1996 (9) TMI 397 - AT - Central Excise

Summary

Issues: Classification of goods under Central Excise Tariff Act, 1985

Issue 1: Classification of Air Handling Unit (AHU)
The appeal involved the classification of goods described as Air Handling Unit (AHU) under Heading No. 84.14 of the Schedule to the Central Excise Tariff Act, 1985, as sought by the appellants, versus the Revenue's classification under Heading No. 84.15 of the Tariff.

Analysis:
The appellants contended that the AHU units they manufactured were essential sections of the Air Handling Units, not standalone fans. They argued that when assembled with necessary equipment, these sections formed a complete AHU of the Central Air Conditioning Plant. However, the Revenue argued that the AHU was a specific part of the Air Conditioning Machine and should be classified under Heading No. 84.15 as suitable for use solely or principally with the Air Conditioning Machine.

Issue 2: Interpretation of Tariff Headings
The dispute centered around the interpretation of Heading No. 84.14 and Heading No. 84.15 of the Central Excise Tariff Act, 1985. The appellants sought classification under Heading No. 84.14, which covers air or vacuum pumps, air or gas compressors, and fans, while the Revenue classified the products under Heading No. 84.15, which pertains to Air Conditioning machines.

Analysis:
The Tribunal examined the nature of the goods, their application, and the relevant provisions of the Tariff Act. It noted that the goods supplied by the appellants were specifically designed for Air Conditioning purposes, as indicated by the product literature and the customers they catered to, who were leading Air Conditioner manufacturers. The Tribunal also referred to Section Note 2 of the Tariff Act, which provides rules for the classification of parts of machines, emphasizing that parts suitable for use solely or principally with a particular kind of machine should be classified with that machine.

Issue 3: Legal Precedent
The Tribunal referenced the legal precedent set by the Hon'ble Supreme Court in the case of Eskayef Limited v. CCE, emphasizing that a commodity's potential alternative uses do not detract from its classification in the appropriate heading. It noted that the AHU parts were used solely or principally with Air Conditioning Machines, supporting their classification under Heading No. 84.15 based on Section Note 2 (b) of Section XVI of the Tariff Act.

Analysis:
Based on the legal precedent and the specific nature and use of the AHU units, the Tribunal upheld the Revenue's classification under Heading No. 84.15. It concluded that the AHU did not fall under the descriptions of Heading No. 84.14 and affirmed the Collector of Central Excise (Appeals)'s decision. Consequently, the appeal was rejected, and the order passed by the Collector of Central Excise (Appeals) was upheld.