2015 (3) TMI 999 - AT - Central Excise

Waiver of pre deposit - Denial of exemption claim - parts of air conditioning machines of Heading 84.15 - Notification no.6/2000-CE - Held that - appellant have manufactured and supplied only the compressors, blowers and condensers. As held by the Tribunal in the case of Behr India (2006 (8) TMI 427 - CESTAT, MUMBAI) and Keihin Panalfa Ltd. (2002 (12) TMI 268 - CEGAT, NEW DELHI) for the purpose of Notification no.6/2000-CE dated 1.3.2000 (Sl.No.212-A) as amended and its successor notifications, it is the parts manufactured and supplied by a manufacturer which have to be taken into account and not the parts which were not manufactured and supplied as trading activity. Thus, the Appellant cannot be treated as having supplied complete airconditioning machines to M/s Daewoo Motors. Similarly in respect of the supply to M/s General Motors, the appellant have manufactured and supplied all the parts except the compressors and blowers which were imported and supplied separately from the trading premises. Therefore, in respect of the supplies to M/s General Motors also, it cannot be said that the appellant have supplied complete air conditioner machines in CKD condition. It is also seen that the appellant have placed on record invoices under which the traded items were supplied and from the perusal of these invoices, it is seen that these invoices were issued as registered dealer and the trading premises were at a place different from the location of the factor. - prima-facie view that the impugned order denying the benefit of the exemption notification no.6/2000-CE dated 1.3.2000 as amended and its successor notification is not correct and the appellant have strong prima facie case in their favour. Therefore, the requirement of pre-deposit of duty demand, and interest is waived for hearing of the appeal and recovery thereof is stayed - Stay granted.

Issues Involved:
1. Eligibility for exemption under Notification No. 6/2000-CE and its successor notifications.
2. Classification of goods supplied as parts or complete air conditioning machines in SKD/CKD condition.
3. Interpretation of Board's Circular No. 666/57/2002-CE dated 25.09.2002.
4. Requirement of pre-deposit of duty demand and interest for hearing the appeal.

Detailed Analysis:

1. Eligibility for Exemption under Notification No. 6/2000-CE and its Successor Notifications:
The appellant, manufacturers of parts/components of car air conditioners, claimed exemption under Notification No. 6/2000-CE (Sl. No. 212 A) and its successor notifications, which prescribed a nil rate of duty for "parts" of air conditioning machines. The department contended that the appellant supplied complete air conditioning machines in SKD condition to M/s. Daewoo Motors India Ltd. and M/s. General Motors India Ltd., thus not eligible for the exemption as the notifications exempted only parts, not complete machines.

2. Classification of Goods Supplied as Parts or Complete Air Conditioning Machines in SKD/CKD Condition:
The appellant argued that they manufactured only certain parts (compressors, blowers, and condensers) and imported others (heater evaporators) supplied from a different trading premises. For M/s. General Motors, they manufactured all parts except condensers and blowers, which were imported and supplied from the trading premises. The department, relying on Interpretory Rule 2(a) of the Central Excise Tariff, treated the goods as complete air conditioning machines in SKD condition, thereby denying the exemption.

3. Interpretation of Board's Circular No. 666/57/2002-CE dated 25.09.2002:
The appellant cited the Board's Circular No. 666/57/2002-CE, which clarified that for the exemption notification, the manufacturer would be considered to have supplied complete air conditioning machines only if the goods comprised all essential components like evaporator, condenser, motor, fan or blower, compressor, and capillary line. The tribunal in previous cases (Behr India Ltd. and Keihin Panalfa Ltd.) had held that a manufacturer supplying some components and purchasing others from the market could not be considered to have supplied complete air conditioning machines in CKD/SKD condition. The Commissioner, however, held that the appellant supplied complete machines, relying on a letter from the appellant stating that items not manufactured were supplied under manufacturing invoices.

4. Requirement of Pre-deposit of Duty Demand and Interest for Hearing the Appeal:
The tribunal found that the appellant had a strong prima facie case. The goods supplied to M/s. Daewoo Motors and M/s. General Motors were parts, not complete air conditioning machines, as the appellant did not manufacture all components and some were supplied from a different trading premises without taking Cenvat credit. The tribunal noted that the Commissioner had not correctly applied the Board's Circular and previous tribunal judgments. Consequently, the tribunal waived the requirement of pre-deposit of duty demand and interest for hearing the appeal and stayed the recovery.

Conclusion:
The tribunal concluded that the appellant was eligible for the exemption under Notification No. 6/2000-CE and its successor notifications, as they supplied parts and not complete air conditioning machines in SKD/CKD condition. The tribunal found the appellant had a strong prima facie case and waived the pre-deposit requirement, allowing the stay application.

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