TMI Blog2006 (8) TMI 427X X X X Extracts X X X X X X X X Extracts X X X X ..... rs for the individual parts described on the purchase orders with delivery Schedules for individual entities given/determined by the customers. 1.4 The assessee had claimed exemption under notification No. 22/2000-C.E., dated 6-3-2000 as available to parts of Air Conditioning Machines. They were issued a notice, seeking as to why the said exemption not be denied duty recovered under the proviso to section 11A of the Act with penalty under Section 11AC along with interest under Section 11AB for the clearance, effected, during the period 7-3-2000 to 22-9-2001 on the grounds that the said clearances effected was to be classified as Complete Air-conditioning Machine by virtue of Rule 2(a) note 4 to Section XVI. As these were to be considered as complete Air Conditioning Machine the clearances were not entitled to the exemption under Notification 22/2000. The notice alleged suppression of facts with intent to evade payment of duty on the ground that the assessee misled the Department by deliberate use of unique terminology to describe the goods and deliberately not indicating on the classification declaration for the year 2000-2001 whether they were filed to amend or supercede the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ins the position in this regards :- Nomenclature used by Telco/M M What it contains ? (A) Kit fit on cab? (1) Climate Box Assembly (a) Expansion Valve (b) Blower (c) Evaporator (d) Duct Installation (2) Condenser Assembly (e) Fan (f) Condenser (g) Receiver Drier (3) Control Panel Assembly (h) Control Panel (4) Pipe Assembly (i) Three pipes fitted with connector (B) Compressor Assembly (j) Compressor (C) Compressor Mounting Bracket (k) Mounting Bracket Compressor mounting bracket are nothing but simple brackets used for clamping or mounting the compressor on the engine. Compressor assembly is nothing but complete/fully built compressor. This is supplied as a single piece or as one complete/compact unit in the imported condition. Kit fit on cab derives its nomenclature from the fact that the individual items that make up this kit are for fitment on the cabin of the car. The words Kit A/c are used is to denote that these items are for the air conditioners of the car. The item Kit is used to denote that items comprising this kit are su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... becomes cool. The Liquid Refrigerant gets converted into gaseous form because of absorption of heat. This cool air is circulated to the interior of the car by means of duct and grills on the instrument panel. The control panel assembly helps in controlling the flow and direction of cool air inside the car. The above cycle continues and in the process the air in the passenger compartment of the vehicle becomes cool. A variant of Air-Conditioning Machine also comes with heater and ventilation. Air-Conditioning machine with Heater circulate hot air inside the passenger compartment of the car wherever needed. This is generally so, when outside temperature is very low. Ventilation provides an inlet for fresh air. 2.3 In the absence of manufacture of Compressor Motor by the Appellants, the Appellants could not be said to be manufacturing complete Air-conditioning Machine by applying Interpretation Rule 2(a). As Compressor is an essential part of an air-conditioning machine. It is the heart of the machine. Its cost is submitted to be half the total cost of all parts put together. An Air-Conditioning Machine without a compressor cannot be said to incomplete air conditioning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the six essential elements mentioned therein, then the clearances cannot be considered to be of an entity which can be said to have acquired the essential characteristic of an Air-Conditioning Machine will have to be classified as parts. From the chart extracted herein above it is seen that there is no Motor contained in the entities cleared Motor also occurs at Sr. No. (iii) Condenser at Sr. (v) of the list of six essentials, the clearance of the entities therefore sans these essentials only qualifies to be clearance of Parts not essential characteristic Acquired Air Conditioning Machine as per Rule 2(a) of the Rules of Interpretation when Boards circular is applied. 2.4 Manufacture is a pre-condition before section note 4, can be applied since classification cannot precede manufacture under the Central Excise Levy. When manufacture of an Air-conditioning Machine or an essential chargeable Air Conditioning Machine does not arrive as per Boards Circular and only parts having arisen, due to absence of Motors of Compressor, application of Section note is not called. In any case, after assembly in a Car, at various stages of an automobile assembly line the entities are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on has been arrived by the Board after examining the issue when doubts were expressed on activity of conversion air conditioning a car, would lead to the only conclusion that no duty, on an Air Conditioning Machine can be upheld, since no such entity comes into existence. The DR s plea that this clarification would be applicable to the garages and conversion of a non air conditioned car to an air conditioned car will not alter the observation of the Board on the fact observed that Air Conditioner Machine does not come into existence in an automobile. Revenue now cannot turn around from this fact arrived to call for duty as in Air Conditioner Machine on clearance effected by the supplier to an automobile manufacturer of Parts of an Air Conditioner system. 2.7 When no duty demands could be upheld as no Air-Conditioner Machine ever comes into existence at any stage as be understood is the Central Excise Act, the plea reliance on what the assessee term the entity in the documents, as relied upon, will not after the position. If by application of law on facts manufacture does not take place then duty levy as not called or to be applying the common understanding Test. 2.8 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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