Air-conditioner classification turns on essential components; absence of capillary lines supported waiver of pre-deposit in appeal.

Classification of goods as complete air-conditioners or as parts/sub-assemblies depended on whether the cleared CKD/SKD assembly contained the essential components identified in the Board's circular. The circular stated that if any essential component was absent, the assembly would not assume the character of a complete air-conditioning machine and would remain classifiable as parts. On the facts noted, the absence of capillary lines at clearance supported the applicants' classification claim, and the contrary view was found prima facie inconsistent with the circular. The applicants accordingly established a strong prima facie case, and waiver of pre-deposit of duty and penalties was granted pending the appeal.

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Issues: Whether the applicants had made out a prima facie case for waiver of pre-deposit of the confirmed duty and penalties pending final hearing of the appeal.

Analysis: The dispute concerned classification of the goods cleared by the applicants as complete air-conditioners or only parts/sub-assemblies. The Board's circular indicated the essential components of an air-conditioning machine and clarified that a CKD/SKD assembly lacking any of those components would not acquire the character of a complete air-conditioning machine and would be classifiable as parts. On the facts noted, the absence of capillary lines at the time of clearance supported the applicants' contention, and the impugned view was found prima facie inconsistent with the circular.

Conclusion: The applicants established a strong prima facie case, and pre-deposit of the duty and penalties was waived during the pendency of the appeal.

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