1995 (9) TMI 184 - AT - Central Excise

Summary

Issues: Classification of imported machinery under Customs Tariff - Heading 84.17(1) or 84.15

In this judgment by the Appellate Tribunal CEGAT, New Delhi, the issue at hand is the classification of machinery imported by M/s. Tata Hydro Electric Power Supply Co. Ltd. The Collector of Customs, Bombay appealed to determine whether the machinery should be classified under Heading 84.17(1) of the Customs Tariff, as claimed by the respondent and confirmed by the Collector (Appeals), or as air conditioning equipment under Heading 84.15.

Analysis:

The Appellate Tribunal considered arguments presented by both parties. The Appellant contended that the machinery should be classified under Heading 84.15 as it operates on the principle of refrigeration, with elements like compressor, condenser, and cooling tool present. The primary function of the machine was deemed to be lowering the temperature of the treated air, making it more appropriate for classification under Heading 84.15.

On the other hand, the Respondent argued that the machinery was essential for the proper functioning of the pneumatic instrumentation and control system at the thermal plant, serving as an air drier to prevent malfunctioning due to humidity. Relying on Interpretative Rule 3 of the Customs Tariff, the Respondent emphasized that the principal function of the machine, which was to dehumidify the air, should determine its classification. Furthermore, the Respondent cited a previous Tribunal decision to support their classification.

The Tribunal referenced the Explanatory Notes to the Customs Cooperation Council Nomenclature to analyze the classification issue. It was noted that Heading 84.17 covers machinery for heating or cooling processes, while Heading 84.15 pertains to machines for lower temperatures with active cooling elements. The Tribunal observed that the imported machinery included elements typical of compression type refrigeration, meeting the criteria of Heading 84.15. Despite the intention to dehumidify the air, the primary function of refrigerating the air was deemed decisive for classification.

Ultimately, the Tribunal allowed the appeal by the Collector of Customs, Bombay, reinstating the order of the Assistant Collector. The judgment highlighted the significance of the primary function of the machinery in determining its classification under the Customs Tariff, emphasizing the objective nature of classification over the end use or intention of the user.