1989 (12) TMI 59 - SC - Central Excise

Whether the manufacturer supplies the refrigerating or air-conditioning appliances as a complete unit or not is not relevant for the levy of duty on the parts specified in sub-item (3) of Item 29A? Held that - After referring to sub-items (1) and (2) of Item 29A as covering complete plant and equipment which are ordinarily sold or offered for sale as ready assembled units, had stated as follows, with reference to sub-item (3) it consists of two parts, the first portion referring to parts of machinery and appliances and the second portion referring to complete plants which cannot be considered as parts of machinery. The whole argument arose because of the composite sentence used in this paragraph. It only means complete plants which are covered by Items (1) and (2) cannot be considered as parts of machinery and such complete plants would not be classifiable under sub-item (3) of Item 29A. The reliance placed by the learned counsel on this notification No. 80/62-Central Excises, dated 24th April, 1962 does not in any way advance the case of the appellants. Appeal dismissed.

Issues Involved:

1. Classification of goods under Tariff Item No. 29A of the Central Excise Tariff.
2. Interpretation of sub-items (1), (2), and (3) under Tariff Item No. 29A.
3. Applicability of excise duty on parts of refrigerating and air-conditioning appliances.
4. Relevance of legislative history and government notifications.
5. Reliance on previous judicial decisions and trade advice.

Detailed Analysis:

1. Classification of goods under Tariff Item No. 29A of the Central Excise Tariff:

The appellants, a public limited company, manufactured and cleared cooling coils, condensers, and compressors for cold storage and ice-factory plants, paying excise duty under Tariff Item No. 29A. They contested that these parts were not excisable under sub-item (3) of Item 29A, seeking refunds which were denied by the Assistant Collector of Customs and subsequently by the Collector of Customs and Central Excise, Chandigarh. The High Court dismissed their writ petition, affirming that the goods were indeed parts of refrigerating and air-conditioning appliances falling under sub-item (3) of Item 29A.

2. Interpretation of sub-items (1), (2), and (3) under Tariff Item No. 29A:

The appellants argued that sub-items (1) and (2) covered complete assembled units of refrigerating and air-conditioning appliances ordinarily sold as such, implying that sub-item (3) should only cover parts of those complete units. They contended that sub-item (3) should be restricted to parts of appliances falling under sub-items (1) and (2). However, the judgment clarified that sub-items (1), (2), and (3) are independent and mutually exclusive. Sub-item (3) broadly covers all parts of refrigerating and air-conditioning appliances and machinery, irrespective of whether they form part of a complete unit under sub-items (1) and (2).

3. Applicability of excise duty on parts of refrigerating and air-conditioning appliances:

The legislative history and government notifications indicated that sub-item (3) of Item 29A is comprehensive, covering all parts of refrigerating and air-conditioning appliances and machinery. Notifications exempting certain parts from excise duty further supported that these parts were generally covered under sub-item (3). The judgment emphasized that the plain language of sub-item (3) should not be restricted by the headings or sub-items (1) and (2).

4. Relevance of legislative history and government notifications:

The Finance Act of 1961 introduced Items 29A and 40, later combined into Item 29A by the Finance Act of 1962, indicating a comprehensive approach to refrigerating and air-conditioning machinery and parts. Various government notifications exempted specific parts, reinforcing their coverage under sub-item (3). The judgment underscored that the broad language of sub-item (3) encompasses all parts, and the legislative intent and notifications supported this interpretation.

5. Reliance on previous judicial decisions and trade advice:

The appellants relied on the Allahabad High Court's decision in Mother India Refrigeration Industries (P) Ltd. v. Superintendent of Central Excise, which restricted sub-item (3) to parts of complete units under sub-items (1) and (2). The Supreme Court overruled this decision, finding it fallacious. The Gujarat High Court's decision in Anil Ice Factory v. Union of India, which held sub-items (1), (2), and (3) as independent, was preferred. The judgment also clarified that a Trade Advice dated September 30, 1969, did not support the appellants' case as it merely distinguished between complete plants and parts of machinery.

Conclusion:

The appeal was dismissed, affirming that sub-item (3) of Item 29A is broad and covers all parts of refrigerating and air-conditioning appliances and machinery, independent of sub-items (1) and (2). The legislative history, government notifications, and judicial interpretations supported this comprehensive view, and the appellants' arguments for a restricted interpretation were rejected.

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