TaxTMI 
TaxTMI 
1979 (3) TMI 64
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...., controls, condensers, thermostats, over-load protection thermal relay and panels. In addition, Walk-in-Coolers also necessitate ancillary equipments, such as ducting, copper tubing, wiring and piping. None of the parts of the Walk-in-Coolers can work independently as a cooling machine unless all these parts are installed and assembled together. The distance between Walk-in-Coolers and the condensing units varies according to the requirements and specifications of each individual customer, the variation being as much as 50 feet or more. The petitioner-company manufactures in its factory panels lined with G.I. sheets, wooden flooring, insulated doors lined with G.I. sheets and cooling coils. The other parts to wit, compressors, condensing units, thermostats etc., are purchased by the petitioner-company from the market after paying excise duty on the same. These facts have not been controverted by the respondents, viz. the Union of India, and the Assistant Collector of Central Excise. 3. According to the petitioner-company, the Walk-in-Coolers manufactured by it and erected and installed at the sites of its various customers are not ordinarily sold or offered for sale by the peti....
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....ion of such individual customer. From the affidavit dated 27th July, 1977 of J.T. Advani on behalf of the petitioner-company emerges that even the distance between the product cooler and the condensing units varies and can, in a given case, be as much as 50 feet. After the two components, viz. the product cooler and the condensing unit are connected at the site, vacuum is drawn by means of a vacuum pump. Thereafter refrigerant gas is charged in the system and then the Walk-in-Cooler is started at the site. The temperature readings are then taken by means of a dial thermometer to determine whether the desired temperature in the cooler has been obtained. If any temperature adjustment is required, the same is done at the site. The entire process of assembling and erection of a Walk-in-Cooler is done at the site and according to J.T. Advani, is of such a great magnitude that it would be entirely uneconomical to carry out the whole process twice over, viz. at the factory and once again at the site where the Walk-in-Cooler is assembled and installed. Advani further goes on to state in his affidavit that some of the items like refrigerant gas, etc., cannot be re-used once the Walk-in Cool....
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....Shah that the process of assembling of the various components of the petitioner's Walk-in-Coolers at the site was only a routine matter of fixing up the parts together with nuts and bolts, this contention, though not entirely given up, was not urged by Mr. Shah and fairly so, with any amount of the earlier vehemence with which this proposition was canvassed. There is overwhelming evidence on record which indicates beyond any shadow of doubt that the assembly and installation work done at the site is not merely getting together the various parts and components with nuts and bolts but that a regular erection and installation process at the site has to be gone through lasting not minutes or hours but several days before the Walk-in-Cooler is put in a running condition for the first time at the site itself. This aspect is also brought to the forefront by an affidavit made by one Moreshwar Vinayak Gupte, the Manager of the Engineering Services of Glaxo Laboratories. In this affidavit, Moreshwar Gupte states that in 1970, Glaxo Laboratories had placed an order for installation of a Walk-in-Cooler with the petitioner-company with specifications suitable to the requirements of Glaxo Labora....
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.... and which is put in a running condition for the first time at the site. 11. The fact that the installation of the petitioner's Walk-in-Coolers at the site is not merely mechanical but necessitates detailed assembly and installation for several days, is also brought to the forefront by 3 letters from Hoechst Pharmaceuticals to the petitioner. In the letter dated 22nd September, 1967, Hoechst Pharmaceuticals state that the installation has still not been completed. The next letter is dated 18th October, 1967 in which Hoechst Pharmaceuticals declined the petitioner's request for a certain payment, on the ground that the job was still not complete and the installation work was still in progress. That the installation work was still not over, has also been stated in the letter dated 17th November, 1967 from Hoechst Pharmaceuticals to the petitioner. In addition to Gupte's affidavit, these letters of Hoechst Pharmaceuticals also indicate that the work of assembly, erection and installation was not merely a mechanical job-work of fixing nuts and bolts and starting the electricity to get the Walk-in-Cooler in a running condition, but was an elaborate and complicated job involving sever....
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...., under Tariff Item No. 29A(1). 13. Coming to the affidavit dated 17th October, 1978 and the Report dated 19th October, 1970, of R.S. Nayampalli, the then Superintendent of Central Excise, great reliance was placed by Mr. Shah on this affidavit. The affidavit correctly reflects the contents of the report and hence Mr. Shah adverted at some length to this affidavit. In that affidavit, Nayampalli states that in September, 1970, he along with a representative of the petitioner company and its technician visited 3 places where the petitioner-company had installed Walk-in-Coolers, viz. (1) Hill-Top Hotel, Worli, (2) Glaxo Laboratories, Worli, and (3) Saheb Singh & Sons, Marine Lines. He further states that he made an on-the-spot study of the Walk-in-Coolers at these places which revealed that the petitioner-company was bringing Walk-in-Coolers in a detachable condition only to be erected by nuts and bolts to the panels and condensing unit, Nayampalli observed that panels and doors, already insulated along with its cooling coils and condensing unit were brought from the factory at one time under one transport document and the same were only fitted at the site by nuts and bolts and ele....
