CARRIER AIRCON LTD Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE issue involved in this appeal, filed by M/s. Carrier Aircon Ltd., is whether the Chillers, manufactured by them, are classifiable under Heading No. 84.18 of the Schedule to the Central Excise Tariff Act, as claimed by them or under Heading 84.15 of the Tariff, as decided by the Commissioner, under the impugned Order No. 9/2000, dated 24 -3 -2000.

(2.) SHRI M. Chandrasekharan, learned Senior Advocate, submitted that the Chillers, manufactured by the Appellants, are functionally designed to produce chilled water by using a refrigeration circuit in its construction and this chilled water in turn is applied in Industrial processes such as spot welding, paint shops, nuclear science centre, biotech processing besides in relation to central air -conditioning systems/plants of huge size; that since the impugned chillers were independent machines and were designed to produce chilled water they classified them as refrigerating and freezing equipment under sub -heading No. 8418; that the Commissioner has classified the impugned goods under Heading No. 84.15, confirmed the demand of excise duty and imposed penalty, holding that chillers are nothing but an integral part of the central airconditioning system; that the Commissioner has classified the product on the basis of end use alongwith Air Handling unit and observing that more than 90% of the chillers were used in the commissioning of central airconditioning plants; that the use to which a product is put is irrelevant in the matter of classification because a particular product may have multifarious applications; that it was held in Indian Aluminium Cables Ltd. v. UOI, 1985 (21) E.L.T. 31 (S.C.) that the process of manufacture of a product and the end use to which it is put, cannot necessarily be determinative of the classification of that product under a fiscal statute like the Central Excise Tariff. He, further, submitted that the fact that chillers are used in applications other than in relation to commissioning of central air -conditioning plants, it is proof that they are not meant exclusively or solely for use with air conditioning plants only; that moreover the function of the chiller is only to chill water or bring to a very low temperature often below to a freezing point of water; that essence of the tariff appears that mahcine should be classified by reference to their principal functional purpose regardless of the field of industry to which they are put to use; that the purpose of the impugned goods is only one to chill the water and its function stops thereafter; that in undertaking this function it does not require any other aid or attachment; that internationally the chillers are accepted as falling under Heading 84.18 of the HSN; that as per Note 2(a) to Section XVI of the Tariff, the liquid Chiller when cleared separately and which specifically falls under Heading 84.18 and accordingly it cannot be treated as part of an airconditioner on the same analogy as fans used in the air -conditioner are classified at the time of clearance as an electric fan and not as part of air -conditioner. He also mentioned that air handling unit has an independent and distinct function and this unit produces the designs of air -conditioning effect ultimately and that the liquid chiller itself does not do any airconditioning as it is only designed to refrigerate or produce chilled water/liquid. He also referred to the classification of cooling towers under Heading 84.19 which are used in the central air conditioning plants and have not been treated as parts of central air -conditioning system.

(3.) THE learned Sr. Counsel, further, submitted that Explanatory Notes of HSN dealing with the scope of 'parts' of airconditioners specifically clarifies that "if presented as separate elements, the components of air -conditioning machines are classified in accordance with provisions of Note 2(a) to Section XVI (Heading 84.14, 84.18, 84.19, 84.21, 84.79, etc.) whether or not designed for building into a self -contained unit." He also emphasised that in the impugned Order, the various industrial application of the impugned Chiller has not at all been considered; that these chillers are used in Polyster Film Processing, Colour Picture Tube Processing, Paint shops, Nuclear Science Centre, Welding Process, Textile/Chemical Industry. He also stated that Note 7 to Chapter 84 is not applicable as this Note will apply only where a machine is used for more than one purpose; that in the impugned Order, the term 'purpose' has been treated synonymously with 'end use'; that 'purpose' is different from 'end use'; that the only purpose of the chiller is to chill the water and nothing else; that there is no purpose other than chilling the water. He also relied upon the decision of the Larger Bench in Press Metal Corporation Ltd. v. CCE, 2000 (38) RLT 650 wherein it was held that ultimate use of the manufactured goods after clearance cannot determine the classification of goods manufactured.