General-purpose parts and principal-use test control classification, so exemption could not be denied for fan and panel housing.

General-purpose components are not classifiable as parts of air-conditioning or refrigeration machinery unless it is shown that they are suitable for use solely or principally with such machinery, and the department bears that burden. On the facts recorded, the MS Panel Housing was not shown to be specifically meant for air conditioners, and the industrial fan was used as an exhaust fan in textile mills for ventilation. Note 2(b) to Section XVI therefore did not apply, the exemption under Notification No. 175/86 could not be denied on that basis, and the classification adopted by the Commissioner (Appeals) was affirmed.

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Issues: Whether MS Panel Housing and Industrial Fans were classifiable as parts of air-conditioning or refrigeration machinery so as to deny the benefit of Notification No. 175/86, and whether Note 2(b) to Section XVI of the Schedule to the Central Excise Tariff Act, 1985 applied.

Analysis: The goods were found to be general-purpose items. MS Panel Housing was not shown to be specifically meant for use in air conditioners, and the industrial fan was used as an exhaust fan in textile mills for ventilation. The lower authority had not disputed this factual position, and the department did not discharge the burden of showing that the goods were suitable for use solely or principally with air-conditioning or refrigeration machinery. Note 2(b) applies only where the goods are so used, and on the facts found, that condition was absent.

Conclusion: The classification adopted by the Commissioner (Appeals) was correct. The items were not parts of air-conditioning or refrigeration machinery, the exemption could not be denied on that basis, and the appeal failed.

Ratio Decidendi: Goods of general-purpose character are not classifiable as parts of a particular machine unless it is shown that they are suitable for use solely or principally with that machine, and the burden lies on the department to establish such exclusive or principal use.

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