of the mushroom growing apparatus; (iv) the subject goods cannot be used as aluminium structures for any purpose other than their specific use in the mushroom growing industry; (v) in common trade parlance, the subject goods are known not as mere aluminium racks but as mushroom growing racks; and (vi) Chapter 76 covers all aluminium structures generally, whereas Chapter 84 specifically pertains to any machine or device made of metal used for agricultural purposes.

Thus, the question before Hon’ble Supreme Court was whether the subject goods should be classified under CTI 76109010 as ‘Aluminium Structures’ or under CTI 84369900 as ‘Parts of Agricultural Machinery.

The Hon’ble Supreme Court observed that to be classified under CTI 76109010, the subject goods need to fulfil a two-part criterion: first, they must be made of aluminium, and secondly, they must be a structure or part of such a structure. On the basis of examining the objective characteristics and properties of the subject goods, it is evident that the subject goods fulfil both the characteristics and thus can be classified under CTI 76109010 as aluminium structures. However, both Section Note 1(f) to Section XV and the Explanatory Note to Chapter Heading 7610, respectively, are clear: (1) goods classifiable under Section XVI are excluded from being classified under Section XV, and (2) assemblies identifiable as parts of articles of Chapters 84 to 88 respectively, are excluded from being classified under the heading 7610. Therefore, if the respondent’s classification of the goods as “parts of agricultural machinery” is accepted, the goods would be legally barred from classification under Chapter Heading CTI 7610901.

The Hon’ble Supreme Court observed that Chapter Heading 8436 is an eo nomine provision as it refers to goods by their name: ‘agricultural machinery’. However, it is undeniable that the term ‘agricultural machinery’ inherently refers to ‘use’, i.e, machinery whose principal use is in agricultural processes.

The Hon’ble Supreme Court further noted that for the subject goods to be classified under the CTI 84369900, once again, a two-fold criterion needs to be fulfilled: (i) there needs to be agricultural machinery, i.e., a machinery whose principal use is in the agricultural process, and (ii) the subject goods ought to be considered as ‘parts’ of such agricultural machinery. 

The Hon’ble Supreme Court observed that the “mushroom growing apparatus” seems to be a combination of various separate machines. However, on applying the relevant section notes and Explanatory Notes, it appears to us that mushroom growing apparatus does not qualify as: (i) a composite machine, as different machines are not meant to be fitted together permanently, or (ii) a functional unit, because all the machines do not appear to work together towards a single, clearly defined function. Rather, each machine, i.e., the head filling machine, the automatic watering system, and the compost spreading equipment, seems to perform its own independent task. The only common element is that they are all part of the broader mushroom cultivation process, which is different from fulfilling a specific, unified function. Thus, mushroom growing apparatus cannot be classified as ‘agricultural machinery’ under Chapter Heading 8436.

The Hon’ble Supreme Court also held that the goods in question were also not parts of the machines with which they are integrated post-importation. All of the individual machines were already complete and fully operational on their own, i.e, their mechanical and electrical functions did not rely on the aluminium shelves. These shelves did not contribute to their operation; they merely served as a surface for the devices to perform their functions. A surface supports an object but does not become a part of it.

Accordingly, the appeal was allowed and the impugned Judgment and Order passed by the CESTAT was set aside.

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