2001 (10) TMI 607 - AT - Central Excise

Summary

Issues:
Classification of items Heater and Blower Assembly (HBA) and Duct Assembly Intake (DAI) under Chapter Heading 84.15 of the Central Excise Tariff Act instead of Chapter Heading 84.08 as parts of Motor Vehicles.

Analysis:
The appellants contended that the items should be classified under Chapter Heading 87.08 as parts of motor vehicles, not as parts of air conditioners under Chapter Heading 84.15. They argued that the items are independent parts of motor vehicles, not specifically related to air conditioning machines. They relied on the Explanatory Notes of HSN under Chapter 87.08 to support their classification. The appellants emphasized that the items function to conduct air (hot or cool) and are not directly linked to air conditioning systems. They highlighted technical literature and materials to demonstrate that the items are indeed parts of motor vehicles, not air conditioners.

The Revenue, on the other hand, argued that the items function in conjunction with car air conditioners and are designed to work with them, enabling the control of temperature inside the car. They contended that the items are integral parts of car air conditioners and should be classified accordingly. The Revenue maintained that the procedures for re-classification were correctly followed, and there was no error in the original order.

Upon careful consideration, the Tribunal found merit in the appellants' arguments. They observed that the items were initially classified as parts of motor vehicles under Chapter 87.08 both before and after the show cause notice. The Tribunal noted that the appellants provided technical literature and evidence showing the independent function of the items, not directly related to air conditioners. They highlighted that the items were utilized in non-AC cars as well. The Tribunal emphasized that classification should be based on the function of the item, technical literature, and expert opinions. They concluded that the items expelling hot air temperature from the engine should be classified as parts of motor vehicles under Section XVII, not as parts of air conditioners.

Therefore, the Tribunal set aside the original orders and remanded the matter back to the original authority for re-consideration. The appellants were granted the opportunity to demonstrate that the items are parts of motor vehicles, not air conditioners. The original authority was directed to consider the appellants' evidence, get the items examined by experts, and pass a detailed speaking order while adhering to the principles of Natural Justice. The Appeals were allowed for de novo consideration.