TMI Blog2023 (6) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... as to the classification of the impugned goods and it was held that CMVRF, when imported and presented together in unassembled/ disassembled condition on a single Bill of Entry for supply against a unique project would be classified under heading 84151010 (pre-2013) and when presented separately as part against different bill of entries filed over a period of time shall be classified as parts under heading 84159000. Thus, the impugned goods are classifiable under CTH 84159000 as Parts of Air-Conditioners . The appellant is thus eligible for the benefit of Notification No.46/2011 Sl.No.1103 (I). The impugned order is set aside - Appeal allowed. - CUSTOMS APPEAL No.40557 of 2016 - FINAL ORDER No.40365/2023 - Dated:- 30-5-2023 - MS. SULEKHA BEEVI C.S., MEMBER (JUDICIAL) AND MR. M. AJIT KUMAR, MEMBER (TECHNICAL) Mr. Ankit Sachdeva, Advocate, Mr. Neeladri Chakrabarti, Advocate - For the Appellant Ms. K. Komathi, Additional Commissioner (A.R) - For the Respondent ORDER Brief facts of the case are that appellant namely M/s.Mitsubishi Electric India Pvt. Ltd., Thiruvallur filed a Bill of Entry dated 28.04.2015 for clearance of various models of Mitsubishi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indoor outdoor units will be warehoused and will become complete Multi VRF Systems only after installation at project site. They are in two types ie. 1) having capability of both cooling and heating effect and 2) Having capability of cooling capacity only. In the present case, the indoor units and outdoor unit of aforesaid City Multi VRF Air-conditioning System intended to be imported by them will not qualify to be complete City Multi VRF Air-conditioning System or a split system. This is for the reason that indoor units and outdoor units to be installed in a City Multi VRF Air-conditioning System is not known at the time of importation of said indoor units and outdoor units. Further tonnage and combination of indoor units and outdoor units are not standard and is rather dependent on the customer requirements. Thus in their view, the indoor units and outdoor units would be classifiable under Tariff Heading 8415 90 00 as parts only. 3. The adjudicating authority observed that only when Outdoor unit / Indoor unit of Split Air-conditioner System classifiable under CTH 8415.10 are imported separately, they qualify to be classified as parts of air-conditioners under C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 - Window or wall types, self-contained or split system : 8415 10 10 --- Split System U 10% 8415 10 90 --- Other U 10% 8415 20 - Of a kind used for persons in motor vehicles 8415 20 10 --- For buses U 10% 8415 20 90 --- Other U 10% - Other: 8415 81 -- Incorporating a refrigerating unit and a value fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplained as under : i. CMVRF is a multi and direct expansion type air conditioning system in which one or more outdoor unit is connected with multiple indoor units. The amount of refrigerant can be regulated freely according to the load on the indoor unit by inverter driven compressor in the outdoor unit. Individual indoor units can stop and start their operation as needed. ii. Under CMVRF, various options are available in indoor units (i.e., Hi Wall, Cassette Type, Ceiling concealed type and floor standing) in order to suit various interior design needs of the Customer. iii. The outdoor unit of the CMVRF comprises of a fan, heat exchanger, inverter driven compressor and control box. The outdoor units imported have capacity ranging between 6.37 TR to 12.79 TR. (TR Ton refrigeration) iv. CMVRF air-conditioning systems are generally customized models and the requirement of number of indoor and outdoor unit is not known at the time of import. Consequently, import of indoor and outdoor units which will form part of CMVRF ACs will not be a specified number of outdoor and indoor units. These outdoor and indoor units will be imported separately and stored at the warehouses o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. Ductless products are fundamentally different from ducted systems in which the heat is transferred to or from the space directly by circulating the refrigerant to evaporators located near or within the conditioned space. In contrast, the conventional systems transfer heat from the space to the refrigerant by circulating air (inducted systems) or water (in chillers) throughout the building. VRF systems are larger capacity, more complex version of the ductless multi-split systems, with the additional capability of connecting ducted style fan coil units. They are inherently more sophisticated than multi-splits, with multiple compressors, many evaporators, and complex oil and refrigerant management and control systems. They do not provide ventilation and hence a separate ventilation system is necessary. 15. The term variable refrigerant flow refers to the ability of the system to control the amount of refrigerant flowing to each of the evaporators, enabling the use of many evaporators of differing capacities and configurations, individualized comfort control, simultaneous heating and cooling in different zones, and heavy recovery from one zone to another. VRF condensers use v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is explained by the Ld. Counsel that from the above HSN Explanatory Notes, it can be seen that, split air-condoning systems, which are to be classified under CTH 84151010, are those systems which (a) have a condenser and an evaporator connected together (b) are ductless and (c) use one evaporator for each room to be air-conditioned. In other words, the system is one to one (which means one condenser to one evaporator). 