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TMI Blog2001 (7) TMI 621X X X X Extracts X X X X X X X X Extracts X X X X ..... equipment. 2. Learned Counsel R. Ravindran, at the outset pointed out to the show cause notice which is at page 135 to 143 of the paper book. Show cause notice, dated 10-1-1995 recapitulated the facts of the case and on the basis of the statement of Shri Govindam, Manager of the appellant company and various documents recovered from the appellants office; that is the tender notices describing the items which are required to set up the plant, the show cause notice has alleged that the item is to be treated as a heat exchanger which is classifiable under Chapter S.H. No. 8419.00 of the Schedule to the CETA attracting the effective rate of Central Excise duty @ 20% adv. at the relevant item as on 31-3-1994. The show cause notice mentions proviso to Section 11A to invoke larger period to claim the duty difference on the goods said to have been manufactured by the appellants in procurement of the work contract from DGNP. 3. The appellants gave a detailed reply to the show cause notice which is at page 201 of paper book and also filed synopsis of their submission which is also filed at page 218 to 227 of the paper book. Learned Counsel submit that at the first instance they had taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with duty at 10% only. He submits that the order is quite clear on all aspects of the matter including the appellant being the manufacturer as they had accepted the tender and carried out the work and they are not considered hired labourer as claimed by them, as they had not work directly as a hired labourer under DGNP. The contract clearly discloses that the relationship between DGNP and the appellant was on principal to principal basis and not that of a hired labourer . He seeks for confirmation of order-in-original. 6. In counter learned Counsel reiterated his pleas, besides submitting that they had claimed deductions for certain item like hoses and cables. The Commissioner has also unjustly rejected their claim of Modvat on the inputs used in the manufacturing of the item which had been put as an alternate argument. He also submitted that there was no justification for imposition of penalty. 7. We have carefully considered the submissions made by both the sides. We note from the show cause notice, dated 10-1-1995 that the main allegation brought out in para 2 to 7 is that the appellant had manufactured heat exchanger on accepting the contract from DGNP and cleared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sure to low pressure through expansion valve. The refrigerant is evaporated in the chiller. The chilled water is cooled by the refrigerant by removing heat in chiller. They added that the entire plants were assembled at site with bought out indigenous items. 6. From the foregoing it is evident that M/s. Blue Star Limited, Visakhapatnam responding to a tender notice clinched the tender for the provision of 4 mobile chilled water plants which are used for providing Air conditioning of the ship/submarine whose in built chilled water plants are switched off during maintenance. In the chilled water plants there are 3 circuits namely ; (1) Condenser water circuit (2) Refrigerant re-cycling circuit and (3) Chilled water circuit. In the first circuit sea water is circulated through the condenser by means of a pump and motor. In the second circuit refrigerant gas is compressed in a compressor and then condensed in the condenser by exchanging the heat to sea water and then expanding to lower pressure through Expansion valve and goes to the chiller to exchange heat with the water circulating in the chiller through ships/submarines and thereby providing air conditioning to them. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions made by the appellant, besides the plea of Modvat claim and the penalty being not imposed and demands being time barred. We are not happy with the findings recorded on the issue of classification of the goods. The Commissioner ought to have addressed himself to the question in greater detail and discussed the item, its nature, its technical details and as to how the item is required to be considered as a Heat Exchanger and as to why it is required to be classified under S.H. No. 8419.00 of CETA. The findings recorded by him is in one line. The para (7) of the order is reproduced below; 7. The next question relates to classification of the product. From the technical specification and functional parameters mentioned at para No. 1 it is clear that the product conforms to the tariff description under sub-heading No. 8419.00 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986). Coming to the question of applicable rate of duty on Mobile Chilled Water Plant, I find that Department has demanded the duty 20% adv., as leviable on goods falling under sub-hd. No. 8419.00 However, the assessee contended that the duty liability should be 10% Adv. as the product mer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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