2008 (1) TMI 114 - AT - Central Excise

Classification - section line assembly, liquid line assembly, charging line, header, capillary, strainer assembly etc. which are used in manufacture of air conditioner revenue seek to classify them u/ch 84 as parts of A.C. machine but assessee claim CH 74 as being copper pipe fittings in view of chapter notes/section notes, held that parts of general use , even if specifically manufactured for use of AC as per the requirement of the sizes and other dimensions, would fall u/c 74

Summary

Issues:
Classification of goods under CETA, 1985 - Chapter Heading 74 vs. Chapter Heading 84.

Analysis:
The dispute in the present appeal revolves around the classification of goods manufactured by the appellant, such as section line assembly, liquid line assembly, discharge line assembly, charging line, header, capillary, and strainer assembly, used in air conditioner manufacturing. The appellant claimed classification under Heading 74 of CETA, 1985 as copper pipe fittings, while the Department sought to classify them under Chapter Heading 84 as parts of air conditioning machines. The original adjudicating authority confirmed a duty demand and a personal penalty, which was upheld by the Commissioner (Appeals) except for setting aside the penalty due to the interpretational nature of the tariff entry.

The appellant purchased duty-paid copper tubes, cut them into required sizes, removed foil edges, bent them at various angles, and shapes, joined them using a brazing torch, cleaned them, and closed open ends with plastic caps. The goods were manufactured according to the buyer's specifications, who are air conditioner manufacturers, but the appellant argued that they should still be classified as copper tubes or pipe fittings under Heading 74.10, distinct from air conditioning machine parts under Heading 8415.00.

The Tribunal analyzed the relevant tariff entries and notes, noting that Note 1(g) to Section XV excludes "parts of general use" from Chapter 84, and Heading 74.12 specifically describes goods as copper tubes or pipe fittings. The goods in question were indeed copper tubes and pipe fittings, and manufacturing them to customer specifications did not change their classification. The Tribunal referred to a Board circular and a previous Tribunal order supporting the classification of fittings of copper pipes under Heading 74, even when manufactured for air conditioners.

Relying on a previous Tribunal judgment and the chapter note, the Tribunal concluded that goods considered "parts of general use," even if specifically manufactured for air conditioners, would fall under Chapter 74. Therefore, the impugned order was set aside, and the appeal was allowed in favor of the appellant.