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....lled when at that time he was not even present. This has been rightly emphasised by the petitioner's Constituted Attorney J.T. Advani in his affidavit dated 17th January, 1979 in reply to Nayampalli's report and affidavit. The affidavit and report of the Excise Superintendent Nayampalli are, to my mind, worthless and have been tailored to meet the exigency of the situation. Its contents are suspect. 15. On record there is a letter dated 22nd January, 1969, addressed by Voltas Ltd. to the Assistant Collector of Central Excise. A grievance was made by Mr. Rana that this letter was obtained by the department from Voltas Ltd. behind the back of the petitioner. However, that is another aspect of the matter which I shall be dealing with later. For the moment, I am referring to this letter of 22nd January, 1969 from Voltas Ltd. to the Assistant Collector of Central Excise to indicate that the case of the department as sought to be bolstered by the report and affidavit of Nayampalli is without substance and that what the customer gets at the site is not a plans which is already in a working condition in the factory but a plant or unit which is assembled and installed at site after a lon....
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.... as ready assembled units." 17. It is not disputed that Walk-in-Cooler is a cold storage plant. It consists of various kinds of machineries and equipment not necessarily situate at one place for instance the condensing unit which could be at some considerable distance away from the plant itself. Thus the clarification contained in this letter gives an indication as to what the department itself was directed to consider to be a ready-assembled unit, contrary to the affidavit and report of Nayampalli. 18. In the light of the above discussion, Mr. Shah's contention that what was produced by the petitioner in its factory was a complete ready-assembled refrigerating appliance, viz. a Walk-in-Cooler which was dismantled merely for facilitating transport to the site, must stand negatived. It is true that what the customer ultimately got was a complete refrigerating appliance and to that extent Mr. Shah is correct. But it is not whert the customer ultimately got that must be taken into account in ascertaining whether the case of the petitioner-company falls within the ambit of Tariff item No. 29A(l). I again emphasise that what the customer ultimately got at the site was a plant whic....
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....ed components at the site with the greatest of ease. Mr. Shah also relied on another advertisement where the petitioner-company has advertised that the Walk-in-Coolers are easily assembled. This is an attempt by Mr. Shah at over simplification not disclosed by the record. In any event, what the petitioner may advertise by way of attracting customers, can be no criterion for adjudicaing upon the issue whether duty is payable under a particular tariff item. In other words, payment of duty under a particular tariff item must depend upon the facts of the case and not on the advertisement gimmick of the advertiser. Thus, it is not on the basis of what the petitioner advertises to attract customers, can its liability to pay duty under a particular tariff item be fastened but on the facts and circumstances actually existing and on a determination whether on the basis of those facts and circumstances as disclosed by the record, the case would fall within the provisions of Tariff Item No. 29A(1) or not. 21. Mr. Shah relied on a letter dated 11th May, 1965 addressed by the petitioner to the Assistant Collector of Central Excise. In that letter the petitioner stated that Walk-in-Cooler Mod....
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....ioner to Hoechst Pharmaceuticals in respect of a Blue Star Sectionally built Walk-in-Cooler quantity one, "Loose". Mr. Shah also relied on a bill dated 5th September 1967 of the petitioner to Hoechst Pharmaceuticals for Rs. 14,773/- for "Blue Star Pre-fabricated Sectionally built Walk-in-Cooler suitable for A-C-1-50-230 Volts with locking arrangement........." Mr. Shah urged that in view of this contract, delivery challan and the petitioner's bill, what had been supplied by the petitioner to Hoechst Pharmaceuticals was a Walk-in-Cooler pre-tested in the petitioner's factory and found in working condition and ready for use at the site and that all that had to be done at the site of Hoechst Pharmaceuticals was to make a few necessary adjustments to start the machine. There is nothing either in the contract or in the delivery challan or in the petitioner's bill relied on by Mr. Shah to support this contention urged by him which at best is in the nature of conjecture and speculative reasoning. 23. In the light of the earlier discussion, the grounds urged by Mr. Shah must stand rejected and I come to the conclusion that the case of the petitioner-company would not fall within the amb....
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....are a sales contract with a works contract and plead discrimination. Hence the plea of discrimination urged by Mr. Rana must fail. As a sequitor, there is also no merit in Mr. Rana's contention that the failure by the authority to consider the point of discrimination, amounted to a violation of the principles of natural justice and fair play. 27. It was urged by Mr. Rana that the impugned Order dated 6th January, 1972 violated the principles of natural justice because the letter dated 22nd January, 1969 was obtained by the department from Voltas Ltd. behind the petitioner's back and without giving an opportunity to the petitioner to have its say in the matter. There is no merit in this contention for the simple reason that even assuming that this letter was obtained by the department behind the back of the petitioner, there is nothing in this letter which goes against the petitioner. 28. Mr. Rana invited me to set aside the impugned order dated 6th January, 1972 on the ground that it showed misdirection in law and non-application of mind. Mr. Rana invited my attention to the operative part of the order which reads as under :- "I have carefully gone through their argu....