2021 (12) TMI 579 - AT - Central Excise

Levy of Special Excise duty - Air Conditioners and parts thereof falling under Chapter 8415 of Central Excise Tariff Act, 1985 - case of the department is that the goods which have been cleared by the appellant are having essential characteristic of complete air conditioner therefore, is liable to special excise duty - HELD THAT - The issue in the appellant s own case has been settled vide this tribunal s Order in SEAGULL COOLING PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, VAPI 2006 (8) TMI 466 - CESTAT, MUMBAI , the said decision was given considering the board circular dated 25.9.2002. where it was held that entities by apparent description and application of Boards instruction by themselves cannot be considered to be a complete Air Conditioner or have essential character of Air Conditioner to classify them as other than parts. No duty demands can be worked out on such. Thus, it is clear that the assembly which were cleared by the appellant were not contained either one or more items specified in the board circular. Therefore, if this is correct then the goods cleared by the appellant do not have essential characteristic of complete air conditioner therefore, the same shall not be liable for levy of special excise duty. On going through the impugned order, it is found that the learned adjudicating authority has not discussed about the nature of the assembly cleared by the appellant that whether the assemblies have contained all the six items mentioned in the board circular or otherwise which was claimed by the appellant therefore, the matter needs to be reconsidered only on the point that whether the goods cleared by the appellant contains all the six items mentioned in the board circular or otherwise. If it is found that if one or more items specified in the board circular is absent in the assembly supplied by the appellant, the same shall not be considered as complete air conditioner whereas, the goods shall be considered as parts of air conditioner accordingly, there shall not be any levy of special excise duty. Appeal allowed by way of remand.

Summary

Issues:
Interpretation of essential characteristics of air conditioner parts for special excise duty liability.

Analysis:
The case involved the manufacturing of excisable goods, specifically air conditioners and parts falling under Chapter 8415 of the Central Excise Tariff Act, 1985. The dispute revolved around the levy of special excise duty on complete air conditioners versus parts of air conditioners. The department argued that the goods cleared by the appellant had essential characteristics of complete air conditioners, thus attracting special excise duty. On the other hand, the appellant contended that the cleared goods were parts lacking the essential characteristics of air conditioners, hence exempt from the duty.

In the initial round, the adjudicating authority confirmed the demand, which was challenged by the appellant leading to a remand by the tribunal for fresh adjudication. Subsequently, after almost a decade, the authority again confirmed the demand, prompting the present appeals by the appellant. The appellant's counsel argued that the issue was settled in the appellant's favor in a previous tribunal decision, citing a board circular. Charts were presented to demonstrate that the goods cleared did not possess all essential characteristics of a complete air conditioner, as per the circular, making them parts not liable for special excise duty.

The authorized representative for the revenue reiterated the findings of the impugned order and referred to various tribunal judgments in support. Upon careful consideration of both sides' submissions and the records, the tribunal noted that the issue in the appellant's case had been previously settled by the tribunal's order considering the board circular. The board circular specified essential components that must be present in an assembly to be deemed a complete air conditioner. The tribunal observed that the assemblies cleared by the appellant did not contain all components specified in the circular, indicating that they were not complete air conditioners and hence not subject to special excise duty.

The tribunal found that the adjudicating authority had not adequately discussed the nature of the assemblies cleared by the appellant in relation to the components listed in the board circular. Therefore, the matter was remanded to the authority for a fresh decision based on whether the cleared goods contained all components specified in the circular. If any of the components were absent, the goods would be considered parts of air conditioners, and no special excise duty would be levied. The tribunal directed the authority to complete the reconsideration process within three months due to the matter's age.

Ultimately, the appeals were allowed by way of remand to the adjudicating authority, and the decision was pronounced in open court on a specified date.