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TMI Blog2006 (7) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... er refrigerating or freezing equipment. Accordingly, the chillers in question shall fall under specific heading 84.18 of the Tariff Act. This view is supported by the explanatory notes of H.S.N. below heading 84.15. Chillers in the domestic and international trade parlance are known as refrigerating equipment. The trade identifies chillers as refrigerating machinery on the basis of its function of chilling water using refrigerating circuit. Even by testing it from the commercial parlance test as well the chillers would not be classifiable under Chapter Heading 84.15. Appeal dismissed. - Civil Appeal No. 3914 of 2001 & C.A. Nos. 8418 - 8419 of 2001, C.A. Nos. 4715 - 4717 of 2002, C.A. No. 2898 of 2005 - - - Dated:- 5-7-2006 - ASHOK BHAN AND LAKSHMANAN AR.DR. JJ. Civil Appeal No. 3914 of 2001, Civil Appeals Nos. 8418, Civil Appeals Nos. 8419 of 2001, Civil Appeals Nos. 4715 of 2002, Civil Appeals Nos. 4716 of 2002, Civil Appeals Nos. 4717 of 2002, Civil Appeals Nos. 2898 of 2005 K. Swami, Vikas Bansal for P. Parmeswaran, Ashok Mathur, Rakesh Ojha, Arindam Ghose, Ragvesh Singh, Kumar Vivek Vibhu, Ms. Indra Sawhney, Gopal Jain, Ms. Ruby Singh Ahuja,Debmalya Banerjee for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neer, working with the respondent and Shri A.K. Mehra, B.Sc. Engineering Electrical, working as a Manager (Mechanical) dealing with designs of mechanical engineering in M/s. Jacob H C Ltd., were recorded. 5. The Department on perusal of the statements dated 31.12.1998 of Shri R.K. Verma and statement dated 27.1.1999 of Shri A.K. Mehra, the literature /brochure available on the subject and the purchase orders placed by various customers came to the conclusion that the respondent erred in classifying the chillers under heading 84.18 as 'other refrigerating of freezing equipments', as the majority of the customers (more than 90%) had placed their purchase orders for supplying of chillers of various capacities along with air handling units or fan coil units and other electrical accessories required for use in air-conditioning purposes; That chillers when used in combination with AHU connected with chiller water system cools and dehumidifies the air and there is no difference between this system and central air- conditioning system as the effect will be the same. That the main application of both types of chillers is for air-conditioning of the various types of large b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the impugned show cause notice invoking the extended period of limitation of 5 years under the proviso to Section 11A of the act was without jurisdiction and no valid proceedings could subsist there under it was submitted that they were manufacturing and clearing the chillers which are also known in trade parlance as refrigerating machinery for which classification / declaration list had been accepted by the department On merits, it was submitted that it was common knowledge that chillers and cooling towers are generally used in relation to central air-conditioning plant for air-conditioning of large areas such as hotels, airports, Govt. offices/departments and that the facts which are within the common knowledge ought to be presumed in law to be within the knowledge of the excise department; the allegation made by the department that end use of the chiller is for the air-conditioning purposes and hence the chiller must be treated as part of the air-conditioner, was erroneous in law; that the process of manu- facture of a product and the end use to which it is put cannot necessarily be determinative of the classification of that product under a fiscal schedule like ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... short paid on 249 chillers valued at ₹ 10,79,55,623/- was confirmed and ordered to be recovered under Rule 9 (2) read with Section 11A. Penalty of ₹ 1,84,62,136 / -was imposed under section 11AC of the Act. Interest was also ordered to be charged under Section 11AB of the Act. 8. Being aggrieved by the orders passed by the authority-in-original, respondent filed appeal before the Central Excise and Gold (Control) Appellate Tribunal (for short the Tribunal ). The Tribunal by the impugned order has accepted the appeal, set aside the order-in-original and held that the end use of chillers in the air-conditioning system would not take away the primary or basic function of the chillers which is to produce chilled water by refrigeration circuit and the same shall fall under Chapter Heading 84.18 of the tariff act. 9. Aggrieved by the orders passed by the Tribunal, the Department has filed the present appeals. 10. Shri K. Radhakrishnan, learned senior advocate appearing for the Revenue submitted that the chillers are nothing but an integral part of the central air-conditioning system and a complete central air-conditioning system comes into existence when chille ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the primary function of the chiller is to refrigerate or chill water/liquid irrespective of the industrial or other application which the chilled water is put to. Air-conditioning system is just one amongst the various industrial applications in relation to which chillers are used. Only because 90% of the chillers manufactured by the respondent are used in the air-conditioning system cannot be the basis for classification of the chillers as parts of air- conditioning system classifiable under heading 84.15. 15. End use to which the product is put to by itself cannot be determinative of the classification of the product. See Indian Aluminium Cables Ltd. vs. Union of India and Others, 1985 (3) SCC 284. There are a number of factors which have to be taken into consideration for determining the classification of a product. For the purposes of classification the relevant factors inter alia are statutory fiscal entry, the basic character, function and use of the goods. When a commodity falls within a tariff entry by virtue of the purpose for which it is put to, the end use to which the product is put to, cannot determine the classification of that product. 16. Tariff heading 84.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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