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Issues: Classification of Industrial Cooling Unit under Heading 8418.69 or 84.15 for Notification No. 61/94 benefit.
The dispute in the appeal revolved around the classification of the Industrial Cooling Unit imported by the appellants. The issue was whether the unit should be classified under Heading 8418.69 as refrigerating equipment, thus qualifying for the benefit of Notification No. 61/94, or under Heading 84.15 as an Air Conditioning unit, as contended by the Revenue. The appellants argued that the unit had the basic characteristics of an air conditioning machine but did not meet the criteria specified for air conditioning machines. They emphasized that the unit's freezing point was below the comfort air conditioning level, and it lacked arrangements for controlling humidity, which was a requirement for air conditioning machines under CTH 84.15. The appellate authority referred to HSN explanatory notes and held that the unit fell under Heading 84.15, which covers apparatus changing humidity by condensation. The Board's Circular No. 242-76-96-CX dated 3-9-96 was crucial in the judgment. The Circular clarified that units like the one in question were classifiable as refrigerating appliances. It highlighted that freezers and freezing equipment, including refrigerators maintained at sub-zero temperatures, were essentially refrigerators working on the mechanism of refrigeration. The Circular referenced the HSN explanatory notes and the Conference of Delhi Zone Collectors of Central Excise, which concluded that freezers were covered by specific notifications. The Board's position was that freezers and freezing equipment falling under Heading 84.18 were considered "other refrigerating appliances and machinery," making them eligible for certain duty exemptions. The judgment emphasized that the revenue could not dispute the Board's clarification, and based on the Circular's guidance, the impugned order was set aside, and the appeal was allowed in favor of the appellants.
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