Customs, Excise and Gold Tribunal - Delhi
M/S. Rapid Controls Private Ltd. And ... vs Cce, Delhi I on 6 October, 2000
Equivalent citations: 2001(132)ELT769(TRI-DEL)
ORDER
V.K. Agrawal
1. The issue involved in these two appeals is whether the Control Valves, manufactured by M/s. Rapid Controls P. Ltd.,are classifiable under Sub-heading 8481.80 of the Schedule to the Central Excise Tariff Act, as claimed by them, or under Sub-heading No.8481.10, as confirmed by the Commissioner, under the impugned Order.
2. Shri V.Lakshmikumaran, learned Advocate, mentioned that the Appellants manufacture following industrial Control Valves in their factory:-
(a) Solenoid Valve,
(b) Ball Valve,
(c) Pneumatic Operated Control Valve,
(d) Autovent (Automatic Air Purge Valve),
(e) Mixing Valve,
(f) Air Flow Switch,
(g) Water Flow Switch He submitted that the Valves manufactured by the Appellants find application in water lines in industrial installations; that those water lines can be for large air conditioning or cold storage plant or in any heat exchanger; that these valves are also use in normal water lines in industrial or commercial establishments; that though the Commissioner has accepted their stand that the valves are used in the water lines in large air conditioning plants, yet he has classified the impugned valves under Sub-heading 8481.10, holding that water distribution pipeline in the air-conditioning and refrigerating machinery forms an integral part of the machine itself; that's per Refrigeration And Air Conditioning Technology by William C. Whitman and William M.Johnson, expansion valve is n orally installed in the liquid line between the condenser and the evaporator; that according to "special Refrigeration System Components", the Solenoid Valve is used to control fluid flow; that thus for classification of expansion valves under Sub-heading 8481.10, suitability of the valve to control the flow of the refrigerant in the cooling coil to maintain the desired pressure and temperature is the only criteria; that the connotation of expansion valve in refrigerant cycle is well understood from I.S.3615-1967 which provides that Expansion valve is "a device which regulates the flow of refrigerant from the liquid into the evaporator to maintain a constant evaporator pressure"; that Solenoid operated Valves are also used in large air conditioning system to start or stop the flow of refrigerant and accordingly Sub-heading 8481.10 covers only those valves, which are used in the refrigeration or air conditioning appliances or machinery to control and regulate the flow of the refrigerant in the system; that none of the valves manufactured by the Appellants answer the description of the goods of Sub-heading 8481.10 and 8481.20 and accordingly automatically get classified under Sub-heading 8481.80 and not as parts of machine or equipment on which these are fitted.
3. The learned Counsel, further, mentioned that they have classified their products in accordance with Board's Circular No. 6/86 dated 25.9.86 according to which water solenoid valves are classifiable under Sub-headings other than 8415.00 8418.00 or 8418.00 of the CETA. He also relied upon Circular No.5/88 dated 29.2.1988 according to which cooling tower, used in refrigeration system, would not be classifiable under Heading 84.15; that similarly in Circular No.6/90-Cx 4 dated 4.5.1990 it was clarified by the Ministry of Finance that end use will not decide the classification of heat exchanger, which is classifiable under Heading 84.14 and not to be classified with machines to which it is attached. He also stated that while expansion valves for refrigerating and air-conditioning appliances are thermostat designed for exclusive use for ammonia, free on and other refrigerant gases, the impugned valves are exclusively used for balancing, mixing and reducing pressure etc. of water and other fluids in the pipelines laid down at industrial installations such as atomic energy plants, power plants, oil refineries, dairies, chemical plants as well as in the water pipe laid down along with the refrigerating and air-conditioning systems; that the impugned a valves have no application in refrigerating and air-conditioning appliances itself; that solenoid valves are of two types, viz. designed for refrigerating and air conditioning appliances and for air, water, steam and oil which are called as industrial solenoid valves; that impugned a valves are industrial solenoid valves; He, further, mentioned that the Department has drawn the inference of impugned valves being used in refrigerating or air-conditioning appliances on the basis that the same have been supplied to companies which are engaged in the manufacture of such appliances and machinery; that the inference has been drawn on fallacious understanding that these companies are engaged only in the manufacture of said appliances; that in fact, these companies also undertake air-conditioning of buildings, hotels, and like as well and as per requirement water pipelines are also laid down at sit; that the valves manufactured by them and supplied to these companies are used in the said water distribution pipelines and air-conditioning appliances. The learned counsel referred to some of the certificates given by their customers such as Volts Ltd. in which i t was mentioned that the valves procured from the appellants have been used in water distribution pipeline system in air conditioning and refrigerating plants. Similar certificate has been given by M/s.Blue Star, M/s. Carrier Aircone Ltd. and M/s.Kirlosker Pneumatic Ltd. The learned Advocate also referred certificate receive from other buyers such as Friends Marketing P. Ltd. M/s. Scenerio India