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TMI Blog2001 (4) TMI 306X X X X Extracts X X X X X X X X Extracts X X X X ..... ers were classifiable under heading 84.15 of the CET in terms of Board s Circular 227/61/96-CX 6, dated 4-7-1996 and the appellant was not eligible for the exemption under Notification 75/87-C.E. as the condition for opting for its benefit had not been exercised and duty was liable to be paid for the entire value of clearances between 1-4-94 to 31-3-99 by the proprietary firm, the proprietrix, Sh J.H. Kamath and Shri A.K. Jaya Chandra Reddy. Duty of Rs. 40,15,030/- was demanded under Rule 9(2) read with Section 11(A). It was proposed to impose penalty on them under Rule 173Q(1), Section 11AC and interest demanded under Section 11AB(1). Penalty was also proposed to be imposed on the present proprietrix, Sh J.K. Kamath former Proprietor and Sh A.K. Jayachandra Reddy under Rule 209A. 2. The Commissioner heard the appellants and by his order dated 18-10-2000, impugned before us, found and ordered- (i) Goods being manufactured viz. Grills, Diffusers are classifiable under Heading 84.15 as parts of Air Conditioning System. (ii) The goods were eligible for exemption under Notification 75/87 dated 1-3-87 and worked out the total duty liability at Rs. 9,75,202 which was deter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rills are made of either plastic, Aluminium or steel and are available in ready to fix sizes and standard designs. Those are also manufactured against specific orders to suit a particular engineering design that may be required. In the case of aluminium grills, the raw materials are mainly aluminium extrusions, tubes, rods and screws, nuts and bolts. 26. The exact function of supply outlets/grills has been explained in the Principles of Air Conditioning , 3rd Edition, by V. Paul Lang as under : Supply outlets help to distribute the air evenly in a room, some outlets fan the air and other outlets direct the air in a jet stream. Still other outlets combine these actions. As a result of these actions the outlets are able to exhort some control on the direction of the air delivered by the fan. This directional control, plus the location and the number of outlets in the room contribute greatly to the comfort or to the discomfort resulting from the air pattern. 27. The book further explains that the outlets/grills are extremely important from the point of appearance function and performance. They are designed to attractively conceal a duct opening, throw the air-conditioned air ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se solely or principally with a particular kind of machine or a number of machines in the same heading (including a machine of heading number 84.79 or 85.43 are to be classified with the machine of that kind..... As is evident from the usage of the aluminium grills as understood from M/s. Blue Star Kool Nest and M/s. Voltas, the principle and predominant use of the Aluminium grills is that connected with air conditioning plant. Its use for interior decoration is mainly to match the existing or proposed supply outlets and is minimal. Looking to the preponderance of the usage, the aluminium grills are more appropriately classifiable as parts of air conditioning plants only under chapter sub-heading 8415.00 of Central Excise Tariff Act, 1985. 31. Further, the Section Note XV of Base Metal and Articles of Base Metal, reads as under : Notes : (1) This section does not cover : (f) Articles of Section XVI (Machinery; Mechanical appliances and Electrical goods); (2) Throughout this Schedule, the expression "parts of general use"; means : (a) Articles of Heading No. 7307, 7312, 7315, 7317 or 7318 and similar articles of other base metal. 32. The section 2(a) cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said grill is to enhance the looks of the air-conditioner. Grills have functional utility for deflecting the air-flow in the desired direction. They are identifiable part of an air-conditioner and therefore, are more appropriately classifiable under Chapter 8415 of Central Excise Tariff Act, 1985. 35. Air conditioning machine parts are clearly recognizable as identifiable parts of air handling system machine, hence classifiable under 84.15 of Central Excise Tariff Act, 1985 and not articles of metal ibid - Gen Power Electric v. Collector - 1998 (107) E.L.T. 259 (T). 36. Air handling unit a specific part of air conditioning machine, manufactured on specific orders from manufacturers of air-conditioners, used solely or principally with the air-conditioning machines though capable of various applications for handling air is classifiable under Heading 84.15 of Central Excise Tariff Act, 1985 by virtue of Note 2(b) of Section XVI. - Keyer Industries v. Collector - 1997 (91) E.L.T. 587 (T) - Pawan Brothers (P) Ltd. v. Collector - 1997 (95) E.L.T. 646 (T) 37. The Hon ble Tribunal in the case of Sri Ram Metal Works v. CCE, Bangalore - 1998 (99) E.L.T. 616 (T) has held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used in Central Air Conditioning Plants, as in the cases before us, to be classified under 84.15, provided Central Air Conditioning Plants of which they are parts is held to be excisable under 84.15. There is no finding arrived at, as to how the Central Plants are excisable under 84.15. The learned Commissioner has either overlooked or is ignorant of Boards instructions on Exigibility of Central Air Conditioning Plant . By Telex dated 13-6-1986 vide F. No. 145/6/86/CX 4, Board has clarified :- IT IS REPORTED THAT THE EXCISE DUTY IS BEING DEMANDED IN CERTAIN COLLECTORATES ON REFRIEGERATION AND AIR-CONDITIONING PLANTS INSTALLED/ASSEMBLED AT SITE OUT OF DUTY PAID PARTS, COMPONENTS, ACCESSORIES THEREOF(.) MATTER HAS SINCE BEEN EXAMINED BY THE MINISTRY(.) IT IS VIEWED THAT NO EXCISE DUTY IS LEVIABLE ON THE PLANTS WHEN THE REFRIGERATION AND AIR-CONDITIONING PLANTS ARE ASSEMBLED/INSTALLED AT SITE (KNOWN AS CENTRAL PLANTS) PROVIDED THAT PARTS, COMPONENTS AND ACCESSORIES USED IN THE ASSEMBLY AT SITE HAVE PAID APPROPRIATE EXCISE DUTY AS SUCH INSTALLATION/ ASSEMBLY MAY NOT AMOUNT TO MANUFACTURE(.) LOWER FIELD FORMATIONS MAY BE SUITABLY INSTRUCTED IMMEDIATELY(.) Therefore it is evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to CET Act Heading 76.16. (d) When we find that Board s instructions have been (sic) are applicable in the facts of this case, to rule out the exigibility of Centralised Air Conditioning System classification of the Duct terminal end Grills/Diffusers from Heading 84.15; the Supreme Court has conclusively held that Board s Circulars are binding on the Department. Then we see no reason to deny the classification of Grills/Diffusers used in Centralised Air Conditioning System under 7616.90 of C.E.T.A. 1985. We would rely on the following findings of the Supreme Court in Paper Products Case [1999 (112) E.L.T. 765 (S.C.)] - Consistency and discipline are of far greater importance than winning or losing Court proceedings and - Department do not have a right to file appeal against the correctness of binding nature of the Circular issued by the Board. and not uphold the Commissioner s Orders impugned before us. The same required to be set aside. We also do not find any reason, to deal with arguments of the learned DR made at the hearing in light of the view we are taking. The arguments are therefore rejected. 6. In view of our findings, the impugned orders are set asi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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