9911796707
TMI Blog1991 (1) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... n should be under Item 29A(3), they filed a revised classification list on 12-10-1981, in respect of the parts classifying them under Item 29A(3) and claimed exemption from duty under Notification 80/62, dated 24-4-1962 and as the classification list was not approved by the Assistant Collector, they started paying duty "under protest" from 2-12-1981. The classification was provisionally approved. The Assistant Collector in his order, dated 14-10-1982, held that the parts were parts of the air-conditioning and refrigerating machinery and classifiable under Item 29A(3) and also that the benefit of Notification 80/68 was available. In consequence a refund of Rs. 12,58,526/- was given to them under a cheque, under a covering latter, dated 29-6-1983. Aggrieved by the order of the Assistant Collector, the Collector directed the Assistant Collector by an order, dated 27-12-1983 to file an application to the Collector of Central Excise (Appeals), Bombay under Section 35E(2) of the Act, and also against the order of the Assistant Collector, dated 29-6-1983, by which a refund cheque was issued, the Collector directed the Assistant Collector to file an application to the Collector of Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y deals in the following accessories : (1) Drive Set (belt drive/direct coupling), (2) Base Frame, (3) Oil Separator, (4) Suction and discharge stop valve, (5) Crankcase heater, (6) Solenoid valves, (7) Cutouts and Pressure gauges. There is a clear distinction between a part of a compressor and an ''accessory" of a compressor because though an accessory can never technically or commercially be called a part of a compressor it would be a part of the Refrigeration system. All ACR compressors and air-conditioning and refrigeration system and appliances are manufactured to conform to international standards. Some are leading standards normally referred to in AR1. In the case of parts or components of a compressor, each part or component is specific and has to be manufactured so that it is integrated into the compressor design. Each and every part and component of compressor is, therefore, necessary for a compressor to function. The functions of the compressor and of the following accessories of the compressor, i.e. parts of ACR system are detailed below: (1) Drive Set (2) Base Frame. A compressor (1) is a vital part of the ACR system. Compressors can be of different designs - (in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of (a) flywheel, motor pulley and V-Belt or (b) the direct coupling. The drive set has to match the speed and horse power of the electric motor to the speed and compression capacity of the compressor. Either of the two types of drive sets has therefore, to be specific to the speed and horse power of the electric motor and the compressor and it is not interchangeable. Since the compressor can be made to run at different speeds (thereby giving different compression capacity) different combinations or permutations are possible in the size of the motor pulley and the size of the flywheel (and consequently the configuration of the belt) and these have to be selected for the particular ACR system. Carrier air-conditioning system design hand book, page-7.8 indicates criteria for selecting drive from which it can be easily seen that choice depends on number of factors. There is, therefore, an option in the permutation/combination of the motor pulley and flywheel, but once a desired compressor capacity and a speed of the compressor is decided and the speed of the electric motor is determined the combination of the electric motor pulley, flywheel and V-belt becomes specific and is not int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el stated that the parts of refrigerating and air-conditioning appliances and machinery, all sorts were to be brought under Item 29A(3) of the Tariff. The All India Air-conditioning and Refrigeration Association had issued a circular, dated 5-4-1986, asking their members to submit classification list to their respective Collect orates where the new tariff was introduced and items flywheels/pulleys, couplings/belt guard were to be classified under 8483.00, base stand/franc made of iron/steel under 7308.70. Further instructions from the Govt. of India in Circular No. 6/86 Exn., dated 25-9-1986, had for the guidance of the field formations listed the items of air-conditioning and refrigerating machinery classifying them under the headings which would merit classification under the respective heading. A reference was also made to the Tariff Advice No. 10/76, dated 3-3-1976 issued by the CBE & C advising that among other things, belt drive guard cannot be considered as components of compressor, but these are items essential for working of the system, where compressor is also a part. By the Trade Notice 51/76 issued by the Collector of Central Excise, Poona, these items have been refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not distinct from each other. [Grind well Norton Ltd. v. Collector of Customs -1986 (24) E.L.T. 426 (Tri.); TI Millers v. Union -1987 (31) E.L.T. 344 (Bom.); Universal Luggage Mfg. Co. Ltd. v. Collector-1990 (45) E.L.T. 508 (Tri.)]