1999 (3) TMI 131 - AT - Central Excise

Summary

Issues: Classification of the product under Tariff Heading, benefit of Notification 166/86-C.E., rate of duty, classification dispute between Tariff Heading 84.18 and 84.19.

Classification under Tariff Heading and Benefit of Notification 166/86-C.E.:
The case revolved around the classification of a product known as 'open loop water cooler' under the Tariff Heading. Initially, the Assistant Collector classified it under Tariff Heading 8418.00, granting the benefit of Notification 166/86-C.E., which imposed nil duty on water coolers. However, the Revenue sought a revision, arguing that the product should fall under "other refrigerating appliances and machinery" under Sl. No. 6 (iii) of the said notification, attracting a 60% ad valorem duty. The lower appellate authority classified the product under Tariff Heading 84.19, applying Notification 155/86-C.E., which imposed a 15% ad valorem duty. The Collector of Central Excise (Appeals) reasoned that the product did not qualify as a water cooler under Heading 84.18 but rather as machinery for cooling distilled water, falling under Heading 84.19. Consequently, the product was reclassified under Heading 84.19, subject to duty at 17% ad valorem under Notification No. 155/86, dated 1-3-1986.

Classification Dispute between Tariff Heading 84.18 and 84.19:
The Revenue contested the classification under Tariff Heading 84.19, asserting that the product should be considered as "other refrigerating appliances or machinery" under Sl. No. 6 (iii) of the notification, instead of Tariff Heading 84.18. The Tribunal analyzed the distinction between Tariff Heading 84.18 and 84.19, emphasizing that cooling by machinery under Heading 84.18 typically involves temperatures near zero or sub-zero. In contrast, the cooling range of the product in question was from 45^0C to 6^0C and did not operate on a refrigerating system. Therefore, the Tribunal upheld the lower appellate authority's decision to classify the goods under Tariff Heading 84.19, making them eligible for the benefit of Notification 155/86, dated 1-3-1986. The Tribunal found no merit in the Revenue's argument and dismissed the appeal.

In conclusion, the judgment clarified the classification of the 'open loop water cooler' product under the appropriate Tariff Heading and the application of relevant duty rates based on the nature of the product's cooling mechanism. The decision highlighted the importance of distinguishing between different tariff classifications and considering the operational principles of the product in question to determine the correct classification for duty purposes.