TaxTMI 
TaxTMI 
2001 (4) TMI 306
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....es made by Preventive Officers was issued proposing - (i) Grills, Diffusers were classifiable under heading 84.15 of the CET in terms of Board's Circular 227/61/96-CX 6, dated 4-7-1996 and the appellant was not eligible for the exemption under Notification 75/87-C.E. as the condition for opting for its benefit had not been exercised and duty was liable to be paid for the entire value of clearances between 1-4-94 to 31-3-99 by the proprietary firm, the proprietrix, Sh J.H. Kamath and Shri A.K. Jaya Chandra Reddy. Duty of Rs. 40,15,030/- was demanded under Rule 9(2) read with Section 11(A). It was proposed to impose penalty on them under Rule 173Q(1), Section 11AC and interest demanded under Section 11AB(1). Penalty was also proposed to be imposed on the present proprietrix, Sh J.K. Kamath former Proprietor and Sh A.K. Jayachandra Reddy under Rule 209A. 2. The Commissioner heard the appellants and by his order dated 18-10-2000, impugned before us, found and ordered- (i) Goods being manufactured viz. Grills, Diffusers are classifiable under Heading 84.15 as parts of Air Conditioning System. (ii) &n....
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.... controlled by the main air conditioning system, supply outlets are responsible for guiding the air in the desired direction at desired speed, controlling the air flows as also closing the ducting with a look that would enhance the general interior of the room/building. 25. The grills are made of either plastic, Aluminium or steel and are available in ready to fix sizes and standard designs. Those are also manufactured against specific orders to suit a particular engineering design that may be required. In the case of aluminium grills, the raw materials are mainly aluminium extrusions, tubes, rods and screws, nuts and bolts. 26. The exact function of supply outlets/grills has been explained in the "Principles of Air Conditioning", 3rd Edition, by V. Paul Lang as under : "Supply outlets help to distribute the air evenly in a room, some outlets fan the air and other outlets direct the air in a jet stream. Still other outlets combine these actions. As a result of these actions the outlets are able to exhort some control on the direction of the air delivered by the fan. This directional control, plus the location and the number of outlets in the room contribute great....
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....hat the details of the outlets/grills are determined based on the drawings or site conditions and that the air terminals distribute the air uniformly in the conditioning area and help in sending the return air to the air handling units. Section 2(b) of Section XVI of the HSN states that "other parts, if suitable for use solely or principally with a particular kind of machine or a number of machines in the same heading (including a machine of heading number 84.79 or 85.43 are to be classified with the machine of that kind....." As is evident from the usage of the aluminium grills as understood from M/s. Blue Star Kool Nest and M/s. Voltas, the principle and predominant use of the Aluminium grills is that connected with air conditioning plant. Its use for interior decoration is mainly to match the existing or proposed supply outlets and is minimal. Looking to the preponderance of the usage, the aluminium grills are more appropriately classifiable as parts of air conditioning plants only under chapter sub-heading 8415.00 of Central Excise Tariff Act, 1985. 31. Further, the Section Note XV of Base Metal and Articles of Base Metal, reads as under : Notes : (1) This se....
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....ner only. 34. The Hon'ble Tribunal in the case of M/s Jahalam Tools (I) Ltd. v. CCE reported in 2000 (118) E.L.T. 750 Tribunal has held that graph forging manufactured with drawing and specifications of finished goods and had been given a definite shape by the process of forgings, is classifiable under Ch. 82 of CETA 1985 and not under Ch. 72 ibid applying Rule 2(a) Interpretative Rules. "Plastic grills used in air-conditioners are not merely decorative parts, although one of the functions of the said grill is to enhance the looks of the air-conditioner. Grills have functional utility for deflecting the air-flow in the desired direction. They are identifiable part of an air-conditioner and therefore, are more appropriately classifiable under Chapter 8415 of Central Excise Tariff Act, 1985." 35. Air conditioning machine parts are clearly recognizable as identifiable parts of air handling system machine, hence classifiable under 84.15 of Central Excise Tariff Act, 1985 and not articles of metal ibid - Gen Power Electric v. Collector - 1998 (107) E.L.T. 259 (T). 36. Air handling unit a specific part of air conditioning machine, manufactured on specific order....
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....t prescribes - "3.....If the grills manufactured are suitable for use solely or principally with an air conditioning machine/system which is held excisable and dutiable under Chapter Heading 84.15, then such grills also will merit classification under Heading 84.15 and chargeable to duty accordingly. However, the general purpose grills would merit classification under the respective Chapters 39.73 or 76 etc., as the case may be, depending upon the constituent materials." This would, thus bind the department to follow and if they would hold such Grills used in Central Air Conditioning Plants, as in the cases before us, to be classified under 84.15, provided 'Central Air Conditioning Plants' of which they are parts is held to be excisable under 84.15. There is no finding arrived at, as to how the 'Central Plants' are excisable under 84.15. The learned Commissioner has either overlooked or is ignorant of Boards instructions on Exigibility of 'Central Air Conditioning Plant'. By Telex dated 13-6-1986 vide F. No. 145/6/86/CX 4, Board has clarified :- "IT IS REPORTED THAT THE EXCISE DUTY IS BEING DEMANDED IN CERTAIN COLLECTORATES ON REFRIEGERATION AND AIR-CONDITIONING PLANTS INS....