- (1.) The present appeal calls in question the legal substantiality of the judgment and order dated 23.04.2003 passed by the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi (for short, 'the Tribunal') in Appeal No. E/577/2001-B whereby the Tribunal, placing reliance on the decision Sanden Vikas (India) Ltd. v. C.C.E., New Delhi, 2003 153 ELT 3 , opined that the issue raised by the revenue is covered by the said decision and, therefore, the appeal was sans merit and did not warrant any interference.
(2.) At the outset, it is apt to note that when the matter was listed before a two-Judge Bench on 25.3.2015, the following order came to be passed:- "From the reading of the impugned order passed by the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi (for short, 'the Tribunal'), it transpires that the Tribunal followed decision of this Court in the case of this very respondent-assessee titled Sanden Vikas (India) Ltd. v. Collector of Central Excise, New Delhi, 2003 153 ELT 3 and on that basis, the appeal of the respondent was allowed. The Revenue challenging the aforesaid order in the present appeal, contended that the judgment of this Court in Sanden Vikas (India) Ltd. requires re-consideration. This is specifically stated in the synopsis and the list of dates. We further find that on 08.12.2003, an order was passed by this Court admitting the present appeal, after condoning the delay in filing the appeal. In view thereof, we are of the opinion that the matter needs to be heard by a three-Judge Bench. Ordered accordingly. The Registry is directed to obtain necessary instruction in this regard from Hon'ble the Chief Justice of India for listing of this matter before a three-Judge Bench." In view of the aforesaid order, the matter has been placed before us.
(3.) Be it noted, the decision in Sanden Vikas (India) Ltd. was the pronouncement between the same parties for a different period i.e. 20.3.1990 to 25.7.1991. The present appeal is primarily concerned with the period 1.8.1991 to 28.2.1993, during which notification no. 166/86-CE was applicable. Before we proceed to deal with the postulates in the notification, it is obligatory to understand what was decided in Sanden Vikas (India) Ltd. . The facts in the said case were that the appellant-assessee therein, the respondent in the present appeal, is a manufacturer of car air-conditioning kits. It classified the said goods under Item No. 5 of Heading 8415 of the Schedule to the Central Excise Tariff Act, 1985 (for short, 'the Act') for the purpose of availing the benefit of exemption as given under Notification No. 166/86-CE dated March 1, 1986 (as amended from time to time). The appellant therein contended that it was only manufacturing parts of the air-conditioning kit and, therefore, the kit could not be treated as an air-conditioner. The Assistant Collector, disagreed with the stance of the assessee and treated the same as air-conditioning system falling under Item No. 3 of the Heading 8415 of the Notification. On March 20, 1990, a new Entry, Item No.8, was added to the table of the Notification and thereafter the assessee classified the air-conditioning kits under the said Entry for the purpose of levy of excise duty. On October 1, 1990, the Assistant Collector, Central Excise, Division-I, Faridabad issued a notice to the assessee stating that under the said Entry i.e. serial no. 8, the sub-heading relating to compressor had not been included in the second column of the table and as the car air-conditioning kits include compressor they fall under Item No.3 (Heading No. 8415.00) of the Notification and accordingly the assessee was asked to show cause why the excise duty amounting to Rs.2,20,74,021.30 should not be demanded from it. The assessee replied to the said show cause notice and other show cause notices asserting that car air-conditioning kits, including compressor, manufactured by it, is a machinery especially designed to be used for air-conditioning of motor vehicle and as it is not usable as room air-conditioner, split unit air-conditioner or package type air-conditioner, it cannot be classified in that group; the components of the car air-conditioner kit are nothing but parts of the car air-conditioner and the air-conditioning kit was shown as such in common parlance and, therefore, it was classifiable under serial no. 8 of the said Notification. The Assistant Collector, vide order dated January 24, 1992 rejected the stand put forth by the assessee and confirmed the demand which was affirmed by the Collector (Appeals) by his order dated July 13, 1992. On appeal being filed before the Tribunal, it dismissed the same. The two-Judge Bench of this Court referred to the column 3 of the table annexed with the notification and posed the question whether the car air-conditioning kit is classifiable under Item No. 3 or under Item no. 8 of the table of the said Notification. After reproducing the Item No. 3 of the said Notification, to which we shall refer to in detail at a later point of time, analysed the description of goods given against Item No.3 in column (3), referred to the amendment made on March 20, 1990 whereby in column (3), following words were added against Item No.5:- "other than the parts and accessories of car airconditioner including car air-conditioning kit." The Court observed that what is excluded from Item No.5 is mentioned against Item No.8, as per the portion quoted above. Thereafter, the two-Judge Bench referred to the Memorandum explaining the provisions in the Finance Bill, 1990 insofar as it relates to Chapter 84 and observed thus:- "13. A careful reading of the items afore-mentioned, in the light of the note under Chapter 84 in the Memorandum, leaves no doubt in our minds that exclusion of the afore-mentioned goods from the description of goods against Item No. 5 and their specification against Item No. 8, with effect from March 20, 1990, was with the intention of creating a specific entry in regard to car air-conditioners both parts and accessories thereof as well as car air-conditioning kits. 14. As the air-conditioning kit is meant for providing air-conditioning in car and as the description of the goods first mentioned against column (3) which notes air-conditioners, we are inclined to take the view that the car air-conditioning kit fell within the meaning of the air-conditioners against Item No. 3 before March 20, 1990. This position continued till Item No. 5 was amended and Item No. 8 was inserted in the said Notification where specific entry with regard to parts and accessories of car air-conditioner and car air-conditioning kit was provided." Thereafter, the Court opined that a specific Entry prevails over the general Entry and, therefore, w.e.f. March 20, 1990 till July 25, 1991, air-conditioning kits which comprises of various parts are classifiable under Item No. 8 of the said Notification. The Division Bench reproduced the Explanation (2) that was added on July 25, 1991, which reads as under:- "Explanation (2) For the purposes of this notification, the term 'car air-conditioner kit' or 'car air-conditioning kit' shall exclude the kit or assembly of parts which contains automotive gas compressor with or without magnetic clutch." While interpreting Explanation (2), the Court noted the submissions of the learned counsel and eventually held thus:- "18. To resolve the controversy, we shall revert to the wording of the said Explanation. It provides that for the purposes of the Notification, the term "car air-conditioner kit" or "car air-conditioning kit" shall exclude the kit or assembly of parts which contains automotive gas compressor with or without magnetic clutch. In our view, the Explanation has the effect of taking away the automotive gas compressor (with or without magnetic clutch) from out of the car air-conditioning kit. The car air-conditioning kit which comprises of parts of car air-conditioner remains as part of Item No. 8 of the notification. The Explanation cannot be so construed as to remove the term "car air-conditioner kit" or "air-conditioning kit" itself from Item No. 8 of the Notification. What follows is that 'car air-conditioning kit minus automotive gas compressor with or without magnetic clutch' will remain in the description of goods against Item No. 8 of the Notification and that the excluded part of the kit, namely, automotive gas compressor with or without magnetic clutch, will cease to be part of Item No. 8 and will be liable to duty separately.";