2009 (2) TMI 165 - AT - Central Excise

Parts of Air conditioner classification - cooling coils and condensing coils of air-conditioners - Notification No. 22/2000-CE dated 6-3-2000 - Board Circular No. 666/57/2000-CX., dated 25-9-2002 held that - components which are required for completion of one refrigeration cycle have to be considered as essential parts - coil and condensing coil are parts of an A.C - demand is clearly hit by bar of limitation inasmuch as the notice were issued after a normal period - The appellants have been filing declaration and classification list indicating availment of exemption Notification in respect of the above parts. As such, we are of the view that demand is hit by bar of limitation

Summary

Issues:
1. Classification of cooling coils and condensing coils of air-conditioners as parts of air-conditioners for the benefit of Notification No. 22/2000-CE.
2. Application of Circular No. 666/57/2000-CX regarding the classification of assembly or sub-assembly as parts.
3. Extension of benefit to various parts of air-conditioner machines based on previous judgments.
4. Bar of limitation on the demand due to delayed issuance of notices.

Analysis:

1. The main issue in this case was the classification of cooling coils and condensing coils of air-conditioners as parts of air-conditioners to avail the benefit of Notification No. 22/2000-CE. The lower authorities had held that these coils were not parts but complete air-conditioners, leading to a duty confirmation against the appellant. However, the Tribunal referred to Circular No. 666/57/2000-CX, which recognized assembly or sub-assembly as parts in previous judgments. Citing relevant case laws, it was established that components essential for the functioning of the air-conditioner should be considered parts. Consequently, the Tribunal set aside the impugned order and allowed the appeal on merits.

2. The application of Circular No. 666/57/2000-CX played a crucial role in the decision. The Circular highlighted previous Tribunal decisions, such as M/s. Seagull Fabricators Pvt. Ltd. and Universal Commercial Corporation cases, which emphasized the inclusion of assembly or sub-assembly as parts. The Circular clarified that components necessary for a refrigeration cycle should be deemed essential parts. Based on these precedents and the Circular, the Tribunal concluded that the cooling coil and condensing coil are indeed parts of an air-conditioner, overturning the lower authorities' decision.

3. Additionally, the Tribunal noted that in a previous case involving Behr India Ltd., the benefit of classification as parts had been extended to various components of air-conditioner machines. This further supported the Tribunal's decision to classify the cooling coils and condensing coils as parts, aligning with the principles established in earlier judgments and circulars.

4. Finally, the Tribunal addressed the issue of limitation on the demand raised by delayed issuance of notices. It was observed that the demand was time-barred as the notices were issued after the normal period. The appellants had consistently filed declarations and classification lists indicating the exemption notification, leading the Tribunal to conclude that the demand was indeed hit by the bar of limitation. As a result, the impugned order was set aside, and the appeal was allowed with consequential relief to the appellant.