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2015 (7) TMI 96
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....old (Control) Appellate Tribunal, New Delhi (for short, 'the Tribunal'), it transpires that the Tribunal followed decision of this Court in the case of this very respondent-assessee titled Sanden Vikas (India) Ltd. v. Collector of Central Excise, New Delhi, 2003 (153) E.L.T. 3 (S.C.) and on that basis, the appeal of the respondent was allowed. The Revenue challenging the aforesaid order in the present appeal, contended that the judgment of this Court in Sanden Vikas (India) Ltd. (supra) requires re-consideration. This is specifically stated in the synopsis and the list of dates. We further find that on 08.12.2003, an order was passed by this Court admitting the present appeal, after condoning the delay in filing the appeal. In view thereof, we are of the opinion that the matter needs to be heard by a three-Judge Bench. Ordered accordingly. The Registry is directed to obtain necessary instruction in this regard from Hon'ble the Chief Justice of India for listing of this matter before a three-Judge Bench." In view of the aforesaid order, the matter has been placed before us. 3. Be it noted, the decision in Sanden Vikas (India) Ltd. (supra) was the pronouncement betwee....
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....itioning kit was shown as such in common parlance and, therefore, it was classifiable under serial no. 8 of the said Notification. The Assistant Collector, vide order dated January 24, 1992 rejected the stand put forth by the assessee and confirmed the demand which was affirmed by the Collector (Appeals) by his order dated July 13, 1992. On appeal being filed before the Tribunal, it dismissed the same. The two-Judge Bench of this Court referred to the column 3 of the table annexed with the notification and posed the question whether the car air-conditioning kit is classifiable under Item No. 3 or under Item no. 8 of the table of the said Notification. After reproducing the Item No. 3 of the said Notification, to which we shall refer to in detail at a later point of time, analysed the description of goods given against Item No.3 in column (3), referred to the amendment made on March 20, 1990 whereby in column (3), following words were added against Item No.5:- "other than the parts and accessories of car airconditioner including car air-conditioning kit." The Court observed that what is excluded from Item No.5 is mentioned against Item No.8, as per the portion quoted above. Therea....
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....ut of the car air-conditioning kit. The car air-conditioning kit which comprises of parts of car air-conditioner remains as part of Item No. 8 of the notification. The Explanation cannot be so construed as to remove the term "car air-conditioner kit" or "air-conditioning kit" itself from Item No. 8 of the Notification. What follows is that 'car air-conditioning kit minus automotive gas compressor with or without magnetic clutch' will remain in the description of goods against Item No. 8 of the Notification and that the excluded part of the kit, namely, automotive gas compressor with or without magnetic clutch, will cease to be part of Item No. 8 and will be liable to duty separately." 4. It is submitted by Ms. Nisha Bagchi, learned counsel appearing for the appellant that the view expressed by the Division Bench in paragraph 18 wherein it has been held that car air-conditioning kit minus automotive gas compressor with or without magnetic clutch will remain in the description of goods against Item No. 8 and that excluded part of the kit, namely, 'automotive gas compressor' will cease to be a part of Item No.8 and would be liable to duty separately is not the correct....
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....Chapter 8415.00 (which reads as air-conditioning machines, comprising a motor-driven fan and elements for changing the temperature and humidity, including those machines in which the humidity cannot be separately regulated) of the Central Excise Tariff Act. Learned counsel would contend that during the disputed period i.e. 1.8.1991 to 28.2.1993, the respondent was clearing the automotive gas compressors and the air-conditioning kits (without gas compressors) under different gate passes, which were supplied separately, and at different point of time and on that basis the respondent was discharging excise duty at the rate mentioned in serial no.1 of Notification No. 166/86-CE whenever automotive gas compressors were cleared and the rate mentioned in serial no.8 of Notification No. 166/86-CE, whenever car air-conditioning kits (without the gas compressors) were cleared. He has referred to relevant part of the Notification No. 166/86-CE, as it stood during the period of dispute, which we shall refer to at a later stage, and placed heavy reliance on the two-Judge Bench in Sanden Vikas (India) Ltd. (supra), especially, on paragraphs 16, 17 and 18 and supported it in entirety. It is put f....
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....contention of the revenue is correct, the car air-conditioning kit with the automotive gas compressor will rightly fall under serial no.5 of the said Notification, for Explanation 2 begins by saying "For the purposes of this notification, the term "car air-conditioner kit" or "car air-conditioning kit" shall exclude the kit or assembly of parts which contains automotive gas compressor with or without the magnetic clutch. In this context, it is his submission that car air-conditioning kit is mentioned in serial no.5 and serial no.8 and serial no.5 would exclude car air-conditioning kit only when the automotive gas compressor is not part of the kit and if the automotive gas compressor is a part of the car air conditioning kit, according to the contention of the revenue, it will not be "parts and accessories of the car air-conditioning including car air-conditioning kit" under serial no.8 and in that event, it will have to be under serial no.5. Elucidating the submission, learned counsel would contend, the exclusion under serial no.5, namely, "other than the parts and accessories of car air-conditioner including car air-conditioning kit" will therefore not apply for such air-condition....
