1986 (10) TMI 44 - HC - Central Excise

Issues Involved
1. Whether the "Ice Cream Combination Cooler" attracts Excise duty under Tariff Item 29A of the Central Excises and Salt Act, 1944.
2. Interpretation of the term "ordinarily sold or offered for sale as ready assembled units" under Tariff Item 29A.
3. Consistency in the interpretation of tariff entries by Departmental authorities and the Board of Revenue.

Issue-wise Detailed Analysis

1. Whether the "Ice Cream Combination Cooler" attracts Excise duty under Tariff Item 29A of the Central Excises and Salt Act, 1944:

The writ petitioner installed an Ice Cream Combination Cooler at the Indian Coffee House in Calicut in 1976. The unit was assembled from parts purchased from the open market and those manufactured by the petitioner-firm. The Department assessed this unit under Tariff Item 29A of the Central Excises and Salt Act, 1944. The Government, in revision, confirmed the assessment, reasoning that whether such appliances are manufactured at the factory premises or assembled on-site, they are liable to duty under sub-item (1) of Item 29A as they are sold as 'Combination Coolers'. The unit serves the same purpose as other appliances of similar type sold in a ready assembled form.

2. Interpretation of the term "ordinarily sold or offered for sale as ready assembled units" under Tariff Item 29A:

The learned Single Judge set aside the orders of the Department, stating that if the installation involved merely putting parts together by nuts and bolts for easy transportation, Entry 29A would apply. However, if the parts were brought to the premises to install and supply a Cooler that could not be ordinarily and readily sold as a finished product, Entry 29A would not be attracted. The judgment emphasized that Entry 29A applies only to items ordinarily sold or offered for sale as ready assembled units.

Supporting this interpretation, the Court cited the Collector of Central Excise, Madras' order, which stated that the Ice Cream Combination Cooler assembled at the premises according to specific requirements does not fall under Item 29A(1). The Bombay High Court in Blue Star Ltd. v. Union of India held that a Walk-in-Cooler assembled on-site according to individual specifications does not attract Entry 29A. Similarly, the Allahabad High Court in Mother India Refrigeration Industries P. Ltd. v. Superintendent of Central Excise held that refrigerating plants erected on-site are not covered under sub-items (1) and (2) of Item 29A as they are not ordinarily sold as ready assembled units.

3. Consistency in the interpretation of tariff entries by Departmental authorities and the Board of Revenue:

The Court noted that the Board of Revenue had previously expressed a view favorable to the assessee, as observed by the Allahabad High Court. Another authority had taken a similar view in an identical case from the same area. The Court stressed the importance of consistency in interpreting tariff entries, stating that principles of taxability should not vary from person to person or office to office.

Conclusion:

The Court concluded that Tariff Entry 29A is applicable only when refrigerating appliances are ordinarily sold or offered for sale as ready assembled units. Since the Ice Cream Combination Cooler was assembled according to specific customer requirements and not ordinarily sold as a ready assembled unit, it does not attract duty under Item 29A. The Department's assessment was based on a misunderstanding of the entry's true import and meaning. The learned Single Judge's decision to set aside the assessment and related orders was affirmed.

The Writ Appeal was dismissed with costs.

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