1997 (12) TMI 410 - AT - Central Excise

Summary

Issues:
Classification of the item "Chillpac" under tariff Heading 84.19 with the benefit of Notification 175/86 versus under tariff Heading 84.18 as per the ld. lower authority's decision.

Analysis:
The appeal concerns the classification of "Chillpac" and the applicability of Notification 175/86. The ld. lower authority classified the item under tariff Heading 84.18, precluding it from the benefits of Notification 175/86. The lower authority emphasized that the Chillpac, even in an unassembled state, possesses the essential characteristics of refrigerating equipment, aligning with the HSN Explanatory Note defining compressor type refrigerators. The authority noted that Chillpacs were tested with temporary components and assembled goods were dispatched, supporting the classification as refrigerating equipment. Additionally, statements from buyers and product literature confirmed Chillpac as a water chilling plant. The appellant contended that Chillpac falls under Heading 84.19 due to its function of treating materials, emphasizing the temperature capability of up to 5 oC, different from the near-zero temperatures associated with Heading 84.18.

The ld. Advocate argued the bona fide belief of the appellant regarding the classification of Air-conditioning and Refrigerating equipment under Heading 84.18 and Chillpac under Heading 84.19 for exemption eligibility. Reference to HSN notes under both headings was made, highlighting the difference in functions and temperature requirements for classification. The departmental representative supported the lower authority's view, emphasizing the refrigeration principle and temperature change brought about by the equipment in processing materials. The Tribunal analyzed the essential elements of compressor type refrigerators as per HSN, noting the capability of the equipment to produce low temperatures and its technical alignment with refrigerators.

Considering the arguments presented, the Tribunal upheld the classification of Chillpac under Heading 84.18, denying the benefit of Notification 175/86. The Tribunal referenced the limited scope of Heading 84.19, covering equipment for material treatment involving temperature changes, which did not align with Chillpac's function as a water chilling plant. Citing a Supreme Court ruling, the Tribunal emphasized resorting to HSN for classification in case of doubt. The Tribunal also addressed the appellant's alternative plea for abatements and Modvat credit, allowing these benefits subject to compliance with relevant rules. The appeal was rejected, except for the modifications regarding abatements and Modvat credit, which the lower authority was directed to consider.