Functional use controls exemption for insulation material used as part of refrigerating equipment, despite different tariff classification.

Resin bonded glass wool used as insulation in a cold storage plant was treated as eligible for exemption under Notification No. 45/88-C.E. because its functional use brought it within the description of a part or accessory of refrigerating and airconditioning machinery. Classification under Tariff Heading 70.14 did not, by itself, exclude the goods from the benefit of the notification where the substantive use was covered. The procedural issue relating to the CT2 certificate could not override the notification's substantive applicability. Functional use as an integral insulation component was therefore decisive for exemption eligibility.

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Issues: Whether resin bonded glass wool used in a cold storage plant was entitled to the benefit of Notification No. 45/88-C.E. dated 1-3-1988 as a part or accessory of refrigerating and airconditioning appliances or machinery.

Analysis: The goods were not disputed to possess insulation properties and were admittedly used in the cold storage plant for insulation. The notification was interpreted as granting exemption to parts and accessories used in refrigerating and airconditioning applications even if such goods were classifiable under a different tariff heading. The fact that the goods fell under Tariff Heading 70.14 did not, by itself, exclude them from the benefit of the notification where their functional use brought them within the description of parts or accessories covered by the exemption. The procedural question relating to the CT2 certificate could not override the substantive applicability of the notification.

Conclusion: The resin bonded glass wool was held entitled to the benefit of Notification No. 45/88-C.E. The Revenue's appeal was rejected.

Ratio Decidendi: For exemption under a beneficial notification covering parts and accessories of refrigerating and airconditioning equipment, functional use as an integral insulation component can bring goods within the exemption even if they are classifiable under a different tariff heading.

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