COLLECTOR OF CENTRAL EXCISE Vs. VOLTAS LTD

JUDGEMENT

(1.) THIS is an appeal preferred by Union of India to challenge judgment dated March 16, 1988 passed by the learned single Judge in Writ Petition No. 261 of 1981. By the impugned judgment, the learned Judge allowed the petition filed by the respondent-company and set aside the order dated September 26, 1980 passed by Government of India, Ministry of Finance, Department of revenue, in exercise of powers under Section 36 (2) of the Central Excises and Salt Act.

(2.) THE respondent-company is registered under the provisions of the Companies Act and is engaged in manufacture of air-conditioners and water coolers and has a factory at Thane. Some of the essential parts of air-conditioners and water coolers are impellers (alternatively called blowers), motors and propellers. The company purchased the said parts from different suppliers and then these parts and other parts are assembled to bring into existence the end products like air-conditioners and water coolers. The function of the propeller on the condenser side is to take the outside air from the atmosphere and force it through the condenser back into the atmosphere. By this process, the refrigerant gas is condensed. The blower on the evaporator side takes air from the room and force it through a cooling coil thereby evapourising the liquid refrigerant. This results in lowering the temperature and the humidity in the room. The motor drives the propeller and the blower both of which are housed in the air-conditioner and are attached to the two opposite ends of the shaft of the motor. The motor itself has no independent base of mounting. For functioning of air-conditioners, certain other essential items are required such as inlet cone, a scroll, a partition plate and a venturi. The inlet cone facilitates the intake of air while the scroll is an indivisible and integral part of the air-conditioner and provides for movement of air over the evaporator. The partition plate divides the hot and cold side of the refrigeration system in the air-conditioner. The venturi creates particular operating characteristics required for the condensation of the refrigerant gas.

(3.) THE Superintendent, Central Excise, Range I, Thane, by communication dated February 7, 1972 informed the company that machine like blower and condensor fans are manufactured and fitted in refrigeration and air-conditioners and that manufacture falls under 'industrial fans' as set out in Tariff Item No. 33 (2) and excise duty is leviable from May 29, 1971. The company was, therefore, called upon to apply for L-4 licence for the manufacture and pay excise duty on all industrial fans manufactured and cleared from May 29, 1971. The company sent reply dated march 29, 1972 pointing out that the company does not manufacture fans falling under Tariff item No. 33. The company pointed out that blower wheels of fans are obtained from the market and are used for assembly of air-conditioners and water coolers and on such assembly, the blower wheels lose their identity. The Superintendent, Central Excise, by order dated July 28, 1972 informed the company that the manufacture of industrial fans (blowers) attracts duty under tariff Item No. 33 (2) and the company should obtain L-4 licence and pay duty.