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2009 (1) TMI 125 - AT - Central ExciseQ. 1 Whether Modified Vapour Absorption Chillers (MVAC) are parts of refrigeration/air-conditioning machinery falling under sub-heading 8418.90 as contended by the revenue or Vapour Absorption Heat Pumps falling under Heading 8418/8418.10 as contended by the assessee held that MVAC is classifiable u/sh 84.10 as refrigerating equipment and not u/h 8418.90 Q. 2 whether the value of Lithium bromide is includible in the assessable value of MVAC and whether benefit of abatement u/s 4(4)(d)(ii) of CEA, 1944 is available to it held that Lithium bromide is a bought-out item essential for operation of MVAC but no a part of MVAC so it s value is not includible - as the revenue has not proved that the total price realised by the assessee is not the cum-duty price, the matter requires re-examination by the original authority
Issues Involved:
1. Classification of Modified Vapour Absorption Chillers (MVACs) 2. Inclusion of the value of lithium bromide in the assessable value of MVACs 3. Benefit of abatement under Section 4(4)(d)(ii) of the Central Excise Act, 1944 Issue-wise Detailed Analysis: 1. Classification of Modified Vapour Absorption Chillers (MVACs): The primary issue in Appeal Nos. E/1482/2000 and E/1731/2000 was whether MVACs should be classified under sub-heading 8418.90 as parts of refrigeration/air-conditioning machinery or under Heading 8418/8418.10 as Vapour Absorption Heat Pumps. The Revenue argued that MVACs are parts of refrigeration/air-conditioning machinery, citing that they are used primarily for cooling purposes and have been tested only in cooling mode. The assessee contended that MVACs are complete machines capable of both heating and cooling, thus classifiable as heat pumps. The Tribunal referred to the HSN Explanatory Notes and noted that a heat pump is defined as a device used primarily for heating buildings or providing domestic hot water. The Tribunal concluded that MVACs, used mainly for cooling, could not be classified as heat pumps. They relied on the principle that the principal purpose of a machine determines its classification. The Tribunal held that MVACs should be classified under sub-heading 8418.10 as refrigerating equipment and not as parts under sub-heading 8418.90. The matter was remanded to the jurisdictional authority to re-calculate the duty demand according to this classification. 2. Inclusion of the Value of Lithium Bromide in the Assessable Value of MVACs: In Appeal No. E/819/2000, the issue was whether the value of lithium bromide should be included in the assessable value of MVACs. The Revenue argued that lithium bromide is essential for the operation of MVACs and should be included in their value. The assessee argued that lithium bromide is a bought-out item, distinct from MVACs, and hence its value should not be included. The Tribunal agreed with the assessee, citing the Supreme Court's decision in CCE v. ACER India Ltd., which held that distinct and different goods should not have their values combined for assessable value purposes. The Tribunal concluded that lithium bromide and MVACs are distinct and different goods, and thus the value of lithium bromide should not be included in the assessable value of MVACs. 3. Benefit of Abatement under Section 4(4)(d)(ii) of the Central Excise Act, 1944: The second issue in Appeal No. E/819/2000 was whether the benefit of abatement under Section 4(4)(d)(ii) could be extended for computing the assessable value of MVACs. The Revenue contended that the price quoted by the assessee was not a cum-duty price, and thus the benefit should not be granted. The Tribunal noted that the benefit could only be granted if the price included the excise duty, as per the Supreme Court's decision in Amrit Agro Industries Ltd. The Tribunal found that the factual aspect of whether the price was a cum-duty price had not been verified by the lower authorities. Therefore, the matter was remanded to the original authority for re-examination with reference to the relevant records. The original authority was directed to provide adequate opportunity for the assessee to present their case before passing a fresh order on this issue. Conclusion: The appeals were partly allowed and partly remanded for further examination. The classification of MVACs was determined to be under sub-heading 8418.10 as refrigerating equipment. The value of lithium bromide was excluded from the assessable value of MVACs. The issue of abatement under Section 4(4)(d)(ii) was remanded for re-examination by the original authority.
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