TMI Blog1989 (6) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... L No. 161/R-III/Noida/87, dated nil effective 8-5-1987. (2) Order-in-Original C.No.V(30)171-Misc/Subros/87/4122-26, dated 18-8-1987 confirming the demand of Rs. 94,46,804.51 for the period September, 1986 to May, 1987. (3) Order-in-Original C.No.V(30)171-Misc/Subros/87/4118-21, dated 18-8-1987 modifying the C/L No. 207/86 effective 22-6-1988. (4) Order for approval of C/L No. 207/86 effective 22-6-1986. (5) Order for approval of C/L No. 103/87 effective 22-6-1986." Vide Order Nos. 322 to 327/88-B1, dated 19-7-1988 the Bench had condoned the delay in the filing of the supplementary appeals. Since the above captioned appeals emerge from a consolidated order passed by the Collector of Central Excise (Appeals), the same are disposed of by this consolidated order. 2. Briefly the facts of the case are that M/s. Subros Ltd., C-51, Phase II, NOIDA (U.P.) had filed two classification lists No. 103 and 207 both effective from 22nd June, 1986. In the classification list No. 103 the relevant items were gas compressors for air-conditioning system in car and light commercial vehicles and air-conditioning parts and accessories for car/light commercial vehicles. The classification of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing reference to Rule 2(a) of the Rules of Interpretation, conclusion was drawn that the respondent s products had the essential character of air-conditioners. Two conclusions had been drawn by the Asstt. Collector by reading of Rule 2(a) of Rules of Interpretation. One was that incomplete and unfinished articles were to be treated as complete and finished articles. Secondly, unassembled or disassembled articles must be classified as if they were assembled. The Asstt. Collector had also elaborated the concept of essential character . The relevant observation in this context is Essential Character does not mean that the article though incomplete/unfinished should have reached the stage when it can function as a finished and complete article because the rule does not anywhere state anything about the article being ready to perform any specific function. For an article to have achieved the essential character as stated in this rule, it would suffice if the article in incomplete/unfinished condition has got the character identifying the article and is at the stage from where it cannot, in any manner be converted into any article other than the one the essential character of which it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Collector (Appeals), the respondent had contended that in the correspondence exchanged between Maruti Udyog Ltd. and Subros Ltd. regarding bulk order, the items to be supplied by M/s. Subros Ltd. had been described as air-conditioning components kits. In the letter dated 21-9-1987 from Maruti Udyog Ltd. addressed to Messrs Subros Ltd., it was certified that we confirm that blower assembly is not part of AC kit. Blower assembly is a standard fitment in our car and at present, we are importing it from our collaborators, M/s. Suzuki Motor Co., Japan and same is fitted in our car in MUL . There was another certificate dated 1st July, 1987 from Messrs Nippon-denso Co. Ltd, the collaborators of M/s.Subros Ltd. This certificate reads as We are in collaboration with M/s. Subros Ltd. for manufacture of components of automotive air-conditioners for the Maruti car. The parts and components manufactured under our supervision do not contain a motor driven fan or blower and since the components also do not have a Prime Mover, which is the Maruti s car engine, the components manufactured by us cannot be assembled and made to function independently without fitment in the Maruti Car. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollector s order on classification lists No. 207/86 and 103/86 were bad in law and were in excess of jurisdiction. He had dismissed the applications filed by the Asstt. Collector and had allowed the appeal filed by M/s. Subros Ltd. 6. Being aggrieved from the aforesaid order, the Collector of Central Excise, Meerut, has come in appeal before the Tribunal. 7. Shri J.N. Nigam, the learned Senior Departmental Representative has appeared on behalf of the appellant. Shri Nigam has made a prayer for accepting the miscellaneous application No. 317/88-B1, dated 18th August, 1988 making a prayer for admission of additional evidence which was the second annual report for 1986-87 of the respondent, Messrs Subros Ltd. Shri Nigam stated that the period involved in June, 1986 to May, 1987 and the accounting year ending of the respondent is 30th April, 1987 and the same may be taken on record. 8. Shri B.B. Gujral, the learned Advocate who had appeared on behalf of the respondent, stated that he has got no objection to its admission. 9. After hearing both the sides, the Bench had allowed the miscellaneous application No. 317/88-B2 filed by the revenue. 10. Shri B.B. Gujral, the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vocate, has pleaded that in the interest of justice the additional evidence may be admitted. 11. Shri J.N. Nigam, the learned SDR, who has appeared on behalf of the appellant states that there is a certificate filed by the respondent dated 11th August, 1988, whereas the period of demands commenced in May, 1987. He opposes the admission of additional evidence and states that with the help of both the documents, respondent is making a new case. In support of his case, he has referred to the judgment of the Delhi High Court in the case of Gunvant and Others v. Collector of Central Excise and others reported in 1987 (32) E.L.T. 53 (Del.) where the Delhi High Court had held that "it is well settled that additional evidence is not permissible even in appeal to enable one of the parties to remove lacuna in presenting its case at the proper stage and fill in gaps". Shri Nigam has pleaded for the rejection of the respondent s prayer for additional evidence. 