Central Excise - Fitting of Air-conditioning parts in cars - Duty liability regarding - Central Excise - 21/88-CX.4

Central Excise - Fitting of Air-conditioning parts in cars - Duty liability regarding Circular No. 21/88-CX.4 Dated 28-9-1988 [From F. No. 145/2/87-CX.4 ] Government of India Ministry of Finance (Department of Revenue) New Delhi Subject : Central Excise - Fitting of Air-conditioning parts in cars - Duty liability regarding. A doubt has arisen whether fitting of duty-paid air-conditioning parts/components on a car amounts to manufacture of air-conditioners under heading 84.15 of the Central Excise Tariff, and whether, after fitment of the air-conditioner, a new excisable commodity viz. air-conditioned car chargeable to duty again under Chapter 87 comes into existence. It has been reported that car air-conditioner as fitted in a car part by part; compressor is fitted above engine, condenser is fitted in front of the radiator, cooling coil is fitted inside the car, fan is fitted in front of cooling coils and then all these parts are connected by copper pipes to complete the cycles. If somebody wants to shift air-conditioner from one car to another, it has to be dismantled completely and to be fitted again. 2. It is observed that when car air-conditioner components in kit form are cleared from the factory of manufacture duty is leviable on such kits as car air-conditioners. The fitment of these duty paid components in a car does not amount to manufacture of car air-conditioner. There should be no question of charging duty again on car air-conditioner which in kit form has already paid duty. In other cases where duty paid components which have not been cleared in kit form are assembled and fitted on the car then conceptually an air-conditioner can be said to have been manufactured by virtue of rule 2(a) of the Rules of Interpretation and Note 4 to Section XVI of Central Excise Tariff Act, 1985. But such acquisition of duty paid components from different sources is not on a significant scale, and accordingly the Board is of the view that the problem of such assembly and fitment in a garage should be solved by fixing the rates of duty on components appropriately. 3. It is also decided that, as a result of fitment of an air-conditioner in a car, no new excisable commodity is manufactured. It cannot be said that an air-conditioned car has been manufactured. 4. The above instructions may be brought to the notice of the lower field formations and the trade interests may also be suitably advised.