2002 (7) TMI 610 - AT - Central Excise

Issues: Application for waiver of pre-deposit of Special Excise duty and penalty.

Analysis:
1. Classification of goods: The appellant, a manufacturer of car air-conditioner parts, sought waiver of pre-deposit for Special Excise duty and penalty. They argued that the parts supplied by them, classified under Heading 84.15, qualify for exemption under Notification No. 6/2000-Central Excise. The Adjudicating Authority disagreed, considering the goods as sub-assemblies of car air-conditioners, not parts. The appellant contended that the definition of 'parts' in the EXIM Policy cannot be applied to the Central Excise Tariff. They cited precedent (Seagull Fabricators Pvt. Ltd. v. CCE) where even sub-assemblies were considered 'parts' under the Tariff. The appellant emphasized that their goods lack essential air-conditioning machine characteristics, like a motor-driven fan, and are not complete air-conditioners, as per CCE v. Subros Ltd.

2. Legal arguments: The appellant's counsel highlighted that the goods in question are not classified as air-conditioning machines under Heading 84.15 due to the absence of a motor-driven fan, as per precedent. They argued that if the items are not parts of air-conditioning machines, they should not be charged Special Excise Duty under Heading 84.15. Additionally, they noted that Section Note 4 to Section XVI applies only when the entire machine is presented for assessment, not individual parts. The appellant's counsel made a strong case for waiver based on legal interpretations and precedents.

3. Opposing views: The Departmental Representative opposed the waiver, arguing that the goods, being in assembly form, cannot be considered 'parts' and cited the definition of 'parts' in the EXIM Policy. They referenced a case (Universal Commercial Corporation v. CC, Delhi) where imported goods declared as 'Condensing Unit' were deemed incomplete air-conditioning machines. The representative contended that the matter is debatable and relied on the distinction between 'parts' and 'sub-assemblies.'

4. Tribunal's decision: The Tribunal considered both parties' submissions and observed that the appellant manufactures sub-assemblies, not complete air-conditioners. The Tribunal noted that the Adjudicating Authority did not apply Rule 2(a) of Interpretative Rules to classify the sub-assemblies as complete air-conditioners. Citing the precedent of Sea Gull Fabricators Pvt. Ltd., the Tribunal agreed with the appellant's interpretation that the goods should be considered 'parts' under the Tariff. Therefore, the Tribunal found a strong prima facie case in favor of the appellant for waiving the pre-deposit requirement of duty and penalty, ordering a stay on recovery during the appeal process.

5. Conclusion: The Tribunal's decision favored the appellant, acknowledging their arguments regarding the classification of goods as 'parts' under the Central Excise Tariff. The case was scheduled for regular hearing, with the Tribunal granting a stay on the recovery of duty and penalty pending the appeal. The detailed legal analysis and reliance on precedents contributed to the Tribunal's decision in favor of the appellant.

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