2011(07)LCX0218

IN THE CESTAT, SOUTH ZONAL BENCH, CHENNAI

Ms. Jyoti Balasundaram, Vice-President and Dr. Chittaranjan Satapathy, Member (T)

ETA General Pvt. Ltd.

Versus

Commissioner of Customs, Chennai

Final Order No. 1079/2011, dated 29-7-2011 in Appeal No. C/478/2004

Advocated By -

Shri Alwan, Advocate, for the Appellant.
Shri V.V. Hariharan, J CD R, for the Respondent.

[Order per: Chittaranjan Satapathy, Member (T)]. -

Heard both sides.


2. The appellants herein are manufacturers of 'O' General Brand of Window and Split Air Conditioners in collaboration with M/s. Fijitsu General Asia Pvt. Ltd., Japan. The appellants regularly import certain parts of these air-conditioners required for manufacture from group companies including M/s. Fijitsu General Asia Pvt. Ltd. in Thailand.


3. Two of the items regularly imported by the appellants as above are condenser assemblies and evaporator assemblies. These assemblies according to the appellants perform the function of heat exchanger and when these were imported, the appellants claimed assessment of these goods as heat exchangers for the purpose of classification under Customs Tariff Act, 1975.


4. In respect of two imports, when documents were filed for clearance of these items, the officers of SUB functioning under the respondent took up for examination the documents relating to these items and it was alleged that the items imported namely condenser assembly and evaporator assembly were being claimed as heat exchangers by a wrong description to avoid payment of proper duty. Thus in respect of the above two consignments for which, two warehousing bills namely 300652 and 300653 both dated 8-11-2000 were filed, were provisionally allowed clearance under ex-bond Bills of Entry No. 3916 dated 22-2-2001 and 8640 dated 24-4-2001. Prior to this clearance, in respect of another 8 consignments, assessment was made as claimed by the appellants and goods were allowed clearance. However, the assessment was kept provisional with regard to valuation of the goods.


5. It has been alleged by the Department that the classification claimed by the appellants in respect of these items under Heading 8419.50 provided for rate of duty at 25% basic, 10% surcharge, 16% additional duty and 4% special additional duty. Whereas, if evaporator and condenser assemblies are classified as parts of air-conditioners under Heading 8415.90, the duty payable will be 35% basic customs duty, 10% surcharge and 16% additional duty with 4% special additional duty. It has been further alleged that when all technical documents including drawings mentioned only the description of these goods as 'condenser assembly' and 'evaporator assembly', the appellants have described them in the invoices as heat exchanger only to claim a lower rate of duty under Heading 8419.50.


6. The adjudicating Commissioner has ordered classification of the impugned imported goods as 'parts of air-conditioning machines used for domestic purposes' under sub-heading 8415.90 of the Customs Tariff, chargeable to duty @ 35% BCD + 10% SCD + 16% CVD + 4% SAD and has ordered finalization of provisional assessment accordingly leading to the present appeal.


7. We find that the adjudicating Commissioner has dealt in detail with the arguments raised on behalf of the appellants seeking classification of the impugned goods as heat exchangers under Tariff Heading 8419.50 and after considering the scope of the disputed entries with reference to the relevant Section Notes and Explanatory Notes to the HSN has come to the conclusion that the impugned goods require classification under Heading 8415.90 rather than under Heading 8419.50 as claimed by the appellants.


8. It has been submitted by the learned counsel for the appellants that the HSN Explanatory Notes under Heading 8415 makes no distinction as to domestic or industrial equipment but merely states that if presented as separate elements, the components of air-conditioning equipment have to be classified in accordance with provisions of Note 2(a) of Section XVII under Headings 84.14, 84.18, 84.19, 84.21,84.79 etc.


9. The learned JCDR for the Department submits that the adjudicating Commissioner has adequately dealt with this issue and he supports the impugned order.


10. We have considered the case records and submissions from both sides. We have perused the competing entries under Customs Tariff Headings 84.15 and 84.19. Parts of air-conditioning machines comprising a motor driven fan and elements for changing the temperature and humidity are very much covered under Heading 8415.90. The Explanatory Notes to the HSN for 'Parts' appearing under Heading 8415.90 clarifies that if presented as separate elements, the components of air-conditioning machines would get classified in accordance with the provisions of Note (2)(a) to Section XVI under Headings 84.14, 84.18, 84.19 etc. This Explanatory Note has to be read harmoniously with the legal text of Heading 84.19 which makes it amply clear that under the sub-heading 84.19 only those machinery which are other than machinery or plant of a kind used for domestic purposes are included. Hence, the heat exchanger unit covered under subheading 8419.50 can only include a heat exchanger unit which is not used for domestic purposes. The plea advanced on behalf of the appeals that the impugned goods can be classified under Heading 84.19 is not acceptable as the same are not for purposes other than air-conditioning machinery used for domestic purposes as has been brought out in the adjudicating Commissioner's order. When the legal text of the Heading 8419 excludes goods used for domestic purposes, the individual sub-heading under the said Heading cannot be said to be including something which is excluded from the scope of the Heading itself. Further, we also find that though the relevant technical documents including drawings describe the impugned goods as condenser assembly and evaporator assembly, the appellants have described the goods differently as heat exchangers to claim assessment under Heading 8419.50 at a lower rate which is not permissible. Accordingly, we find no justification whatsoever to interfere with -the detailed order recorded by the adjudicating Commissioner. Hence, we uphold the impugned order and reject the appeal.

(Operative portion of the order was pronounced in open court on 29-7-2011)

Equivalent 2012 (278) ELT 0348 (Tri. - Chennai)

Equivalent 2012 (191) ECR 0363 (Tri.-Chennai)