18. Adverting to the Customs Tariff Heading 8415, Ld. Counsel submitted that Customs Tariff of India is fully aligned with the HS. The subheads 841510 and 841520 are at the single dash and these cover two different class of air-conditioners. While CTH 841510 covers the one-to-one split systems, CTH 841520 covers air-conditioners of the type used in motor vehicles. The CTH 841581, CTH 841582 and CTH 841583 are two dash (--) level sub headings coming under the single dash level subhead - Other . Therefore, these three two dash level subheads would cover only those types of air-conditioners not covered by CTH 841510 and 841520. The interpretation notes to General Rules of Interpretation would establish the same. The observation of the Commissioner (Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PUCY- P450YKA 16 1,63,800 13.65 218.4 PLFY- P100VBM-E 60 38,200 3.18 190.80 PUHY- P300YKA 4 1,14,300 9.525 38.1 PLFY- P125VBM-E 120 47,800 3.98 477.60 PUHY- P400YKA 4 1,53,500 12.79 51.16 PLFY- P25VCM-E2 8 9,600 0.8 6.40 PLFY- P32VBM-E 6 12300 1.03 6.18 PLFY- P40VBM-E2 10 15,400 1.28 12.8 Total No of units 46 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... door unit can be made functional with one indoor unit and upto 43 depending upon parameters, like the capacity of outdoor units, the capacity of indoor units to be connected to an outdoor units, requirement for particular project etc. For example, one unit of outdoor unit with the cooling capacity of 4 Ton capacity can be connected to one unit of indoor unit of same capacity and in the same way one unit of outdoor unit with the cooling capacity of 14 Ton capacity can be connected to more than ten indoor units of around one ton cooling capacity. Thus, these are nothing but split air conditioners which are complete machine and cannot be treated as parts of air-conditioner . The Ld. A.R argued that appellants are not eligible for the benefit of the notification. 24. Heard both sides. 25. The show cause notice is issued by D.R.I. The appellant has filed an affidavit stating that the issue whether the SCN issued by D.R.I is proper and valid is not contested by the appellant before this Tribunal and do not intend to contest the said issue in any other forum in regard to this appeal. We therefore proceed to aanalyse the merits of the case. 26. The very same goods were imported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort duty as if they were the finished goods. We have already referred to this aspect vis-a-vis the facts in Phoenix International s case where the goods were brought in one and the single consignment and they were all brought together though they were imported by two companies, i.e., PIND and PIL fraudulently. 15. Shri Lakshmikumaran, learned counsel for the respondent also drew our attention to the HSN Explanatory Notes as it stood prior to 1997 which is as under: (VII) For the purpose of this Rule, articles presented unassembled or disassembled means articles the components of which are to be assembled either by means of simple fixing devices (screws, nuts, bolt, etc.) or by riveting or welding, for example, provided only simple assembly operations are involved. Learned counsel further points out that in a decision in CCE v. Woodcraft [(1995) 3 SCC 454] this Court took the view that HSN Explanatory Notes should be referred to for understanding the true scope and meaning of expressions used in the Customs Tariff. He further points out that the Revenue did not dispute the fact that complicated processing of imported parts had to be done before they could be fit in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... position would be no different. 16. Our attention was invited to a very interesting decision reported in Modi Xerox Ltd. v. CCE, New Delhi [1998 (103) E.L.T. 619] which was confirmed by this Court in 2001 (133) E.L.T. A91 (it must be noted that the decisions in Woodcraft Products is specifically confirmed in this decision). In this case, the Tribunal had relied on Tara Chand s case as also the CC v. Mitsuny Electronics Works [1987 (30) E.L.T. 345 (Cal. HC)] which we have made reference in the earlier part of this judgment. The Tribunal had held that the fax machine in completely knocked down condition imported by the appellant being not a fax machine but part thereof, the benefit of exemption under Notification No. 59/88/Cus., dated 1-3-1988 would not be available. Very interestingly, it was claimed by the importer that it had imported the fax machine and not the components obviously because the duty payable on the components was more. The Tribunal came to the conclusion that in view of Section Note 2 to Section XVI Rule 2(a) would not apply and confirmed the import of goods as components. While interpreting Explanatory Note to Rule 2(a), the Tribunal had held that this Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hibited. For this the learned counsel relied on the decision in Modi Xerox (supra). In that view the learned counsel says that Rule 2(a) would not be applicable at all. This question needs no consideration here particularly in view of the interpretation that we have given to Rule 2(a). On facts, we have already found that Rule 2(a) would not be applicable to the present case since there is no question of the goods having the essential character of CTVs. In that view, the question of applicability of Section 2(a) on this account need not be gone into in this judgment. 18. We also approve of the reliance by the Tribunal on the reported decision in Susha Electronics Industries v. CC [1989 (39) E.L.T. 585], Trident Television Pvt. Ltd. v. CC [(1990) 45 E.L.T. 24], Vishal Electronics Pvt. Ltd. v. CC, Bombay [1998 (102) E.L.T. 188], Sharp Business Machines (supra) and the judgment of the Calcutta High Court in HCL Ltd. (supra). 4.15 Following the decision of the Hon ble Apex Court as above we are of the view that CMVRF, when imported and presented together in unassembled/ disassembled condition on a single Bill of Entry for supply against a unique project would be classified un ..... X X X X Extracts X X X X X X X X Extracts X X X X
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