1998 (10) TMI 231 - AT - Central Excise

Scientific and laboratory equipment/instruments - Benefit of Notification No. 155/86-C.E. dated 1-3-1986 available.

Issues Involved:
1. Classification of the machinery under the appropriate sub-heading.
2. Eligibility for exemption under Notification No. 155/86.
3. Interpretation of the term "refrigerating and air-conditioning machinery."
4. Applicability of Notification No. 166/86.
5. Discriminatory application of exemption benefits.

Detailed Analysis:

Issue 1: Classification of the Machinery
The appellants manufactured scientific and laboratory equipment falling under sub-heading 8419.00 of the Schedule to the C.E.T.A., 1985. The equipment included items such as Cloud & Pour Test Apparatus, Low Temperature Bath, B.O.D. Incubator, Humidity Control Oven, CO2 Incubator, Orbital Shaker Incubator, Seed Germinator, Freeze Dryer, and Low Temperature Cabinet. The Department contended that these items contained components like power-operated compressor condenser, fan motors, and capacitors, which operate on the principle of refrigeration, classifying them as refrigeration machinery/equipment.

Issue 2: Eligibility for Exemption under Notification No. 155/86
The appellants sought exemption under Notification No. 155/86, which provided a concessional duty rate of 15% for goods other than refrigerating and air-conditioning machinery and parts thereof. The Department argued that since the equipment worked on refrigeration principles, they were not eligible for this exemption. The appellants contended that their products were laboratory equipment used for scientific purposes, not domestic refrigeration or air-conditioning machinery, thus qualifying for the exemption.

Issue 3: Interpretation of the Term "Refrigerating and Air-Conditioning Machinery"
The lower authorities interpreted "refrigerating and air-conditioning machinery" to include any equipment operating on refrigeration principles. The appellants argued that this interpretation was too broad. They cited the Madras High Court decision in Assistant Collector v. New Horizon Sugar Mills and the Tribunal decision in Indian Airlines Corpn. v. Collector of Customs, emphasizing that words in an exemption notification should cover what they legitimately can, not be given an extended meaning.

Issue 4: Applicability of Notification No. 166/86
Notification No. 166/86 prescribed a higher duty rate of 60% for refrigeration appliances and machinery. The Department classified the appellants' products under this notification. The appellants argued that their equipment, being laboratory instruments, were not specified under Sl. No. 6 (iii) of Notification No. 166/86 and thus should not attract the higher duty rate.

Issue 5: Discriminatory Application of Exemption Benefits
The appellants claimed that other manufacturers of similar equipment were granted the concessional rate under Notification No. 155/86, and only they were being subjected to the higher rate under Notification No. 166/86. They cited the Tribunal decision in Guest Keen Williams v. Collector of Central Excise, arguing that denial of exemption on a discriminatory basis was unjust.

Judgment Analysis:
The Tribunal found that the lower authorities' interpretation of "refrigerating and air-conditioning machinery" to include equipment working on refrigeration principles was unwarranted. The specific mention of "refrigerating and air-conditioning appliances" in Notification No. 155/86 should not be extended to include all equipment operating on these principles. The Tribunal referred to the decision in Collector of Central Excise v. Hind High Vaccum Co. Ltd., where machinery involving refrigeration was not classified as refrigerating machinery.

The Tribunal concluded that the appellants' equipment, though operating on refrigeration principles, were not "refrigerating and air-conditioning machinery." Therefore, they did not fall under the excluded category of Notification No. 155/86. The benefit of the said notification could not be denied to the appellants.

Conclusion:
The appeal was allowed, and the impugned order was set aside, granting the appellants the consequential benefits of the exemption under Notification No. 155/86.

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