. Item 29A(3) refers to "parts" of Refrigerating and Air-conditioning Appliances and machinery all sorts..." But the Collector has purported to restrict the language of the Item by holding that only "essential parts" of air-conditioning and refrigeration machinery are classifiable under 29A(3). [Prick India Ltd. v. UOI& Others -1990 (29) ECR 145 (SC).]. The Collector has no power to go beyond the scope of the arguments advanced before him at the personal hearing, which he has purported to do, by holding, that drive set and base frame were "essential parts of a compressor", when in fact all that was argued before him was that the said parts were "parts" of air-conditioning and refrigeration machinery classifiable under Item 29A(3). [Nav Bharat Link Chain Mfg. Pvt. Ltd. v. Collector -1985 (19) E.L.T. 493 (Tri.).] It is submitted that a Notification has to be construed strictly. Notification No. 80/62, dated 24-4-1962 only excludes certain specified p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since no demand under Section 11A was raised for erroneous refund, the demand for recovery was time-barred. He referred to the case law reported in 1988 (37) E.L.T. 22 (Tri.) - Collector of Central Excise v. Universal Radiation Ltd., that the notice under Section 11A, of the Central Excises and Salt Act was the only legal and correct process and application and proceedings under Section 35E is not the correct step. The scope of an appealable order has been spelt out in the case, Mahindra and Mahindra Ltd. v. Collector of Central Excise, Bombay, reported in 1988 (33) E.L.T. 377 (Tri.) = 1983 ECR 1865 D (CEGAT) and therefore, an administration letter cannot be regarded as an adjudicating order. 7. Shri M. S. Arora, the learned JDR made the following submissions : "Factual Highlights : As per ground 'D' of paper book, it has been alleged that there was no issue before the Collector (Appeals) regarding eligibility to Notification No. 80/62. On facts this submission is incorrect as the issue of eligibility to Notification was very much before the Collector as per page 41 of paper book. Legal proposition: The Department has also made additional grounds that additional grounds can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machinery, all sorts". In the instant case the goods are at best part of air-conditioning plant. Thus, outside the purview of Section 29A(3) on intrinsic merits they are not even parts of air-conditioning plant as they do not do any air-conditioning or assist in air-conditioning. (Page 71 and 75 of paper book). On the submission that order reviewed was of Administrative Officer and not of AC, it is submitted that refund can be granted by AC only under Section 11B of Central Excises and Salt Act, 1944 as such the cheque issued for refund will become order of Refund." In conclusion, it was stated that these items were not parts of the air-conditioning and refrigerating system, even if they are accessories to the compressor. 8. The learned counsel, in reply to the points raised, offered the following comments : "The learned JDR made 3 propositions on behalf of the respondent, viz. (i) Even if the 2 articles can be regarded as an accessory to the compressor which was a part of the ACR System, this by itself would not mean that they were an accessory or part of the ACR system. (ii) The classification could not be decided by the end-use of the articles. What was relevant was the fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut of the decision or order as may be "specified by the Collector of Central Excise" in his order. Reading the order passed under Section 35E(2) directing the filing of an application (page 52 of the Appeal Paper Book), the Respondent had clearly asked for determination of the point as to whether the articles were "parts of an ACR System" or were "accessories of the ACR System". This was repeated by the Assistant Collector in the EA-2 applications at page 41 of the appeal paper book and at page 50 of the appeal paper book. Since the scope of the applications were limited, it was not open to contend that the articles in question were not "parts or accessories of an ACR System". The judgments relied upon were, therefore, not relevant. (c) In any event it was submitted that the proposition was taken without any evidence in support. It was a mere assertion and that was not sufficient to refute the evidence produced by the Appellants in the Technical Note, the compilation of technical literature and trade understanding and the compilation of Tariff Advices, Trade Notices and Circulars. (d) Referring to the judgment of the Karnataka High Court in Supreme Motors v. State of Kamataka [19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me and specifically dealt with the provisions of the Central Excises and Salt Act, 1944. The specific judgments under the Central Excises and Salt Act, 1944 were binding even if the provisions of the Customs Act, 1962, were in pari materia. (b) The judgment of the Hon'ble Supreme Court in Geep Flashlight v. Collector was not relevant because it dealt with the erstwhile provisions of Section 129 of the Customs Act, 1962 and expressly turned on the issue whether erroneous refund would amount to "short-levy" within the meaning of Section 28 of the Customs Act, 1962. It did not deal with whether proceedings were maintainable under Section 129D in a case of erroneous refund. (c) It was submitted by the Senior Counsel that the end-use of the articles was relevant. This was because of the language of Item 29A(3) itself which read "parts of or "parts thereof. On a true interpretation, these words in corporate the use because they meant "parts used in ....". As far as the 2 articles were concerned, they were used in a ACR System. (d) Regarding the classification on the basis of the functions of an article, it was pointed out that the judgment cited by the learned JDR in Atul Glass v. Col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellants that the classification should be on the basis of the Tariff Advice or Trade Notices alone but it would be supportive material to show the Department's own understanding of the nature of the articles in question consistently for a period of 14 years, and some satisfactory material had to be produced to justify why only for one year in question (13-10-1981 to 12-10-1982) that consistent stand was being departed from in the EA-2 application. (iii) Even in a case of erroneous refund proceedings under Section 11A need not be invoked. The procedure under Section 35E(2) could be independently adopted. (a) It was pointed out by the Senior Counsel that the EA-2 application was misconceived. In a case of erroneous refund, only proceedings under Section 11A of the Act could be adopted. The procedure under Section 35E(2) was not available. Reference was made to judgments of this Hon'ble Tribunal in Universal Radiators v. Collector (supra) and Re-rolling Mills v. Collector [1989 (43) E.L.T. 115J. (b) It was also submitted that the so-called "order or decision" impugned in the EA-2 application by the Respondent at page 46 of the Appeal Paper Book was an administrative communication s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gment in Collector v. Roman Boards to cases other than of "erroneous refund", and further relied on the case law, Indian Leaf Tobacco Development Co. Ltd. and ITC Ltd. v. UOJ reported in 1984 (16) E.L.T. 234 (Mad.). 9. We have considered the submissions made by both the sides. The issues to be resolved are : (i) Classification of (a) base frame (b) Drive set - consisting of flywheel, motor pulley and V-belt or direct coupling under Item 29A(3) and not under Item 68. (ii) Extension of Notification 80/62 for these articles. (iii) The application under Section 35E(2) for recovery of the erroneous refund is not valid. The appellants claim that they were paying duty on these items under Item 68, and had on 12th October, 1981, filed revised classification list seeking classification under Item 29A(3) and exemption under Notification No. 80/62, dated 24-4-1962. The Tariff Item 29A is reproduced below: Item No. Tariff Description Rate of duty 29A Refrigerating and air-conditioning appliances and machinery, all sorts, thereof: (1) Refrigerators and other refrigerating appliances, which are ordinarily sold or offered for sale as ready assembled units, such as i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ications of the Government show that the sub-item (3) of Item 29A is a comprehensive provision encompassing within it parts of all sorts of air-conditioning and refrigerating appliances and machinery and the Government of India was issuing notifications of exemptions on the understanding that such parts are covered by sub-item (3). There language used in sub-item (3) is also wide and comprehensive in its application and could not be given a restricted meaning. Sub-items (1), (2) and (3) are independent of each other and mutually exclusive. The scope of sub-item (3) is neither restricted nor controlled by the provisions of sub-items (1) and (2)". From the above decisions, flows the elucidation that the scope of the Item 29A(3) is comprehensive to bring within its fold, parts of all sorts of air-conditioning and refrigerating machinery. The Tariff Advices and Trade Notices referred to have listed them as parts of or accessories of refrigerating and air-conditioning machinery. Therefore, a base frame and drive set had to be regarded as parts of the refrigerating appliances, falling under Tariff Item 29A(3). The Tariff Item 68 is a residuary item which covers all other excisable produ ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
