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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 ..... l 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 TEMPERATURE AND HUMIDITY, INCLUDING THOSE MACHINES IN WHICH THE HUMIDITY CANNOT BE SEPARATELY REGULATED(+) 8415.10 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir, at least the following elements: An air heating device (operated by hot water, steam or hot air tubes or by electric resistances, etc.) and an air humidifier (generally consisting of a water spray) or an air de-humidifier; Or A cold water coil or a refrigerator unit evaporator (either of which changes both the temperature and, by condensation, the humidity of the air). Or Some other type of cooling element with a separate device for changing the humidity of the air. In certain cases, the de-humidifier makes use of the hygroscopic properties of absorbent materials. Air-conditioning machines may be supplied with their means of heating or cooling from an external source. They are usually 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tain heat from an underground source or from a mass of surface water. (iii) Earth/water or earth/air heat pumps: in these, heat is obtained by means of a system of tubes buried in the earth. Heat pumps may be presented as a single item of apparatus, the various elements of the circuit forming a unit. Such a unit is referred to as a manobloc type. They may also be presented as several separate items. Certain heat pumps may be presented without an evaporator-when they are in tended for installation in plant already containing one. They are, in such cases, to be considered as incomplete articles having the essential character of the complete articles and remain classified here. Heat pumps are used essentially to heat buildings or provide 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovided with drip pans to catch the condensate. We find that the machine imported by the appellant squarely matches with the description given in the HSN Explanatory Note. We also note that Chapter Heading 8418 expressly covers heat pumps other than air- conditioning machines of Heading 84.15. Therefore, once the machines answer the description of Chapter Heading 8415 they cannot be classified under Chapter Heading 8418 as has been held by the Commissioner. We further note that in the Explanatory Notes, heat pumps have been described as of two types i.e. compression type and absorption type. The appellants' machines are neither compression- type nor - absorption type. The heading also excludes reversible heat pump comprising of a 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y illegible and both sides could not make anything out of it. The appellants were given an opportunity by the Bench to produce the original copy of the catalogue for which they sought time only to submit that the original copies were not available. Therefore, photo copies which are illegible cannot be said to rebut the claim of the Commissioner. It is also noted that the operation manual for these very models describes them as air-conditioner and not heat pumps. The appellants submission that the operation manual is common for both heat pumps and air-conditioner is far from conversing when the manual refers to only air conditioner and not heat pumps. 7. In view of above, we are in agreement with the findings of the Commissioner 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o under Chapter Heading 8415. It was submitted that once it is considered a reversible type of heat pump then since at heat pumps are eligible for concessional rate of duty, exemption cannot be denied. They also referred to wickipedia free encyclopedia in which example of heat pumps includes air-conditioner and reversible cycle heat pump for pro viding thermal comfort. 10. We however find that once the goods have been described as air conditioner, understood in common parlance as air-conditioner, referred to in the catalogue of manufacturer as air-conditioner even though supplier are engaged in the manufacture of both air-conditioners and heat pump, it cannot be concluded on the basis of some literatures that the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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