V.RAMASWAMI - (1.) THE appellants are a public limited company having a factory at Faridabad and engaged in manufacturing air-conditioning and refrigeration equipment of various kinds and descriptions. THEy are holding a L-4 Licence to manufacture goods falling under Tariff Item No. 29A of the Central Excise Tariff. As per classification lists submitted from time to time under' R. 173B of the Central Excise Rules, 1944, the company had declared in Form I that they are engaged in the manufacture of goods falling under sub-items (2) and (3) of Tariff Item. No. 29A. Against gate passes Nos. 111, 112 and 113 dated 21/01/1970 and gate pass No. 116 dated 22/01/1970 the appellants had cleared from the factory cooling coils, condensors and compressors and supplied the same for putting up a cold storage plant to one M/s. Ravi Cold Storage, Ahmedabad. THEse parts were manufactured by the appellants in their factory at Faridabad and were cleared by them against the abovementioned gate passes after payment of a duty of Rs. 13,547.20 p. Against gate passes Nos, 95, 96, 97 and 98 dated 21/01/1969 the appellants had cleared from the factory various parts of refrigerating and air-conditioning appliances and machinery for an ice factory plant to one M/s. Gujarat Industrial Investment Corporation Limited, Ahmedabad. THEse parts also were manufactured by the appellants in their factory at Faridabad and were cleared by them against gate passes referred to above after payment of a duty of Rs. 19,336.87 p.
(2.) ON the ground that parts of the refrigerating and air-conditioning appliances which they have removed under the above said gate passes are not excisable goods falling under Tariff Item No. 29A(3), they filed two refund applications. The Assistant Collector of Customs rejected both these applications holding that the assessment was made correctly. The appellants preferred two appeals against these orders before the Collector of Customs and Central Excise, Chandigarh, who by his common order dated 20/12/1971 dismissed the appeals. Thereafter, the appellants filed writ petition in the High Court of Punjab and Haryana at Chandigarh. This writ petition was dismissed by a learned single Judge holding that the goods supplied are parts of a refrigerating and air-conditioning appliances, that a complete cold storage plant was not supplied to M/s. Ravi Cold Storage, Ahmedabad or M/s. Gujarat Industrial Investment Corporation Ltd., Ahmedabad, and that they will fall clearly within the purview of Tariff sub-item(3) of Tariff Item 29A. An appeal preferred against this judgment was dismissed in limine by a Division Bench. In order to understand the argument of the learned counsel for the appellants, it is necessary to set out Tariff Item 29A in full at the relevant period, which reads as follows: JUDGEMENT_400_1_1990Html1.htm The argument of the learned counsel for the appellants was that sub-items (1) (2) deal with refrigerators and other refrigerating appliances and air-conditioners and other air-conditioning appliances respectively which are ordinarily sold or offered for sale as a ready assembled unit. Therefore, in order to bring it within sub-items (1) and (2) such refrigerating and air-conditioning appliances should be complete assembled units and they must also be ordinarily sold or offered for sale as such ready assembled units. The illustrative examples referred to in the two sub-items make this clear according to them. The cold storage plant and ice-factory plant supplied to the factories concerned in this case as such are not such complete assembled units which are ordinarily sold or offered for sale within the meaning of sub-items (1) and (2). From this premise they sought to interpret sub-item (3) as meaning that the goods that are covered by that sub-item are parts of those refrigerating or air-conditioning appliances which in its assembled form would have come as a complete unit under Tariff sub-items (1) and (2) of Item 29A and are manufactured for sale. In other words, they want to restrict the content of sub-item (3) with reference to the items that may fall under sub-items (1) and (2). The further submission was that though in its sweep sub-item (3) may appear to cover all and every part of refrigerating and air-conditioning appliances and machinery of all sorts, the words "and parts thereof" in the heading controlled the meaning and restrict it in the context only to parts of a completed unit which as such completed unit would have come under sub-items (1) and (2) of Item 29A. In this connection, learned counsel has referred to certain decisions of the High Courts which we will refer to later.
(3.) BY Finance Act of 1961 Items 29A and 40 were introduced in the First Schedule to the Central Excises and Salt Act, 1944 and those two entries read as follows: JUDGEMENT_400_1_1990Html2.htm The Notes on clauses relating to the relevant clause in the Finance Bill 10 of 1961 stated that Item 29A proposes to levy an excise duty on air-conditioning machinery and Item 40 proposes to levy an excise duty on refrigerators and "parts thereof". By the Finance Act 2 of 1962 a combined tariff entry in the form prevailing in 1969 and 1970 was introduced and the Notes on clauses relating to this amendment stated that the proposal is "to combine into one item the present tariff Items 29A and 40 relating to 'Air-conditioning Machinery' and 'Refrigerators' respectively as well as to make it more comprehensive." Under the Government of India, Ministry of Finance, Department of Revenue, Notifications No. 80/62-Central Excises, dated 24/04/1962 as subsequently amended by Notifications dated 29/12/1962, 23/03/1968 and 14/06/1969 all parts of refrigerating and air-conditioning appliances and machinery other than the "parts" mentioned below were exempt from the payment of excise duty leviable thereon : "(i) Cooling coils or evaporator, (ii) Compressor, (iii) Condenser, (iv) Thermostat, (v) Cooling unit, and in the case of absorption types of refrigerators in which there is no compressor, heater including Burners and Baffles in a Kerosene Operated absorption type refrigerator, (vi) Starting Relay, controls (including expansion valve and solenoid valves) and pressure switches, (vii) Overload Protection/ Thermal Relay, (viii) Cabinet." There are a number of other notifications also exempting parts of refrigerating and air conditioning appliances and machinery, intended to be used for various purposes specified in the notifications, such as, use in refrigerating and air-conditioning appliances or machinery which are installed or to be installed in any of the following establishments : "1. Computer rooms; 2. Research and test laboratories; 3. Animal houses; 4. Telephone exchanges; 5. Broadcasting studios; 6. Trawlers; 7. Dams; 8. Mines and tunnels; 9. Thermal and hydel power stations; 10. Technical buildings of Military Engineering service; 11. Any Hospital run by the Central Government, a State Govt., a Local Authority or a Public Charitable Institution; 12. Any factory." ;