Customs, Excise and Gold Tribunal - Delhi
Intec Corporation vs Commissioner Of Central Excise on 10 April, 2003
Equivalent citations: 2003(88)ECC706, 2003(156)ELT544(TRI-DEL)
JUDGMENT V.K. Agrawal, J.
1. The issue involved in this Appeal filed by M/s. Intec Corpn is whether the electrical control panel manufactured by them is classifiable under Heading 85.37 of the Schedule to the Central Excise Tariff or is classifiable under Heading 84.15 alongwith the roof top mounted package unit of air conditioners manufactured and supplied by them to Indian Railways.
2. Shri B.L. Narsimhan, learned Advocate, submitted that the Appellants, manufactured roof top mounted package unit of air-conditioners for the Indian Railways in conformity with the specifications provided by Railway Design Standard Organisation: that the said organization has also issued design specifications for electrical control panel meant for Air conditioners; that sometimes Indian Railways floats tenders calling for manufacture of electrical control panels also alongwith the air-conditioners; that however the specifications for both air-conditioners and control panels are individual and separate: that the Assistant Commissioner under Order-in-Original dated 21.10.99 has classified electrical control panel under Heading No. 85.37 by applying Note 2(a) to Section XVI of the Central Excise Tariff; that however, on appeal filed by the Revenue, the Commissioner (Appeals) under the impugned order has classified the control panels under Heading 84.15 on the ground that control panels were designed for air-conditioners units and supplied alongwith the air-conditioners units and as such the electric control panels are solely and principally used with the Air-conditioners units and protect the electric motors and, therefore, they are integrally connected with the air-conditioning package units.
3. Learned Advocate, further, submitted that the Air-conditioner package unit as manufactured by them is complete in all respects and it can be operated by power supply given directly to it from any electrical sources; that electrical control panel in question basically consists of switchgear i.e. contractors, overload relays, MCBs Bus bars, switches, terminal blocks to start, stop and protect the electric motors; that panels can operate with any electrical machinery having five electrical loads; that this panel can operate five motors having, be it in air-conditioner or any other electrical machinery and as such they are not solely identifiable as parts of air-conditioner unit and hence are classifiable under Heading 85.37. He mentioned that Note 2(a) to Section XVI of the Central Excise Tariff settles the issue of classification of control panel under Heading 85.37; that Note 2 (a) provides that parts which are goods included in any of the Heading of Chapter 84 or Chapter 85 are in all cases to be classified in their respective Headings; that electric control panels are specifically mentioned in Heading 85.37 and in terms of Note 2(a) electric control panels cannot be classified elsewhere else but under Heading 85,37 even if they are suitable for use solely or principally with roof top mounted package unit of air-conditioners, that resort to Note 2 (b) to Section 16 can be held only when the goods cannot be classified by the application of Note 2(a); He relied upon the following decisions:
(1) CCE v. Union Connectors Pvt. Ltd., 2001 (76) ECC 58 (LB) : 2001 (131) ELT 604 (T-LB) (2) Hydraulic Engineers v. CCE, 2001 (130) ELT 366 (T) (3) Pioneer Electric Furnace Mfrs. v. CCE, 1999 (13) ELT 667 (T) (4) Buckau Wolf India Ltd. v. CCE, 1997 (95) ELT 118 (T) (5) Himson Textile Engineering Indus Ltd. v. CCE, 1997 (95) ELT 519 (T)
4. Learned Advocate also relied upon the Board's Circular No. 145/5/86-CX.4 dated 25.9.89 wherein two lists of parts or accessories of air-conditioner or refrigerating machinery has been given. Annexure A contains list of parts or accessories, which are classifiable under Heading 84.15, 84.18 or 84.19 of the Tariff whereas Annexure B contains list of parts and accessories of refrigeration and air-conditioning machinery which are not classifiable under Heading Nos. 84.15, 84.18 and 84.19 and mentioned that electrical panels and control panels have been specifically mentioned at S. No. 16 of said Annexure B. He also referred to Explanatory Notes of HSN, which puts the classification of the said panels beyond any doubt. He mentioned that as per Explanatory Notes of HSN, while explaining Note 2 of Section XVI it is clearly mentioned that Note 2(a) applies in particular to inter alia, "Boards, Panels, consoles. Desks, cabinets and other apparatus for electric control or the distribution of electricity (Heading 85.37)." Finally, he submitted that on the very same issue in the case of Sidwel Refrigeration v. Commissioner of Central Excise Delhi, 2003 (86) ECC 142 (T) : 2003 (151) ELT 246 (T), the Appellate Tribunal has held that the control panel has to be assessed separately to excise duty under Heading 85.37 and not as part of Roof top mounted package unit.