etc. undertaking the use of the impugned valves in air drying plant, Fire fighting system etc. He also referred to the Appellants' brochure, according to which the flow switch is used in indoor or outdoor applications in high humidity atmosphere, on liquid lines handling fluids below dew point temperature or below 32F. He also stated that they have not sold their entire quantity to the so called manufacturer of refrigerating and air conditioning appliances; that more than 22% of total production of valves find its way to different other parties. The learned Counsel also contended that the demand is hit by time limit as the show cause notice was issued on 30.8.99 for the period 1.4.94 to 31.3.99; that extended period of time limit is not invocable as they had filed declaration under Rule 173-B and submitted RT-12 return and invoices; that the entire facts were known to the Department; that the Adjudicating authority himself has dropped the demand for the period September, 94 to April, 1995 on the basis of the decision in the case of CCE, Baroda vs. Costspun Ltd., 1999 (113) ELT 353 (SC); that once the Commissioner accepts the view that the Jurisdictional Officer have approved the classification after a detail inquiry and application of mind there could not be any ground for invoking the provisions of Proviso to Section 11A(1) of the Central excise Act; that provisions of Section 11Ac and 11AB would be applicable only in a case where the short levy had accurred by reasons of fraud, suppression etc. and that too after in Section of the said Section w.e.f. 28.9.1996.
4. Dr. Ravinder Babu, learned D.R., reiterated the findings as contained in the impugned Orderand emphasised that the impugned products are used in water distribution pipeline system in air conditioning and refrigerating plants; that Sub-heading 8481.10 uses the word valves used for air conditioning, refrigerating appliances and machinery and accordingly once the impugned valves are used in the air conditioning and refrigerating appliances plant then it can not be denied that the uses of impugned valves is connected with the refrigerating and air conditioning plants and machinery and these should be considered as part of the refrigerating or air conditioning plant only.
5. In reply learned Advocate relied upon the decision on the case of Sand Industrial Controls Pvt. Ltd. vs. CCE, New Delhi, 2000(40) RLT 163 (CEGAT).
6. We have considered the submissions of both the sides. Heading 8481 and rival sub-headings are extracted below:-
84.81 Taps, cocks, valves and similar appliances for pipes, boiler shells, tanks, vats or the like, including pressure-reducing valves and thermostatically controlled valves 8481.10 - Expansion valves and Solenold valves for refrigerating and air-conditioning appliances and machinery 8481.20 - .....
8481.80 - Other Parts The Appellants emphasised that Valves manufactured by them are neither Expansion Valves or Solanold Valve which are used for refrigerating and air-conditioning appliances and machinery and that the impugned valves are never used in the machinery and these are used only at the time of installation of the plant. The Revenue on the other hand is of the view that the very fact that the impugned goods are used in the air-conditioning and refrigerating plants by the customers of the Appellants in the water distribution pipelines the products have to be classified under Sub-heading 8481.10 as it cannot be said that such water pipelines are for any use other than for refrigerating or air-conditioning plants and machinery. We do not find the substance in the submissions made by the revenue that merely because of the use of these valves in the pipelines for distribution of water in air-conditioning and refrigerating plant will make these valves as valves for refrigerating and air-conditioning plants and machinery. As per IS:3615-1967 Expansion Valve is a device to regulate the flow of refrigerant from the liquid line into the evaporator to maintain a constant evaporate pressure. It is not the case of the Department that the impugned valves are performing such a function. It is also apparent from the various certificates brought on record by the Appellants that the units engaged in the manufacture of refrigerating and air-conditioning plants have used the impugned goods in water distribution pipeline system only and not used them in air conditioning machinery and appliances. The Appellants have also brought on record the certificates received from buyers other than manufacturer of refrigerating or air-conditioning plants to prove their point that the impugned valves have been used for various applications such as Fire Fighting System, Oil Lubricating System, for purging of Air from Cold Water and Hot water, in Water Softening plants, Industrial billet heating equipment etc. The Department thus has not brought sufficient evidence on record to prove their case that the valves manufactured by the Appellants are Expansion Valves or Solanold Valves classifiable under Sub-heading 8481.10. The Tribunal in Sand Industrial Control case (supra) did not accept the plea of the Revenue that the valve will be classifiable under Sub-heading 8481.10 merely because these are used in installation of air-conditioning system observing that Note 5 Section XVI of the Central Excise Tariff does not provide that whenever any system is installed everything used therein would become part of that system. We, therefore, hold that the impugned goods are classifiable under Sub-heading 8481.80 and accordingly set aside the impugned Order. As the appeal is allowed on merit we are not considering the other submissions regarding time limit. Both the appeals are allowed.