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Issues: (i) Whether voltage stabilisers manufactured by the assessee were parts or accessories of air-conditioners and refrigerators so as to deny small-scale exemption under the notifications; (ii) whether the demand was barred by limitation.
Issue (i): Whether voltage stabilisers manufactured by the assessee were parts or accessories of air-conditioners and refrigerators so as to deny small-scale exemption under the notifications.
Analysis: The goods were found to be independently classifiable under Chapter 90 and capable of use with several electrically operated machines. A product can be treated as a part of a particular machine only when it is specifically designed to work with that machine. On that reasoning, voltage stabilisers could not be treated as accessories of refrigerating or air-conditioning appliances merely because they may also be used with such equipment. The earlier departmental view in similar matters also supported the grant of exemption.
Conclusion: The denial of small-scale exemption was unjustified and the assessee was entitled to the benefit of the notifications.
Issue (ii): Whether the demand was barred by limitation.
Analysis: The show cause notice covered a long past period while the classification lists had been filed and approved by the proper officer. In the absence of any basis to invoke the longer period, the demand could not be sustained beyond the normal limitation period.
Conclusion: The demand was barred by limitation.
Final Conclusion: The appeal succeeded on both merits and limitation, and the duty demand and penalty were set aside.
Ratio Decidendi: A product that is independently usable with multiple machines cannot be denied small-scale exemption as a part or accessory of a particular machine merely on the basis of incidental use, and approved disclosure by the assessee defeats invocation of the extended period absent a valid legal basis.
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