5. Countering the submissions Shri V. Valte, learned SDR submitted that electric control panels are essential integral and identifiable components/parts of air-conditioning package unit, that the air-conditioning package unit cannot function without the impugned goods; that the electric control panels are cleared alongwith the air-conditioning package units; that the Board's Circular dated 25.9.86 was issued to provide merely broad guidelines and was not based on detailed technical information of each of the parts or accessories; that it was clearly mentioned in the said Circular that the individual cases should be decided on merits by the Commissioner themselves keeping in view that guidelines contained in the Circular. Finally, he submitted that the Chennai Bench of the appellate Tribunal in the case of Commissioner of Central Excise Chennai v. Fluid Therm Technology Pvt. Ltd. and Ors., 2003 (85) ECC 279 (T) : 2003 (53) RLT 582 has held that the control panels designed specifically and dedicated to the furnace are required to be classified alongwith furnace and not under Heading 85.37. The learned Senior Departmental Representative also relied upon Note 4 to Section 16 which provides that where a machine covers individual component (whether separate or interconnected by piping, by transmission device by electric cables or by other devices) intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or 85, then the whole falls to be classified in the heading appropriate to that function. Learned Senior Departmental Representative submitted that when a part is utilized alongwith main equipment and cleared alongwith it, it has to be classified alongwith the main equipment. In reply the learned advocate for the Appellants submitted that the Chennai Bench has not considered the implications of Note 2 (a) to Section XVI nor it has taken note of the Explanatory Notes of HSN and the Board's Circular dated 29.5.86. He finally mentioned that it is settled law that the Board's Circular are binding on the Revenue Authorities and they cannot plead against the Board's Circular.
6. We have considered the submissions of both the sides. The facts which are not in dispute are that the Appellants are manufacturing both Roof Top Mounted Package Unit of air-conditioner and electrical control panels as per the specifications of the Indian Railways. It is also not in dispute that the impugned electrical control panels are used alongwith the package air-conditioner units. The Appellate Tribunal has considered this issue in the case of Sidwel Refrigeratior Ltd. wherein also the Appellants were manufacturing and supplying Roof Top Package unit of air-conditioners to Indian Railways and electric control panels on the basis of specifications provided by Railway Designs and Standard Organization. The Tribunal observed that "the air-conditioning system comes into existence only after being assembled at the site of different machines and parts thereof. The classification given in the Board's Circular as referred above, is relevant in this case. The different parts of the air-conditioning system are to be assessed separately. ECP cannot be, therefore, treated as integral part of RMPU. These items together cannot be assessed as air-conditioning system." We find force in the submissions of the learned Advocate that the classification of electric control panels is to be decided in terms of Note 2 to Section XVI of the Central Excise Tariff. Note 2 to Section XVI provides guidelines for the classification of the parts as under:
(a) Parts which are goods included in any of the Heading of Chapter 84 or Chapter 85 (other than Heading No. 84.09...) are in all cases to be classified in their respective Headings.
(b) Other parts, if suitable for use solely or principally with a particular kind of machines are to be classified with the machines of that kind or in Heading No. 84.09, 84.31, 84.48, 84.73, 85.03, 85.22, 85.29 or 85.28 as appropriate."
6.2 It is apparent from Note 2 that Rule 2 (b) does not apply to parts which in themselves constitute an article covered by Heading of Chapter 84 or Chapter 85. These are in all cases to be classified in their appropriate Headings even if they are specially designed to work as parts of a specific machine. This was the view of the Larger Bench of the Tribunal in the case of Commissioner of Central Excise, Mumbai v. Unicon Connectors Pvt. Ltd. It is not the case of the Revenue that electric control panels are not goods included in Heading 85.37 of he Central Excise Tariff. Thus applying the Note 2(a) to Section XVI the electric control panels are classifiable under Heading 85.37. Rule (1) of the Rules for the Interpretation of the Schedule also provides that classification shall be determined according to the terms of the Headings and any relevant Section or Chapter Notes. The Explanatory Notes of HSN as pointed out by the learned advocate, clearly provide that the Rule that the parts which are suitable for solely or principally with particular machines are classifiable in the same Heading as machine, does not apply to parts which in themselves constitute an article covered by a Heading of Section XVI. As an illustration it has been mentioned in HSN Explanatory Notes, mentioned at S. No. 13, that Panels for electric control would fall under Heading 85.37. A perusal of the decision in the case of Fluid Therm Technology reveals that Note 2(a) or Explanatory Notes of HSN or even the Board's Circulars which put the electric control panel in the list of articles which are not classifiable under 84.15 had not been noted by the Bench deciding the said matter. We also do not find any force in the submissions of the learned Senior Departmental Representative that Board's Circular dated 25.9.86 was only in the nature of the guidelines. It is clearly mentioned in the said Circular that "while it may not be possible in the absence of detailed technical information of each of the parts of accessories to provide comprehensive ruling on the classification of each of the products, nevertheless the following guidelines are being issued for determining the classification of various parts and accessories of refrigerating and air-conditioning machinery and appliances which should enable the Collectorates to eliminate divergence in the practice of any assessment of these products." No doubt the Circular, further, says that individual case should be decided on merits by the Collectorates themselves keeping in view these guidelines, nothing has been brought on record by the Revenue in the way of technical information to clarify electric panels under Heading 84.15 when the Board itself has put them in the list of parts and accessories which are not classifiable under Heading 84.15. In view of these facts and circumstances, we do not find any necessity to refer the matter to the Larger Bench. We therefore, allow the Appeal.