TaxTMI 
TaxTMI 
2019 (7) TMI 1506
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....25 dated 3rd October, 2018 = 2018 (12) TMI 143 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA. BRIEF FACTS OF THE CASE A. The appellant is registered under GST in order to carry on a business of supply of products such as Fan Coil Units, Valves, Actuator, thermostat etc. along with its standard spare parts and accessories to its various customers across India. B. The appellant had filed an application before the Maharashtra Authority for Advance Ruling, (AAR) on the following question:- "Whether the Fan Coil Unit is covered under HSN Code 8418 under Goods and Service Tax Act, 2017". C. The AAR vide its order dated 3rd October, 2018, decided the issue, thereby, holding that the impugned item i.e. 'Fan Coil Unit' would be covered under the HSN Code 8415 instead 8418 as claimed by the appellant. Being aggrieved by the above ruling, the present appeal is filed. Grounds of Appeal 1. It is the case of the appellant that the AAR has ignored the submission and argument made by the appellant while adjudicating the issue. Therefore, the present appeal is preferred on the following grounds:- i) That the learned Authority has erred in understanding Note 2(b) of section Notes of Section....
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....Hemant Deokate, Deputy Commissioner of State Tax, appearing on behalf of the respondent, reiterated the submissions which were earlier made before the Advance Ruling Authority. DISCUSSION AND FINDINGS 2. We have gone through the facts of the case. We have also gone through the order of the AAR against which the appeal is filed. The question in the present appeal is as under:- "Whether the Fan Coil Unit is covered under HSN Code 8418 under Goods and Service Tax Act, 2017". 3. It is seen from the record that Fan Coil Unit (hereinafter referred to as 'FCU') consists of 3 basic components namely fan motor, heat exchanger coils and PCB which is connected with a valve to control the flow of water as per the set temperature. FCU consists of (a) Fan Motor and Fan Blower: Fan Motor is used for rotating impeller of the Fan Blower at certain RPM to provide desired air volume for specific capacity of unit. (b) Heat Exchanger: Heat Exchangers are a group of copper coils arranged in rows with aluminum fins, where copper tubes carry chilled water which absorbs heat from air passed over it by the fan motor. (c) PCB: PCB is the printed circuit board which controls the fan speed and wate....
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.... and evaporators whereas it is seen from the description of the FCU that it is commonly a part of the Air Conditioning System and Heading 8418 does not include 'Air Conditioning Systems'. Therefore, we are unable to agree with the contention of the appellant that the FCU will be covered under Heading 8418. In fact, we agree with the ruling of the AAR that the product would be covered by HSN Code 8415. Heading 8415 is reproduced below:- 8415 ---- Air Conditioning machines, comprising a motor driven fan and elements for changing the temperature and humidity, including these machines in which the humidity cannot be separately regulated. The explanatory note under heading 8415 as under the HSN is reproduced as under:- .."In these machines the elements for humidifying or drying the air may be separate from those for heating or cooling it. However, certain types incorporate only a single unit which changes both the temperature and, by condensation, the humidity of the air. These air conditioning machines cool and dry (by condensation of water vapour on a cold coil) the air of the room in which they are installed or, if they have an outside air intake (damper), a mixture of fresh air....
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.... classified as an 'Air Conditioning System'. We have gone through the judgment and we find the followings:- * The Supreme Court held that a 'chiller' is not an air conditioning system because its function is to chill water and not to control temperature. However, it is seen that the very function of the fan coil unit is to control the temperature in the space where it is installed, or serve multiple spaces. A fan coil is controlled either by a manual on/off switch or by a thermostat, which controls the throughput of water to the heat exchanger using a control valve and/or the fan speed. Thus, the Supreme Court judgment reinforces our say that the Fan Coil Unit cannot be called as a refrigerating unit. * The function of the Chiller and the Fan coil unit are different- whereas the former chills water and liquids, its core function is refrigerating and the latter controls temperature and is therefore is a core part of the air conditioning system. * A fan coil unit (FCU) is a device that uses a coil and a fan to heat or cool a room without connecting to ductwork, Its only function is to heat or cool a room and to control temperature. The chillers basic function is to chill water ....