Customs, Excise and Gold Tribunal - Delhi
Sidwal Refrigeration Ltd. vs Commissioner Of Central Excise on 20 August, 2002
Equivalent citations: 2003(86)ECC142, 2003(151)ELT146(TRI-DEL)
ORDER
K.K. Usha, President
1. Challenge in this appeal at the instance of the assessee is against the order passed by the Commissioner of Central Excise, Delhi dated 12-12-2001. The issue raised is whether Electric Control Panels (ECP) manufactured by the assessee and supplied to the railways have to be treated along with Roof Mounted Package Unit (RMPU) as one item falling under Chapter Heading 8415 as air- conditioning machines. The appellant has also raised a contention on the ground of limitation.
2. The appellants are engaged in the manufacture of air conditioners and parts thereof falling under Heading 8415 and Electric Control Panels falling under Heading 8537 of CETA 1985. The appellants manufacture and supply RMP Unit of air-conditioners to Indian Railways on the basis of the specification given by Railway Designs and Standardisation Organisation (RDSO). ECPs are also manufactured on the basis of the specifications provided by RDSO. Appellants were paying duty on RMPU under Heading 8415 as air-conditioning machine and on ECP under Heading 8537. Documents evidencing payment of duty, purchase order of Railways etc. as also monthly RT 12 returns were being filed with the Central Excise authority from time to time. On several occasions audits were also conducted by the Internal Audit Parties and Audit Parties of AG Assessments were also made on the basis of the above mentioned classification. While so show cause notice dated 22-3-2000 was issued by the Directorate General of Anti-Evasion (Adjudication), New Delhi demanding a differential duty of Rs. 75,34,573/-alleging that the appellants had cleared air-conditioning systems without including the value of ECPs supplied along with the RMPU. It was alleged that ECP is a part of air-conditioning system and is not required to be separately classified. Its value should form part of the air-conditioning system. Extended period of limitation was sought to be invoked by issuing show cause notice in respect of the period from April 1995 to December 1999.
3. The appellants contended that the value of ECP is not liable to be added to that of RMPU and that the demand is barred by limitation. The Commissioner rejected the contention raised by the assessee and confirmed the demand. Aggrieved by the above, the present appeal is filed by the assessee.
4. It is contended on behalf of the appellants that RMPU and ECPs are separate identifiable items. RMPU is a Roof Mounted package Unit. It is required for building air-conditioned coaches by the Railways. ECPs along with many other items are also required for the completion of the air-conditioning of the railway coaches. ECP is mounted inside the railway coach. The RMPU and ECP are inter-connected after they are installed in the railway coach along with several other parts. It is therefore, contended that ECP cannot be treated as part of RMPU. The learned counsel further placed reliance on Circular No. 58/1/2002-CX., dated 15-1-2002 issued by the Central Board of Excise & Customs relating to excisability of plant and machinery inbuilt at site. Clause (5)(iii) of the above circular reads as follows :-
"5(iii) - Refrigeration / Air-conditioning plants. - These are basically systems comprising of compressors, ducting, pipings, insulators and sometimes cooling towers etc. They are in the nature of systems and are not machines as a whole. They come into existence only by assembly and connection of various components and parts. Though each component is dutiable, the refrigeration/ air-conditioning system as a whole cannot be considered to be excisable goods. Air-conditioning units, however, would continue to remain dutiable as per the Central Excise Tariff."
5. On the point of limitation, it was submitted that all the relevant facts were known to the authorities. There was no suppression of facts by the appellants and that the present demand is raised merely as a result of change of opinion about the classification. Therefore, according to the appellants, the demand is clearly barred by limitation. We heard the learned DR who sought to support the impugned order contending that the assessee itself had included the value of ECP as part of air-conditioning system when it supplied the same to DoT and MTNL up to March 1995. According to the Revenue, ECP is an integral part of RMPU.
6. We find merit in the contention raised by the appellant. The Commissioner has posed the question whether ECP and RMPU manufactured and cleared by the notice are two distinct and independent products or ECP is an integral part of RMPU and together they constitute one product, i.e. air-conditioning system. According to us, the very approach made by the Commissioner is not correct. Air-conditioning system comes into existence only upon assembly at the site of different machines and parts thereof. The clarification 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 substantial force in the contentions raised by the appellants on the ground of limitation also. There was no suppression of fact in this case. The classification by the assessee of the two items separately and payment of duty on that basis was known to the department. Therefore, there was no justification in taking recourse to the larger period of limitation.
7. For the above reasons, we set aside the order impunged and allow the appeal.