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TMI Blog2007 (5) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... itioning machines classifiable under Chapter Heading 8415 without benefit of Notification 30/88. For the purpose of countervailing duty also they appear to be classifiable under Chapter Heading 8415 of the Central Excise Tariff. 2. In view of this a show cause notice was issued seeking to classify goods under Chapter Headmg 8415 denying exemption under and also proposing confiscation of the goods for mis-declaration and for want of licence The show cause notice was adjudicated by Commissioner who held that the goods were classifiable under Chapter Heading 8415 and the benefit of Notification 30/88 was held to be inadmissible. The goods were also confiscated for want of licence as well as for mis-declaration with an option to redeem the same on payment of fine of Rs. 30 lakhs. A penalty of Rs. 5 lakhs was also imposed on the appellants. 3. Heard both sides. 4. Since the matter relates to classification and the order-in-original is primarily based on the HSN Explanatory Notes it will he useful to reproduce the relevant entries the HSN Explanatory Notes which read as under "84.15 - AIR-CONDITIONING MACHINES, COMPRISING A MOTOR-DRIVEN FAN AND ELEMENTS FOR CHANGING THE TEM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally fitted with air cleaners, consisting of one or more layers of filtering material often impregnated with oil (textile material, glass wool, steel or copper wool, expanded metal, etc.) through which the air is passed to remove suspended dust, etc. They may also be provided with devices for adjusting or automatically control ling the temperature and humidity of the air. This hearing also covers apparatus which, although not fitted with a device for separately regulating the humidity of the air change the humidity by condensation. Examples of such apparatus are the self-contained window and wall-mounted types and apparatus for cold stores consisting of a combined cooling evaporator and motorized blower. Also included are units for heating/cooling a closed chamber (lorry, trailer or container), consisting of a compressor, a condenser and a motor in a housing mounted on the out- side of the goods compartment and of a ventilator and an evaporator within the container. 84.18 - REFRIGERATORS, FREEZERS AND OTHER REFRIGERATING OR FREEZING EQUIPMENT, ELECTRIC OR OTHER; HEAT PUMPS OTHER THAN AIRCONDITIONING MACHINES OF HEADING NO. 84.15. 8418.61 - Compression type units whose condens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide domestic hot water. Non-reversible heat pumps are generally used for these purposes. However, the heading excludes reversible heat pumps comprising a motor-driven fan and elements for changing both the temperature and the humidity. These are regarded as air-conditioning machines of Heading 84.15." 5. We find that the Commissioner while arriving at his finding has heavily relied upon the Explanatory notes to rebut the contention of the appellants. It was the appellants contention that in order to classify the goods under Chapter Heading 8415 air-conditioning machines should comprise of motor driven fan and element for changing the temperature and humidity and since in their case the goods were air-conditioning machines which did not have element for regulating the humidity and as per explanatory notes to Chapter Heading 8415 the air-conditioning machines must incorporate in addition to the motor driven fan or blower for circulating the air, at least element like air heating device and air de-humidifier and some other type of cooling element with a separate device for changing the humidity of the air, it cannot be considered as air-conditioning machines It was the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... motor fan and elements for changing both the temperature and humidity. We have also gone through the expert opinion given by the IIT Professor and are in agreement with the finding of the Commissioner that the opinion has overlooked the HSN Explanatory Notes and has over emphasized the fact that in 160 unit, there is no separate inbuilt provision for regulating the humidity of the air and according to him a single unit which changes both the temperature and by condensation the humidity of the air even though it answered to the description in the HSN Explanatory Note cannot be considered as air-conditioner. Therefore, once the HSN explanatory notes are internationally valid, they are the best guide for determining the classification of a product and once the expert opinion disputes the very explanatory notes, there is no need of rejecting the same by another expert opinion as is being contended by the appellants. It may be pertinent to point out that the appellants have accepted classification under Chapter Heading 8415 in respect of the 8 units and the dispute is in respect of the remaining 160 units. 6. We also note that similar goods were imported by the appellants earlier an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner that the machines imported by them are air-conditioning machines classifiable under Chapter Heading 8415 and riot 8418 as claimed by the appellants. 8. Now, we shall deal with the appellants' plea regarding the eligibility to the exemption provided under Notification 30/88 dated 1-3-1988. Under Sr. No. (9) of this notification "heat pumps for space heating, water heating, cooling application" are exempted from Custom duty as is in excess of 35% ad valorem and from whole of the additional duty of custom leviable thereon under Section 3 of the Customs Tariff Act. The appellants contention is that even if the machines imported by them is to be considered as air-conditioner machine classifiable under Chapter Heading 8415 since the notification does not specify the Chapter Heading under which the heat pump should fall, it would also cover air conditioning machines as imported by them once it answered the description of heat pumps for space heating, water heating, cooling application and therefore shall be eligible for exemption It was submitted that air-conditioner is a specie of heat pumps and is essentially a heat pump and therefore once the exemption is not confined to go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he goods are nevertheless heat pumps as the term air-conditioner has been used and understood differently in the technical opinion given by the IIT professor and some of the literature now cited before us. The Commissioner has also not held it to be reversible heat pumps but only said that if one were to consider it as a type of heat pump. It does not mean that he has held it as heat pump. We also note that in respect of 8 units which the appellants have accepted them to be air conditioner, the claim for exemption has been given up. The appellants contention that the Interpretative Rules do not apply to exemption notification as per CESTAT decision in the case of LG Electronics India Pvt. Ltd. v. Commissioner of Customs (I), Mumbai, reported in 2006 (204) E.L.T. 450 is also not relevant as in that case the matter related to rules of interpretation and not HSN Explanatory notes. Further in this case the finding have been given on the basis of facts as brought out by the appellants own literature and therefore this decision is not relevant. In view of this we hold that the appellants are not entitled to the exemption under Notification 30/88. 11. The other charge is regarding mis ..... 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