2001 (4) TMI 306 - AT - Central Excise

Summary

Issues Involved:
1. Classification of Aluminium Grills and Diffusers.
2. Eligibility for Small Scale Industry exemption.
3. Imposition of duty and penalties.
4. Applicability of Board's Circulars and Instructions.
5. Exigibility of Central Air Conditioning Plants.

Detailed Analysis:

1. Classification of Aluminium Grills and Diffusers:
The primary issue was whether Aluminium Grills and Diffusers should be classified under heading 84.15 as parts of Air Conditioning Systems or under 7616.90 as general aluminium articles. The Tribunal found that:
- Grills and Diffusers are integral to the air conditioning systems, controlling airflow and enhancing interior aesthetics.
- They are identifiable parts of air conditioning systems, thus classifiable under Chapter Heading 8415.00 of the Central Excise Tariff Act, 1985.
- The Tribunal cited several precedents, including the cases of Gen Power Electric v. Collector and Keyer Industries v. Collector, supporting the classification under 84.15.

2. Eligibility for Small Scale Industry Exemption:
The appellants claimed exemption under Notifications 16/97-C.E., 8/98, and 8/99, arguing their products were classifiable under 7616.90. However, the Tribunal concluded:
- The goods were not eligible for the exemption under Notification 75/87-C.E. as they were correctly classified under heading 84.15.
- The Tribunal emphasized that the classification under 84.15 negated the applicability of the claimed exemptions.

3. Imposition of Duty and Penalties:
The Show-Cause Notice demanded duty and proposed penalties under various sections:
- Duty of Rs. 40,15,030/- was initially demanded, but the Commissioner revised it to Rs. 9,75,202 for one appellant and Rs. 5,15,285 for another.
- Penalties under Section 11AC and interest under Section 11AB were imposed.
- The Tribunal, however, set aside these orders, finding the classification under 7616.90 more appropriate, thus nullifying the duty and penalties imposed.

4. Applicability of Board's Circulars and Instructions:
The appellants relied on the Circular No. 548/44/2000-CX dated 13-9-2000, which clarified:
- General purpose grills made of aluminium are classifiable under 7616.90.
- The Tribunal noted the Commissioner's oversight of the Board's instructions, which were binding and supported the classification under 7616.90.

5. Exigibility of Central Air Conditioning Plants:
The Tribunal referred to the Board's telex dated 13-6-1986, which stated:
- Central Air Conditioning Plants assembled at site are not excisable if parts used are duty-paid.
- This instruction was binding and implied that grills used in such systems should not be classified under 84.15, as the plants themselves were not excisable.

Conclusion:
The Tribunal concluded that the Aluminium Grills and Diffusers should be classified under 7616.90 and not under 8415.00. Consequently, the orders demanding duty and imposing penalties were set aside, and the appeals were allowed. The Tribunal emphasized the binding nature of the Board's circulars and instructions, reinforcing the classification under 7616.90 and the non-exigibility of Central Air Conditioning Plants.