1995(09)LCX0071

IN THE CEGAT, PRINCIPAL BENCH `B’, NEW DELHI

S/Shri G.P. Agarwal, Member (J), P.K. Kapoor, Member (T) and Gowri Shankar, Member (T)

COLLECTOR OF CUSTOMS, BOMBAY

Versus

TATA HYDRO ELECTRIC POWER SUPPLY

Order No. C/353/95-B2, dated 26-9-1995 in Appeal No. C/298/86-B2

CASE CITED

Collector v. Jay Frozen Foods (P) Ltd. — 1995(03)LCX0157 Eq 1995 (078) ELT 0495 (Tribunal)                              [Para 3]

Advocated By : Shri K.K. Jha, SDR, for the Appellant.

 Shri C.P. Patel, Material Officer, for the Respondent.

[Order per : Gowri Shankar, Member (T)]. - The issue for determination in this appeal by the Collector of Customs, Bombay is whether the machinery imported by the respondent M/s. Tata Hydro Electric Power Supply Co. Ltd. is to be classified under Heading 84.17(1) of the Customs Tariff, as claimed by the respondent and confirmed by the Collector (Appeals) or as air conditioning equipment under Heading 84.15.

2. Shri K.K. Jha, SDR argued that it was evident from the technical literature that the goods function on the principle of refrigeration with the machinery performing functions covering the complete refrigeration cycle. The catalogue and technical literature show that the compressed air enters the heat exchanger in which heat is removed by the refrigeration system. The elements of the refrigeration system such as compressor, condenser and cooling tool are all present. That in this process the air also dehumidified did not detract from the fact that primary function of the machine was to lower the temperature of the treated air. The goods were therefore more appropriately classifiable under Heading 84.15.

3. Shri C.P. Patel of the respondent company argued that it was essential for operation of the pneumatic instrumentation and control system of the thermal plant at Trombay that for proper functioning it should not contain humidity as this would cause malfunctioning of the instruments. The goods were essentially air drier. In terms of Interpretative Rule 3 to the Customs Tariff it is the princial function of the machine which should determine the classification. The goods were imported against the import licence for a refrigeration type, dehumidifier and the Customs had not raised any objection that the licence did not cover the goods in question. The goods have thus been rightly classified by the Collector (Appeals). He relied upon the decision of this Tribunal in the case of Collector of Customs, Bombay v. Jay Frozen Foods (P) Ltd. 1995(03)LCX0157 Eq 1995 (078) ELT 0495 (Tri.) = 1995 (058) ECR 708.

4. The Explanatory Notes to the Customs Cooperation Council Nomen- clature on which the Customs Tariff was based at the relevant time, explain that the Heading 84.17, with the exceptions specified, covers “machinery and plant designed to submit the materials (solid, liquid or gaseous) to a heating or cooling process in order to cause simple change in temperature”; One of the exceptions specified is refrigeration machinery falling within the Heading 84.15. Apart from that the function of the machinery imported was not to cause a simple change in temperature but to reduce the humidity. The Explanatory Notes specify that the Heading 84.17 excludes machinery and plant in which the heating or cooling, even if essential, is merely a secondary function designed to facilitate the main function of the machine or the plant. If we now turn to Heading 84.15, the notes provide that the goods of that heading are in the main machines or assemblies of apparatus for the production of continuous cycle of operation of lower temperatures with active cooling elements for the absorption of the latent heat of evaporation of liquidised gases. According to the Notes, the compression type refrigeration should have three types of elements :

1. The compressor which receives expanded gas from the evaporator and delivers it under pressure to

2. The condenser or liquidifier where the gas is cooled and liquidified, and

3. The evaporator, the active cooling element, consisting of a tabular system in which the condensed refrigerant, released through an expansion valve, evaporates rapidly with the absorption of heat from the surrounding air or, in the case of large cooling installations, from brine or a solution of calcium chloride kept in circulation around the evaporators coils.

5. It is seen that the machinery imported by the respondent includes these three elements. It is not denied by the respondent that the air is cooled by employing the machinery but it is claimed that the primary object of such cooling is to dehumidify the air by lowering the temperature to a level below its dew point leading to condensation of the moisture in the cooling air which is removed. It is well settled principle that the end use, or the intention of user is not a determinant of classification. The primary purpose of the machinery was to refrigerate the air. The fact that the intention was not to utilise the cooled air will not make a difference to that function. The specified exclusion of the goods from the Heading 84.17 in the Explanatory Notes clinches this point. In the light of this the decision of the Tribunal, cited by the respondent will have to be distinguished.

6. In the circumstances, the appeal is allowed and the order of the Assistant Collector restored.

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Equivalent 1996 (83) ELT 642 (Tribunal)