The courtroom was quiet when the Bench began reading out its verdict. At the heart of the dispute was a simple-looking product-aluminium shelves used for mushroom cultivation-but the legal question behind it carried serious revenue implications. The Supreme Court was asked to decide whether these shelves were merely aluminium structures or parts of agricultural machinery entitled to duty exemption.
Background of the Case
The appeal was filed by the Commissioner of Customs (Import) against M/s Welkin Foods, a company engaged in mushroom farming.
Welkin Foods had imported aluminium shelving systems, along with floor drains and an automatic watering system, for use in mushroom growing units. While the drains and watering system were accepted as parts of agricultural machinery, the customs department took a different view on the aluminium shelves.
According to the department, the shelves were generic aluminium structures, attracting multiple layers of customs duty. This reclassification led to a demand of over ₹21 lakh in alleged short-paid duty.
The company challenged the demand, but both the adjudicating authority and the appellate commissioner sided with customs. Relief finally came from the Customs, Excise and Service Tax Appellate Tribunal, which ruled in favour of the importer. Customs then carried the matter to the apex court.
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Customs officials argued that classification must be decided at the time of import, not based on how goods are later used. The aluminium shelves, they said, had no moving parts and could not qualify as machines or even parts of machines. Relying on tariff rules and past judgments, the department insisted the shelves were fixed structures made of aluminium.
Welkin Foods countered that the shelves were specially designed for mushroom cultivation. They were not ordinary racks but integral to a mechanised farming setup, used only after being fitted with climate control, watering, and compost-spreading equipment. In common trade language, the company said, these were known as “mushroom growing racks,” not construction material.
Court’s Observations
The Bench closely examined the customs tariff rules, known as the General Rules for Interpretation. It also considered how goods are understood in trade and whether end-use can ever be relevant.
“The Court noted that classification disputes cannot be decided mechanically,” the judgment records. “The structure, design, and functional role of the goods must be examined in context.”
Importantly, the Bench rejected the idea that end-use is always irrelevant. It clarified that where tariff entries themselves refer to function or use, those factors cannot be ignored.
The judges also relied on the common trade understanding of the product. The aluminium shelves, the Court observed, were designed exclusively for mushroom farming and had no alternative commercial use.
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The Decision
Upholding the CESTAT ruling, the Supreme Court held that the aluminium shelving systems were correctly classified as parts of agricultural machinery under the relevant tariff heading.
“The subject goods are not mere aluminium structures,” the Bench observed, adding that they form an essential part of a mushroom-growing apparatus. As a result, the appeal filed by the customs department was dismissed, and the duty demand was set aside.
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The judgment brings clarity to classification disputes involving specialised agricultural equipment and reinforces that form, function, and trade understanding all matter in customs law.
Case Title: Commissioner of Customs (Import) vs M/s Welkin Foods
Case No.: Civil Appeal No. 5531 of 2025
Case Type: Customs Classification Dispute
Decision Date: 6 January 2026
