Classification of condensing units as air-conditioning machines rejected where goods were cleared as incomplete units.

Condensing units of split air-conditioners cleared as such were not treated as complete air-conditioning machines for special excise duty. The Tribunal noted that central excise classification depends on the character of the manufactured goods as cleared from the assessee's premises, not on later use or buyer identification. It also read Chapter Heading 84.15 as covering air-conditioning machines with a motor-driven fan and elements for changing temperature and humidity, which these goods lacked. As the department's material did not displace the statutory description or establish mis-declaration, the demand was held unsustainable.

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Issues: Whether condensing units of split air-conditioners cleared as such could be treated as air-conditioning machines and subjected to special excise duty under the applicable exemption notification.

Analysis: The goods in question were cleared after manufacture as condensing units and not as complete air-conditioners. For central excise, the point of enquiry is the character of the manufactured product as cleared from the assessee's premises, and not an imported article's condition at the time of assessment. The tribunal found that a condensing unit, cleared as such, could not be equated with an air-conditioner merely because of its use or identification by buyers. The description under chapter heading 84.15 of the Central Excise Tariff Act, 1985 also contemplated air-conditioning machines comprising a motor-driven fan and elements for changing temperature and humidity, which the subject goods lacked. The material relied upon by the department did not displace the statutory description, and the foundation for alleging mis-declaration was not established.

Conclusion: The goods could not be classified as air-conditioning machines for the purpose of special excise duty, and the departmental demand was not sustainable.

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