9911796707
TMI Blog1999 (11) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... in their classification list though these compressors were used in manufacture of air-conditioners of capacity less than 7.5 tonnes. A show cause notice dated 25-3-1991 was issued to them for demanding duty for the period from 1-3-1986 to 31-12-1989. The Collector, Central Excise, Hyderabad, under the impugned order dated 21-8-1992, confirmed the demand of duty amounting to Rs. 49,08,612/- and imposed a penalty of Rs. 10 lakhs, holding that the evidence that impugned compressor was used by their customers in the manufacture of air-conditioners had not been disproved by them; that use had been in a substantial number of air-conditioners; that use of 300 compressors in one city alone in the manufacture of air-conditioner was substantial use; that much before their experiment of manufacturing air-conditioner in their unit by using impugned compressor they had mentioned in their 1988 Brochure that the said compressor was capable of being used in air-conditioners and deletion of this use in subsequent brochure confirms deliberate suppression of facts and mala fides; that as the Appellants deliberately suppressed the fact of utilising the compressors in the manufacture of air-conditione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is subsequent to the period to which the demand relates; that there is not even an allegation in the show cause notice that they were aware that any purchaser of compressor was using the same in the manufacture of air-conditioner; that it is clearly stated in letter dated 8-8-1990 of Domestic, Madras that they had purchased the compressor originally with the idea of making water coolers but they subsequently used them for producing mini air-conditioners; that no evidence has been placed on record to even indicate that any compressor allegedly utilised for mini air-conditioner was actually so utilised and, if so, was found workable satisfactory. 4. The ld. Sr. Counsel also mentioned that the demand is time barred; that only on the basis of experiment carried out by them by using one compressor in November 1989, it cannot be said that they had suppressed any information from the Department; that on the contrary, since an experiment was carried out for the first time, clearly establishes that prior to November 1989 they were not even sure that the compressor in question could be used in the manufacture of air-conditioners; that all the classification lists filed by them were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed against the said order and accordingly no penalty is imposable on the Appellants as it cannot be said that they had intentionally not paid the duty. 5. Shri R.K. Sharma, ld. S.D.R., countered the arguments by submitting that failure to file an appeal in one case does not mean that another case cannot be contested by the Revenue and reliance was placed on the judgment of the Supreme Court in the case of Chief Commissioner of Income tax v. V.K. Gururaj, 1996 (83) E.L.T. 485 (S.C.) wherein the Supreme Court held that the failure to file an appeal in one case does not have the effect of following in all other cases. He, further, submitted that the Collector's order proceeds on the assumption that compressor of different specifications are required for water cooler and air-conditioners; that the decision in Kirloskar Cummins Ltd. v. U.O.I. - 1993 (67) E.L.T. 82 (Bom.) relied upon by the Collector (Appeals) pertained to classification of the product whereas in the present matter the issue involved is about the availability of the Notification; that principle of predominant use will not apply in interpreting any entry in Notification. He also mentioned that the Appellants made a m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they had made no misdeclaration in the classification list as the compressors were meant for replacement market for use in water cooler and bottle coolers. He also contended that extended period of five years is applicable only when something positive other than mere inaction or deliberate withholding of information is proved by the assesee as held by the Supreme Court in C.C.E. v. Chemphar Drugs and Liniments - 1989 (40) E.L.T. 276 (S.C.) and in C.C.E. v. Muzzaffarnagar Steels - 1989 (44) E.L.T. 552 (Tribunal). 6. We have considered the submissions of both the sides. Sr. No. 1 of the Table annexed to Notification No. 166/86-CE reads as under : S. No. Heading No. OR Sub- Heading No. Description Rate Condition 1. 8414.10 (i) Gas Compressors of the kind used in air-conditioning including room air-conditioners (window type), Split Unit Air-conditioners and package type Air-conditioners of capa-city not exceeding 7.5 Tonnes. Rs. 4000/- per Compressor (ii) Other gas Compressors Forty per cent ad-valorem (iii) Gas compressors used in the manufacture of Water Coolers NIL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Domestic in which it has been clearly mentioned that they had "purchased these compressors originally with the idea of making water coolers." Similarly M/s. Sarag Tech have also mentioned, in their letter dated 8-8-90, that they explored the possibility of producing small air-conditioners. The use by the customers for air-conditioning can at best be termed as capable of being used and not as of the kind used . The word of means belonging to and it cannot be said that the compressors in question were of air-conditioner. Regarding Brochure, the Appellants have submitted that only in March 1988, they had mentioned alternative use for this model of computer as Air-conditioners, and neither prior to nor after March 1988, they had mentioned such an use. Shri S. Giridhar, Vice President, in his statement dated 6-9-1990 had mentioned that technically S.R. 522 could not be used successfully in 1/2 Ton Air-conditioner and their experiment was not successful since the use of SR. 522 in 1/2 Tonne Air-conditioner did not give the required capacity. The failure of the experiment conducted by the Appellants also indicate that the impugned compressor is not even capable of being used ..... X X X X Extracts X X X X X X X X Extracts X X X X
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