12. Shri B.B. Gujral, the learned Advocate who has appeared on behalf of the respondent again said that the respondent is not removing any lacunas by the additional evidence and states that for proper disposal of the appeal, the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority shall comply with the directions of the Tribunal and after such compliance send the documents, the record of the deposition of the witnesses or the record of the evidence adduced, to the Tribunal. (4) The Tribunal may, of its own motion, call for any documents or summon any witness on points at issue, if it considers necessary to meet the ends of justice." Rule 27 of Order 41 C.P.C. Production of additional evidence in Appellate Court :- (1) The parties to an appeal shall not be entitled to produce additional evidence, whether oral or documentary, in the Appellate Court. But it- (a) the Court from whose decree the appeal is preferred has refused to admit evidence which ought to have been admitted, or (aa) the party seeking to produce additional evidence, establishes that notwithstanding the exercise of due diligence, such evidence was not within his knowledge or could not, after the exercise of due diligence, be produced by him at the time when the decree appealed against was passed, or (b) the Appellate Court requires any document to be produced or any witness to be examined to enable it to pronounce judgment, or for any other substantial cause, the Appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent under sub-heading 8414.10 and parts and accessories of automotive A/Cs for cars and light commercial vehicles under sub-heading 8415.00 at the rate. of Rs. 2500.00 per piece read with Notification No. 135/87-C.E., dated 8th May, 1987 and parts at the rate of 40% read with Notification No. 166/86-C.E., dated 1st March, 1986 as amended from time to time and the revenue changed the classification to sub-heading 8415.00 attracting duty at the rate of Rs. 8000.00 per piece taking both the products as air-conditioners read with Notification No. 166/86, dated 1st March, 1986 as amended as per detailed order. Shri Nigam had argued that the so-called parts by the respondent make a complete kit of air-conditioner for car. He has referred to the order-in-original and the order of the Collector (Appeals). He has argued that heading description speaks of air-conditioning machines comprising of a motor driven fan and elements for changing the temperature and humidity including those machines in which the humidity cannot be separately regulated. Shri Nigam has argued that in the present matter only motor driven fan and blower and the parts so removed completely retain the character of an air- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-heading 8415.10 which appears on page 98 of the paper book which relates to air-conditioning machines, comprising a motor driven fan and elements for changing the temperature and humidity, including those machines in which the humidity cannot be separately regulated. He has also referred to classification list No. 161 which appears on page 51 of the paper book. He has referred to Notification No. 166/86-C.E., dated 1st March, 1986 and Notification No. 135/87-C.E., dated 8th May, 1987. Shri Gujral has also referred to Collector (Appeals) order and in particular he has referred to internal pages 4, 5 and 10 of the paper book. Shri Gujral has argued that the classification lists No. 103/87 and 207/86 were approved by the Asstt. Collector. Thereafter the revenue had filed applications before the Collector (Appeals) to be treated as appeals and, however, during the pendency of the appeals before the Collector (Appeals) the Asstt. Collector had modified the approval order of classification lists No. 207 and 103 which he was not competent to do so. Shri Gujral, the learned Advocate, has referred to internal page 5 of the Collector (Appeals) order where the tariff description 8415.00 ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instant case, classification of parts and accessories has been sought under sub-heading 8415.00 by the respondent. The classification of the gas compressor has been sought for under the sub-heading 8410. The classification of the products viz. gas compressor, cooling unit and other components and parts by clubbing them together and treating them as one full set of air-conditioner as taken by the Department cannot, therefore, be sustained. The classification by the department is not correct in law. Shri Gujral has referred to a judgment of the Tribunal in the case of Bharat Heavy Electrical Ltd. v. Collector of Customs, Madras reported in 1987 (28) E.L.T. 545 (Tri.) and had laid special emphasis on para No. 8 of the judgment. The head note reads as follows : In order to apply the provisions of Rule 2(a) it has to be seen (1) whether the imported product had attained the approximate shape or outline of the finished article; (2) whether the said imported article can only be used for completion into the finished article and (3) these would have to be determined with reference to the nature of the material, its bulk, quantity, weight or value. This very enumeration would, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made wholly of commodity commercially known as plastics and not articles made from plastics along with other material and it is a settled law that an expression used in a taxing statute for describing a commodity must be given the meaning which is generally given to it by a person in the trade or in the market of commodities and in the sense the person conversant with the subject-matter of statute and dealing with it will attribute to it . Shri Gujral, the learned Advocate, has argued that the department has failed to place any evidence on record as to the commercial parlance for the air-conditioner and for automobile and as such these are to be admitted as classification list filed by the respondent. The appeals filed by the revenue needs to be dismissed. 15. Shri J.N. Nigam, the learned Senior Departmental Representative in reply refers to Explanatory Notes. He has stated that if M/s. Maruti Udyog had any intention of manufacturing the air-conditioner, they could have imported the parts directly also and the goods manufactured by the Respondent have to be assessed as air-conditioners. He has pleaded for the acceptance of the appeal. 