Aluminium Mushroom Racks Are Taxable ‘Structures’, Not Customs Duty Free Parts of Agricultural Machinery: Supreme Court

The Supreme Court has held that aluminium shelving used in mushroom cultivation cannot be classified as “parts of agricultural machinery” and must instead be treated as aluminium structures liable to customs duty. The bench of Justice J.B. Pardiwala and Justice R. Mahadevan has overturns an order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), which had earlier granted duty exemption to the importer. The case arose from the import of aluminium shelving systems by M/s Welkin Foods for use in mushroom cultivation. Along with the shelving, the importer also brought in floor drains and an automatic watering system, declaring all items under Customs Tariff Item (CTI) 84369900 as “parts of agricultural machinery”, a category attracting nil customs duty. While customs authorities accepted the classification of the floor drains and watering system, an audit objection was raised regarding the aluminium shelving. The department contended that the shelves were essentially aluminium structures, classifiable under CTI 76109010, attracting multiple duties including basic customs duty, countervailing duty, cess and additional customs duty. This reclassification resulted in a demand of over ₹21 lakh, which was confirmed by the adjudicating authority and upheld by the Commissioner (Appeals). CESTAT, however, took a different view. It held that the aluminium shelving was specifically designed for mushroom cultivation, could not be used for any other purpose, and was known in trade parlance as “mushroom growing racks”. Relying on end-use, integration with other equipment, and the principle that specific tariff entries override general ones, the tribunal classified the goods under Chapter 84 as parts of agricultural machinery. Aggrieved by this decision, the Customs Department approached the Supreme Court. The central question before the Court was whether aluminium mushroom-growing shelves should be classified as: “Parts of agricultural machinery” under Chapter 84 (CTI 84369900), or “Aluminium structures” under Chapter 76 (CTI 76109010). A Bench led by Justice J.B. Pardiwala undertook an exhaustive analysis of customs classification principles under the Customs Act, 1962 and the Customs Tariff Act, 1975. The Court emphasised the primacy of General Rule of Interpretation (GRI) 1, which requires classification based strictly on the terms of the tariff headings and relevant section and chapter notes. The court noted that the end-use is generally irrelevant for customs classification unless expressly provided in the tariff. The taxable event occurs at the time of import, and goods must be classified based on their condition as imported. The aluminium shelves, at the time of import, were static structures without moving parts, power transmission, or mechanical function. The court held that merely serving as a base or support on which agricultural machinery is mounted does not convert a structure into a “machine” or a “part of a machine”. The Court relied on settled precedent holding that supporting structures cannot be treated as components of machinery, even if machinery cannot function without them. Harmonised System of Nomenclature (HSN) Explanatory Notes for Chapter 76 clearly include fixed aluminium structures assembled by bolting or welding—features present in the imported shelves. The Supreme Court rejected the tribunal’s reliance on common or trade parlance, noting that where tariff entries are clear and unambiguous, such tests are unnecessary. It also declined to accept the argument that essentiality for mushroom cultivation was sufficient to bring the shelves within Chapter 84. The Court clarified that “essential for use” is not the same as “part of a machine”, and warned against stretching the scope of agricultural machinery to include every ancillary or supporting item used in farming operations. The Supreme Court held that aluminium mushroom-growing shelves are classifiable as “aluminium structures” under CTI 76109010. The earlier CESTAT ruling was legally unsustainable. The customs duty demand raised against the importer was valid. Case Details Case Title: Commissioner Of Customs (Import) Versus M/S Welkin Foods Case No.: CIVIL APPEAL NO. 5531 OF 2025 Date: 06/01/2026 Click Here To Read Order Read More: Supreme Court Upholds Validity of Consolidated GST SCN in Fraudulent ITC Cases

Aluminium Mushroom Racks Are Taxable ‘Structures’, Not Customs Duty Free Parts of Agricultural Machinery: Supreme Court

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