TMI Blog2019 (7) TMI 1506X X X X Extracts X X X X X X X X Extracts X X X X ..... oor and outdoor units for split system or conditioning machines when presented separately, The explanatory notes also state that in accordance with the provision of Note-2 (b) of Section XVI this heading includes separately presented indoor units and outdoor units in split system or conditioning machine of this heading. In view thereof, the FCU would be covered by HSN Code 8415. Appeal dismissed - Ruling given by the AAR is upheld and warrants no interference. - MAH/AAAR/SS-RJ/27/2018-19 - - - Dated:- 28-3-2019 - SMT. SUNGITA SHARMA, AND SHRI RAJIV JALOTA, MEMBER PROCEEDINGS (Under Section 101 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the MGST Act. The present appeal has been filed under Section 100 of the Central Goods and Services Tax Act, 2017 and the Maharashtra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of Hon ble Supreme Court in matter of Carrier Aircon Limited, specifically when both chillers and fan coil units are inter-dependent and supplementing each other in an-conditioning machine. Therefore, the judgment of Supreme Court, which has held that chiller is classifiable under CTH 8418 is squarely applicable to fan coil units also. That the learned Authority has erred in understanding the technical description and working of the Fan Coil Unit wherein it has been clarified that Fan Coil Unit is used to freeze the water, supplied through pumps, to cool the area where the machine is installed. It is submitted that Fan Coil Unit is connected to chiller through valves pumps. Chiller supplies water to FCU and FCU use this chilled water to cool the area where it is installed. Therefore, the basic function of a Fan Coil Unit is to freeze or cool the area. v) That the learned Authority has erred in concluding that FCU fulfills all the requirements for classification under CTH 8415, whereas FCUs do not have any functionality or capability to act as Air Conditioning machines. The appellant referred to CBEC Circular dated 25.09.2002, in order to demonstrate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sts of chillers, pumps and terminals. Fan Coil Unit is one of various type of terminals. The various types of fan coil units are listed as Ceiling Concealed FCU, 4-Way Cassette FCU, Wall Mounted FCU, High Static FCU, Floor Standing FCU, Tower Floor Standing FCU. The appellant has claimed in their contention that the product fan coil unit is covered by HSN Code 8418 which is classified in Schedule-III, Entry No.319(A) through Notification No.1/2017 CT(Rate). The heading is reproduced as below: HSN 8418 Refrigerators, freezers and other refrigerating or freezing equipment, electric or other; heat pumps other than air conditioning machines of heading 8415 The AAR has held that the FCU is a device consisting of a heating and/or cooling heat exchanger or coil and fan. It is a part of HVAC system found in residential and industrial buildings. Due to their simplicity and flexibility, FCUs are more economical to install than ducted 100% Fresh Air System or Central Heating System with air handling units or chilled beams. After going through the wordings of heading 8418 of the GST Tariff, the AAR came to the conclusion that FCUs are not Refrigerato ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As per the explanatory notes given in the HSN, the heading 8415 applies to machine (1) equipped with a motor driven fan or blowers and 2) designed to change both the temperature and the humidity and (3) for which the elements machine in (1) (2) are presented together. As per the explanatory note, this sub heading also includes both indoor and outdoor units for split system or conditioning machines when presented separately, The explanatory notes also state that in accordance with the provision of Note-2 (b) of Section XVI this heading includes separately presented indoor units and outdoor units in split system or conditioning machine of this heading. In view thereof, the FCU would be covered by HSN Code 8415. The impugned product is a unit which is a part of the Air Conditioning system and is therefore covered by the heading 8415. 5. We also came across rulings given in other countries regarding the classification of the FCU. As per ruling given by the United States International Trade Commission Rulings and Harmonized Tariff Schedule dt.22 nd September, 1994, FCUs were held to be covered by heading 8415. In a ruling given by the Tariff Commission of Repub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y CTH 8418 as they are used along with the chillers and chillers are classified under heading 8418, They have referred to the explanatory note 2(b) of section XVI. As per 2(b) if parts are used with a particular kind of machine then it shall be classified with a machine of that kind only. We disagree with the contention of the appellant as it is clear from the description of the product that FCUs are used in the air conditioning unit and not in refrigerating unit and therefore they cannot be covered under heading 8418. The other contention of the appellant is that stand alone FCUs should be classified under CTH 8414 which specifically covers fans. 8. Heading 8414 is reproduced as below:- 8414 -Air or vacuum pumps, air or other gas compressor and fans; ventilating or recycling goods incorporating a fan whether or not fitted with filter. The fans covered by this heading are described as below in the HSN:- These machines, which may or may not be fitted with integral motors, are designed either for delivering large volumes of air or other gases at relatively low pressure or merely for creating a movement of the surrounding air. Those ..... X X X X Extracts X X X X X X X X Extracts X X X X
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