16. We have heard both the sides and have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty 84.14 XX XX XX XX 8414.10 Gas compressors of a kind used in refrigerating and air-conditioning appliances and machinery 110% plus Rs. 12,000 per compressor XX XX XX XX 84.15 8415.00 Air-conditioning machines comprising a motor-driven fan and elements for changing the temperature and humidity cannot be separately regulated 110% plus Rs. 15,000 per machine 110% plus Rs. 15,000 per machine 19. Notification No. 166/86-C.E., dated 1st March, 1986 prescribes the effective rate of duty for Gas compressors of the kind used in air-conditioners including room air-conditioners (window type), slit unit air-conditioners and package type air-conditioners of capacity not exceeding 7.5 tonne at the rate of Rs. 4,000/- per compressor vide Sl. No. 1 of the said Notification. Sl. No. 6 of the same Notification prescribes the rate of duty on Parts and accessories of refrigerating and air-conditioning appliances and machinery, all sorts at 40% ad valorem. 20. The Respondents manufactured the following :- (1) Automotive Gas Compressor with Magnetic Clutch (8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner should essentially have a motor driven fan/blower. 22. We have also perused the Certificates dated llth August, 1988 and 1st July, 1987 which appear on page 1 and 84 of the paper book respectively. The same are reproduced below :- DENSO NIPPONDENSO CO., LTD ____________________________________________________________________________ T 448 1-1 SHOWA-CHO KARIYA CITY AICHIPREF., JAPAN TELEX : NIDENSO J 59916 CABLE : NIDENSO KARIYA TELEPHONE : KARIYA (0566) 22-3311 July 01, 1987. TO WHOM IT MAY CONCERN We are in collaboration with M/s. Subros Limited for manufacture of components of Automotive Air-conditioners for the MARUTI CAR. The parts and components manufactured under our supervision do not contain a motor driven fan or blower and since the components also do not have a Prime Mover, which is the Maruti s Car Engine, the components manufactured by us cannot be assembled and made to function independently without fitment in the Maruti Car. Sd/- (Y. ITAKURA) MANAGER OVERSEAS ENGINEERING DEPTT. NIPPONDENSO CO. LIMITED" Certificate dated August 11, 1988 :- August 11, 1988 TO WHOM IT MAY CONCERN In application of our Certificate dated the 1st July ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and filtration capabilities. When an electric heater is built into it with suitable controls, it functions as a year-round air-conditioning system. Unitary air-conditioners are manufactured in capacities as high as 100 tons (1 ton of air-conditioning equals 12,000 Btu/hr) and are designed to be mounted conveniently on roofs, on the ground, or other convenient location, where they can be connected by ductwork to the conditioned space. Built-up or field-erected systems are composed of factory-built sub-as-semblies interconnected by means such as piping, wiring, and dueling during final assembly on the building site. Their capacities range up to thousands of tons of refrigeration and millions of Btu per hr of heating. Most large buildings are so conditioned. Another important and somewhat parallel distinction can be made between incremental and central systems. An incremental system serves a single space; each space to be conditioned has its own, self-contained heating-cooling-dehumidifying-filtering unit. Central systems serve many or all of the conditioned spaces in a building. They range from small, unitary packaged systems to serve single-family residences to large, built ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ading 8415.00 reads, Air-conditioning machines, comprising a motor driven fan and elements for changing the temperature and humidity, including those machines in which the humidity cannot be separately regulated." In the HSCN, the heading note under sub-heading 8415.00 reads, this heading covers certain apparatus for maintaining required conditions of temperature and humidity in closed spaces. The machine may also comprise elements for the purification of air. They are used for air-conditioning offices, homes, public halls, ships, motor vehicles etc. and also in industrial installations requiring special atmospheric conditions (e.g. in the textile, paper, tobacco or food industries). The heading applies only to machines; (1) equipped with a motor driven fan or blower, and (2) designed to change both the temperature (a heating or cooling element or both) and the humidity (a humidifying or drying element or both) or air and (3) for which the elements mentioned in (1) and (2) are presented together. The note further states that from the structural point of view, the air-conditioning machines of this heading must, therefore, incorporate, in addition to the motor driven fan or blower ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Accordingly the goods in dispute do not pass the test of essential character. Reference to Note 4 to Section XVI is also not relevant. The note relates to a machine consisting of individual components intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or 85, and it has been laid down that, then the whole falls to be classified in the heading appropriate to that function. In the matters before us, gas compressor, cooling unit and other parts and components cleared by the Respondents have not become air-conditioning machine within the meaning of the term under sub-heading 8415.00 and once a motor driven fan or blower is fitted to the air-conditioning kit, there is no dispute as to its classification. The same will be classified under sub-heading 8415.00 as air-conditioning machine. In the matter before us classification of parts and accessories has been sought for under sub-heading 8415.00 by the Respondents. The classification of these products under sub-heading 8414.00 cannot be accepted as has been claimed by the Department. Accordingly we uphold the findings of the Collector (Appeals). 27. In the result the six appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X
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