TMI Blog2000 (9) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the Chillers, manufactured by the Appellants, are functionally designed to produce chilled water by using a refrigeration circuit in its construction and this chilled water in turn is applied in Industrial processes such as spot welding, paint shops, nuclear science centre, biotech processing besides in relation to central air-conditioning systems/plants of huge size; that since the impugned chillers were independent machines and were designed to produce chilled water they classified them as refrigerating and freezing equipment under sub-heading No. 8418; that the Commissioner has classified the impugned goods under Heading No. 84.15, confirmed the demand of excise duty and imposed penalty, holding that chillers are nothing but an i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the chillers are accepted as falling under Heading 84.18 of the HSN; that as per Note 2(a) to Section XVI of the Tariff, the liquid Chiller when cleared separately and which specifically falls under Heading 84.18 and accordingly it cannot be treated as part of an airconditioner on the same analogy as fans used in the air-conditioner are classified at the time of clearance as an electric fan and not as part of air-conditioner. He also mentioned that air handling unit has an independent and distinct function and this unit produces the designs of air-conditioning effect ultimately and that the liquid chiller itself does not do any airconditioning as it is only designed to refrigerate or produce chilled water/liquid. He also referred to the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of the manufactured goods after clearance cannot determine the classification of goods manufactured. 4.Finally the learned Sr. Counsel submitted that there is no justification for invoking the extended period of limitation under Section 11A of the Central Excise Act; that the fact of manufacture and clearance of Chillers was known to the Department as they were filing classification list/declaration which had been approved/accepted by the Department without any demur/query; that on 19.4.1996 the Range Officer directed them to produce copies of the invoices for verification as there was a query regarding mis-classification of the chillers; that they had complied with the same under letter dated 25-6-96; that a show cause notice dated 2- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g place at different points of time at the site. 5.Countering the arguments, Shri K.K. Goel, learned SDR, submitted that the Appellants themselves have admitted, in their reply dated 15-11-1999 to the show cause notice that chillers are used in relation to central air-conditioning plants generally; that it is also mentioned by them in the Memorandum of Appeal that they are only in the business of air-conditioning; that the view that chillers are arts of air-conditioning system was also expressed in his statement dated 27-1-1999 by Shri A.K. Mehra dealing with designs of mechanical engineering services including air-conditioning and refrigeration and having an experience of 27 years; that he deposed that main application of both type of ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ately for chillers and air handling unit to suppress the real fact regarding use of chillers for air-conditioning purposes and this fact is indicative of their intention that they want to give an impression to the Department that the chillers and air handling units were not required in combination of each other for purpose of central air-conditioning system. 6.In reply Shri M. Chandrasekharan, learned Senior Counsel, mentioned that air handling unit has a specific function of cooling the air while the Chiller has nothing to do with air; that it only chills the water. He emphasised that the classification of the goods cannot be decided on the basis of places where they are being despatched to. He relied upon the decision in the case of Pra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andling unit or with fan coil unit, ducting, piping, pumps, etc. The Revenue has also emphasised the fact that 90% of the Chillers manufactured and cleared by Appellants have been used in the commissioning of central air-conditioning plants. We observe that the functioning of the chiller as explained by the Appellants has not been disputed by the Revenue. The Revenue is classifying the impugned Chiller as part of the air-conditioning system as it is used in central air-conditioning plant of star hotels, Airport, hospital, large office complexes, large establishments. This use in air-conditioning system does not take away the primary or basic function of the Chiller which is to produce chilled water by using a refrigeration circuit. There is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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