2008 (2) TMI 394 - AT - Central Excise

Assessee is contesting special excise duty on the grounds that the goods manufactured and cleared are in fact the parts of the air-conditioning machines (not air-conditioning machines as alleged) because it is not equipped with the motor driven fans and blowers to change temperature and humidity therefore the goods cannot be subjected to special excise duty in view of Notification No. 22/2000 - revenue s contention is that condensing units should be considered as air-conditioners is not appropriate assessee s contention is accepted

Summary

Issues:
Classification of condensing units as air-conditioning machines under Notification No. 22/2000 - Demand of special excise duty - Mis-declaration of parts of air-conditioning units as air-conditioners.

Analysis:
1. The appeal by the Department against the order of the Commissioner (Appeals) focused on the classification of condensing units as air-conditioning machines under Notification No. 22/2000. The Original Authority held that the condensing units should be classified as 'complete air-conditioners' as they have the essential character of air-conditioners. However, the Commissioner (Appeals) upheld the claim of the party that the clearances as parts of air-conditioning machines cannot be considered as air-conditioners, setting aside the demand of special excise duty amounting to Rs. 5,12,740.

2. The Department argued that condensing units should be classified as air-conditioning machines as per Rule 2A of the Interpretative Rules, citing a previous case. However, the Commissioner (Appeals) found that the goods manufactured and cleared by the party are parts of air-conditioning machines, not air-conditioning machines themselves, as they lack motor-driven fans and blowers to change temperature and humidity. The Commissioner also referred to a CBEC circular supporting the classification of the goods as parts of air-conditioning machines.

3. The Commissioner (Appeals) analyzed the Central Excise Tariff Act, noting that the subject goods do not meet the description of air-conditioning machines under chapter heading 84.15. The Commissioner found that the goods were manufactured without motor-driven fans and elements for changing temperature and humidity, thus not falling under the category of air-conditioning machines. Statements from buyers were considered, but the Commissioner emphasized that these cannot override statutory provisions.

4. The Tribunal rejected the Department's appeal, emphasizing that the condensing units cleared by the party should be assessed in their presented condition, not equated with air-conditioners. The Tribunal found no reliable evidence to support the mis-declaration allegations, stating that the demand of duty based on mis-declaration of parts of air-conditioners as air-conditioners was not sustainable. Therefore, the order of the Commissioner (Appeals) was upheld, and the appeal by the Department was rejected.