1986 (9) TMI 206 - AT - Central Excise

Summary

Issues Involved:
1. Classification of Industrial Propeller Fans under the correct Tariff Item.
2. Technical evidence supporting the classification.
3. Trade parlance and market perception.
4. Relevance of advertisements and promotional materials.
5. Certificates from experts and their implications.
6. Definition and application of "industrial system."

Detailed Analysis:

1. Classification of Industrial Propeller Fans under the correct Tariff Item:
The primary issue was whether the industrial propeller fans manufactured by the appellants should be classified under Tariff Item 33(2) or 33(3). The appellants contended that their fans should be assessed under Item 33(2), which pertains to electric fans designed for use in an industrial system. The Department argued for classification under Item 33(3), which covers electric fans not otherwise specified. The Tribunal concluded that the fans did not meet the specific criteria for classification under Item 33(2) and were rightly classified under Item 33(3).

2. Technical evidence supporting the classification:
The appellants presented technical evidence, including certificates from various experts and technical managers, asserting that their fans were specially designed for industrial use. However, the Tribunal found that the special shape or quality of the fans was not sufficient to classify them under Item 33(2). The evidence did not establish that the fans were indispensable for the operation of an industrial system, a key requirement for classification under Item 33(2).

3. Trade parlance and market perception:
The appellants argued that in trade parlance, their products were known as industrial fans. They relied on previous decisions and rulings to support their claim. However, the Tribunal emphasized that the classification should be based on the nature, character, description, and use of the goods rather than mere trade parlance. The Tribunal found that the fans were general exhaust fans and not specifically designed for industrial systems.

4. Relevance of advertisements and promotional materials:
The appellants contended that advertisements and promotional materials should not be the basis for classification decisions. However, the Tribunal noted that advertisements could be considered relevant evidence along with other factors to determine how the manufacturer described the product. The pamphlets issued by the appellants described the fans as suitable for general ventilation work, including domestic and commercial use, which supported the classification under Item 33(3).

5. Certificates from experts and their implications:
The appellants relied on certificates from various experts to support their claim that the fans were designed for industrial use. The Tribunal found that the certificates did not conclusively establish that the fans were indispensable for the operation of an industrial system. The certificates mentioned that the fans were not suitable for domestic use due to their size and power requirements but did not prove that they were essential components of an industrial system.

6. Definition and application of "industrial system":
The Tribunal referred to the definition of "industrial system" provided in the Indian Customs Tariff Act and previous rulings. The definition emphasized that an industrial system involves installations directly employed in the performance of processes necessary for manufacturing, production, or extraction. The Tribunal concluded that the fans in question did not meet this definition as they were not integral to any industrial process or system. They were general exhaust fans used for ventilation, which did not qualify them for classification under Item 33(2).

Conclusion:
After a thorough analysis of the technical evidence, trade parlance, advertisements, and expert certificates, the Tribunal concluded that the industrial propeller fans manufactured by the appellants were rightly classified under Tariff Item 33(3). The appeal was rejected, and the classification under Item 33(3) was upheld.