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....8415.00 Air-conditioners including room air conditioners (window type), split unit air conditioners, and package type air conditioners, - (a) of capacity not exceeding 1.5 tonnes (b) of capacity exceeding 1.5 tonnes but not exceeding 3 tonnes (c) of capacity exceeding 3 tonnes but not exceeding 7.5 tonnes (d) of capacity exceeding 7.5 tonnes but exceeding 10 tonnes (e) of capacity exceeding 10 tonnes but not exceeding 15 tonnes Rs.12,000 per air conditioner Rs.15,000 per air conditioner Rs.33,000 per air conditioner Rs.70,000 per air conditioner Rs.74,000 per air conditioner - 05 84.15, 84.18, 84.19, 84.76.91, 8481.10, 8481.91, 8536.10, 9032.11 or 9032.91 Parts and accessories of refrigerating and air conditioning appliances and machinery, all sorts, other than the parts and accessories of car air conditioner including car air-conditioning kit Forty per cent ad valorem - 08 84.15, 84.18, 84.19 84.76.91, 8481.10, 8481.91, 8536.10, 9032.11 or 9032.91 Parts and accessories of car air conditioner including car air-conditioning kit Sixty five percent ad valorem - 11. Be it stated that air conditioners including car air-conditioning kits fall under Chapter ....
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....f that article has the essential character of the complete article and/or even though the complete or finished article is presented in an unassembled or dissembled form the classification must be as a complete article. In this case, it is fairly not being denied that the components were imported in CKD packs. Thus what was imported was completely knocked-down cars. The components imported had the essential character of a complete car even though presented in unassembled form. As per interpretative Rule 2(a) even though presented unassembled they have to be classified as a complete article." 14. Learned counsel for the respondent has drawn inspiration from Mewar Bartan Nirman Udyog (supra). In the said case, the Court posed the question whether the respondent-assessee was entitled to claim benefit of exemption Notification No. 3/2001-C.E dated 1.3.2001. The assessee in the said case had claimed exemption under serial no. 200 of the said Notification which was denied by the department on the ground that trimmed or untrimmed circles of brass cannot fall under serial no. 200 but they fall under serial no. 201. The Court noted the fact that if the produce in question falls under serial....
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.... unfinished goods would fall in heading relating to the completed goods provided the incomplete or unfinished good bears the essential character of the complete or finished goods. Second part predicates unassembled or assembled goods can be treated as goods complete or finished goods. In this context we may usefully refer to Rule 1 of the Rules of Interpretation, which is as follows: "1. The titles of Sections and Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the provisions hereinafter contained." 17. Thus, Rule 1 of the Rules of Interpretation lays down that for legal purpose classification shall be determined in accordance with the terms of headings and any relative section or Chapter Notes, provided such headings or Notes do not otherwise require a different interpretation. 18. Keeping the aforesaid in view and the context, we are required to interpret the serial numbers of the notification. On a scanning of the Notification, it is perceptible that the gas compres....
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....n. What has been further opined is that the air-conditioning kit minus automotive gas compressor with or without magnetic clutch will remain in the description of goods against item no.8 of the notification and that the excluded part of the kit, namely, automotive gas compressor with or without magnetic clutch will cease to be a part of item no. 8 and will be liable to duty separately. 20. Ms. Nisha Bagchi, learned counsel appearing for the department would contend that in view of the express language employed in Explanation (2) which excludes car air-conditioning kit which contain automotive gas compressor with or without magnetic clutch from the purview of item no.8 of the Notification, the entire kit would stand excluded from the scope of item no.8 and the said car air-conditioning kit which continues to be meant for providing air-conditioning in cars would revert to item no. 3, which has been expressly held to cover car air-conditioning kits. It is urged by her that the interpretation placed by the two-Judge Bench causes violence to the plain and unequivocal language expressed in the Explanation (2) to the Notification. To appreciate the said submission, it requires a careful ....
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....d part by part at different places in a car engine and elsewhere in the car. Though by virtue of such fitments an ordinary car is converted into an air-conditioned car, but at no point of time & car-conditioner as a separate and distinct commodity comes into existence. It is thus clarified that the activity of acquiring duty paid parts and components of a car air-conditioner from the market and fitting the same at appropriate positions in a car does not result into manufacture of a new excisable item such as car air-conditioner" Relying on the same, learned counsel for the respondent submitted that though the said circular has been brought at a later stage, but it really exposits the intention of the notification. The question of retrospective applicability or not does not arise, for the simon pure reason is it really clarifies the position. 22. Having regard to the analysis we have made, the purport and impact of the Notification, the question that would arise for consideration is whether Sanden Vikas (India) Ltd. (supra) lays down any incorrect proposition of law. In the said decision, in paragraph 18, which we have already reproduced, the two-Judge Bench, construing the Explan....
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....ne unit of transaction, it will get out of serial no.8. If a manufacturer sells the kit and the automotive gas compressor separately by different invoice or by separate pricing, we do not see any reason for exclusion of the air-conditioning kit from the serial no.8 because there are two transactions and the kit is charged as per serial no.8 and compressor is charged as per serial no.1. There is no dispute over the fact that one can buy the automotive gas compressor with or without magnetic clutch with the kit, and both can also be purchased separately from different manufacturers. What the two-Judge Bench has said is that an air-conditioning kit minus automotive gas compressor with or without magnetic clutch will remain in the description of goods against item no.8 of the Notification and that the excluded part of the kit, namely, automotive gas compressor with or without magnetic clutch will cease to be a part of item no.8 and will be liable to duty separately. Thus, the Division Bench has quite categorically stated that if the air-conditioning kit does not contain automotive gas compressor with or without magnetic clutch, duty is paid as per item no.8 and if it contains the autom....