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TMI Blog2003 (5) TMI 443X X X X Extracts X X X X X X X X Extracts X X X X ..... s; that in Plant I, they manufacture cooling unit assembly and condensing unit assembly; that in Plant II they manufacture the gas compressor, parts of gas compressor and other fitting parts like valves, pipes, tubes, etc., necessary for the fitment of the car air- conditioner; that separate purchase orders are placed by the Motor car manufacturers on Plant I and Plant II depending upon their requirements; that based on these orders, supply of the various parts is made separately under separate invoices at various points of time; that at no point of time, the complete car air-conditioner emerges at the hands of Plant I or Plant II; that the customers procure other parts required for assembly of the car air-conditioner from various other manufacturers; that the complete air-conditioner comes into existence during the course of manufacture of the car. 2.2 The learned Advocate mentioned that separate show cause notices dated 2-4-2001 were issued to Plants I and II contending that Serial No. 212A of Notification No. 6/2000 is not available to the parts in question since they are in the nature of sub-assemblies and when the clearances of both the plants are clubbed together, they have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of all manufacturers from one or more factories have to be clubbed in order to determine the eligibility of any exemption as in the case of small-scale exemption notification; that there is no condition in the Notification that the clearances of two or more units of the same manufacturer are to be clubbed to determine whether they are entitled for the exemption. 3.2 He, further, mentioned that in the context of Serial No. 212A of the Notification No. 6/2000-C.E. itself, the Board has, under Circular No. 666/57/2002-CX., dated 25-9-2002, clarified that unless all the parts mentioned in the Circular are supplied together, the exemption to parts of air-conditioner cannot be denied to the goods; that applying the said Circular, the Tribunal in Keihin Panalfa Limited v. CCE - 2003 (151) E.L.T. 367 (T), has held that when all the parts mentioned in the Circular are not supplied, the exemption cannot be denied; that in the present case, both Plant I and Plant II supply different parts of car air-conditioner and at no point of time, all the parts mentioned in the said Circular are supplied by a single plant and accordingly exemption from SED cannot be denied to the Appellants. 4. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at right from the day they started claiming exemption from payment of SED, they had sought clarification from the Department regarding the correct legal position; that they had also filed classification declaration giving therein the details of the goods manufactured by them along with the claim of exemption from payment of duty of SED; that thus mere filing the declaration dated 6-3-2000 indicating the factual position of clearance of parts of air-conditioner cannot amount to misdeclaration; that it is settled legal position that mere staking of claim for an exemption notification cannot amount to misstatement; that moreover penal provisions under Sections 11AB and 11AC of the Central Excise Act are not invokable as these provisions can be invoked only when the duty is determined under proviso to Section 11A(1) of the Act; that in the present matters, duty demand has not been raised under proviso to Section 11A(1); that in fact, the show cause notice did not even allege that the duty demand had arisen on account of any suppression of facts or fraud, etc., on the part of the Appellants with intent to evade payment of duty. The learned Advocate submitted that if the charge of suppre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Plant II; that the sub-assemblies manufactured at Plant I are transferred to Plant II to be used as inputs of the automative air-conditioner system which is completed at Plant II and finally cleared as end-products i.e. automative car air-conditioner to their customers. He also mentioned that M/s. Subros Limited is one legal entity and separate units have been established so as to smoothen the work; that this is strengthened from the fact that their customers were corresponding not with Plant I and Plant II but with M/s. Subros Limited only and they were not talking about parts of air-conditioners but about car air-conditioners. He relied upon the decision in Sharp Business Machines Pvt. Ltd. v. Collector of Customs - 1990 (49) E.L.T. 640 (S.C.). In the said matter the Department has held that the goods covered by three bills of entry to be one consignment which amounted to the import of ten copiers. The Supreme Court held that the Tribunal was not right in setting aside the finding of the adjudicating authority and in taking the view that one has to look into the respective licence and not to the fact that if all the consignments covered by all the bills of entry assembled toge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and assemblies which are sold as kit; that when the Appellants are making assemblies of a car air-conditioner, the same cannot be classified as parts only; that when the car air-conditioner is being cleared in an unassembled form, Rule 2(a) of the Interpretative Rules becomes applicable; that the goods put to assessment are those goods which make the air-conditioning machine and as such the clearances of both the units are to be combined; that Heading 84.15 applies to air-conditioning machine as well as parts thereof; that the goods have to be classified read with Rule 2(a) of the Interpretative Rules, as these goods have the essential character of a car air-conditioner; that accordingly the benefit of Notification will not be available to the Appellants. The learned Senior Advocate emphasised that when an assessee clears all parts which constitute a machine, exemption Notification has to be read with Tariff Heading read with Rule 2(a). He relied upon the decision in Universal Commercial Corpn. v. CC, Delhi - 1994 (69) E.L.T. 150 (T). In this case, since the imported goods contain motor driven fan or blower for circulating the air and also contain a refrigerator unit consisting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that Plant No. II was set up in 1995 and as such it cannot be alleged that Plant II was created to avail the concession of any notification or to camouflage any clearances made by the Appellants; that the question of lifting the veil does not arise as admittedly both plants belong to same limited company; that the demand in show cause notice has not been made on the basis that the goods have moved from Plant I to Plant II. He pointed out that the finding of the Commissioner in the impugned Order that they had admitted that a complete car air-conditioner system was being manufactured in Plant II is erroneous as they had never admitted such a fact; that even their letter dated 4-8-2000 addressed to the Range Superintendent does not state so; that it is clearly mentioned therein that they are the manufacturers of parts and accessories of automotive air-conditioning system . He finally referred to the Commissioner s finding (internal page 30 of the impugned Order) to the effect that the Appellants had cleared air-conditioner system to M/s. Maruti Udyog Limited and contended that these clearances made to Maruti are not the subject-matter of demand of duty in the impugned order. 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or sub-assemblies are not air-conditioning system as defined under Heading 84.15 of the Central Excise Tariff. We also note that the Central Board of Excise Customs, has itself under Circular No. 666/57/2002-CX., dated 25-9-2002, clarified that if an assembly or kit (even in CKD or SKD form) does not have all the above components it will not be considered to have the essential characteristics of an air-conditioning machine and will be classified as parts . The Tribunal, relying upon the said Circular, in the case of Keihin Panalfa Limited v. CCE, Noida - 2003 (151) E.L.T. 367 (T) has held that air-conditioner sub-assembly are eligible for the benefit of exemption under Notification No. 6/2000-CE. We also note that the Appellants, in their letter dated 4-8-2000 has again referred to their earlier declarations in which the benefit of exemption of SED on parts and accessories was claimed by them. They had also mentioned in the said letter that they had been given to understand by the Department to debit the Special Excise Duty. Then they had chosen to pay SED with effect from 4-8-2000 under protest and filed a revised declaration under protest. No mileage from the said declarati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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