ORDER
P.C. Jain, Member (T)
1. On 31-5-1983, Central Excise Officers visited the factory premises of the appellants herein. According to the said officers, the appellants were found engaged in manufacture of ‘cabinets’ for air conditioners without obtaining Central Excise licence or without filing any declaration.
1.2 On examination of the appellants records, it was observed by the said officers that they were showing the goods as “sheet metal parts with aluminium covers” whereas actually cabinets for air conditioners were manufactured and removed by them. This fact is alleged to have been admitted by Shri Balvinder Singh, partner of the appellant firm.
1.3 On follow up action at the premises of the customers to whom such ‘cabinets’ were sold by the appellants, some ‘cabinets’ were seized.
1.4 On scrutiny of records, a show cause notice was issued to the appellants as also to some of their customers from whom seizures were made as to why duty of Rs. 2,65,646.71 be not recovered from the appellants, penalties be not imposed upon the noticees and the seized goods be not confiscated.
1.5 On adjudication, Collector of Central Excise, Delhi, on the basis of statements recorded from the appellants partners and the customers during the course of investigation held that aluminium cover is not a cabinet; the housing cleared as sheet-metal-parts is a ‘cabinet’; that ‘cabinet’ of an air conditioner as admitted by the appellants and customers in their statements is sold in unassembled condition as loose sheet metal parts. The statements given by the customers, during cross-examination are not worthy of reliance. He, therefore, confirmed the demand of duty of Rs. 2,51,537.33 on the appellants. He also imposed a penalty of Rs. 50,000/- on the appellants. Apart from the above, some of the seized goods were confiscated with an option to their owners to redeem those goods on payment of fine in lieu of confiscation etc. with which we are not concerned. This order of the Collector of Central Excise Delhi has been impugned in the appeal before us.
2.1 Shri P.S. Bedi, learned consultant has urged that cabinet of an air-conditioner has a definite connotation in trade parlance. He points out that in ‘ABC of Air-Conditioning’ by Ernest Tricomi published by D.B. Taraporevala Sons & Co. (P) Ltd. Bombay, the Cabinet has been described as follows :-
“The cabinet of a room air conditioner usually makes provision for directing or deflecting the air stream far greater convenience of room occupants. All controls are mounted on the front panel. It is usually designed for compactness, low silhouette, and sturdiness. This is particularly true for room air conditioners where part of the unit is exposed to the outdoors.”
2.2 He also points out that all the persons during cross-examination before the adjudicating authority have stated that in manufacture of ‘cabinet’, the following are essentially required :-
“(i) Sheet Metal Parts
(ii) Nut and Bolt
(iii) Screw
(iv) Insulation materials such as Namda and thermocol
(v) Adhesive Solution
(vi) Lining
(vii) Grill
(viii) Switch Panel and switches”
But the said authority has discarded cross-examination statements for the reasons that these are all afterthoughts. Customers have business dealing with the appellants and therefore, they are bound to favour the appellants. Learned consultant has further submitted that the adjudicating authority has relied on statements recorded during investigations behind the back of the appellants merely on the ground that none of the persons lodged a complaint with the department that statements taken from them were under coercion/intimidation despite the fact that all of them said during the cross-examination that all those statements were at the dictation of the Central Excise Officers.
2.3 Learned consultant further submits that the sheet-metal parts are nothing but ‘housing’ or empty shell which is a part of a ‘cabinet’ of air-conditioner. It is not a ‘cabinet’ by itself liable to duty. He also submits that in 1985 (21) E.L.T. 485 [Moosa Haji Patrawala], Tribunal comprising 3 Members Bench has held that ‘housing’ is not a cabinet of an air conditioner. In this connection, paras 3, 6 and 7 from the said Report are reproduced below to appreciate the facts, question and finding of the Tribunal in Moosa Haji :-
“3. During arguments a sample of the product was shown to us. Photographs of the same have also been filed. Three affidavits – one by Shri Rampal Sharma, working as Commercial Manager with M/s. Lloyds Sales Corporation, who are manufacturers of room air-conditioners; second, from Shri Jagdish Sahjwani who is a partner of the firm Messrs National Agencies situated at 59 Mohamadali Road, Bombay, and carrying on the business of dealing in air-conditioners and third, Shri Bhupinder, son of Shri Bupendrabhai Mahyavanshi who is an air-conditioning mechanic, have been filed in evidence. These three affidavits would show that the wrapper or casing by those dealing with air-conditioners is not called a Cabinet. From these affidavits it would also appear that the article in question is called an outer wrapper. The affidavit of Shri Bhupinder also states that no article answering to the description of cabinet is required in air-conditioner. The appellants also reply on Brussels Tariff nomenclature, Section 16. Entry Nos. 84.12 and 84.15 – Air-conditioning Machines – for their submission that there is no cabinet in air-conditioners. Catalogue of Voltas Crystal 1500 Model Room Airconditioner has also been filed to show that the entire airconditioner is fixed on a base plate as a chassis and covering is provided only as a protective cover and that it is not a cabinet. It has been urged that the airconditioner comes into existence without the cover and that the so-called cabinet is not integral part of the same.
6. It is well settled that scientific, technical or dictionary meanings should not be made basis for classifying tariff items as Parliament in enacting these do not use words which are applied to any particular Science or art. The words in Taxing statutes should be interpreted in their ordinary sense. When the matter is examined on this touch-stone, while the appellants have filed affidavits of persons dealing with the article in question, the Department has not placed any material on record to controvert these affidavits in spite of sufficient time having been granted for the purpose. Added to this, in BTN which has considerable persuasive value, we find that there is no mention of cabinet as a part of air-conditioners. For the purposes of these appeals, it would, therefore, have to be held that the Department has failed to prove that the article in question in commercial or trade parlance is a cabinet. We hold accordingly.
7. It is, however, made clear that the findings given in these appeals that the 19/733 article is not proved to be a cabinet is for want of adducing evidence by the Department. This would not preclude the Department from contending for a subsequent period that the article is a cabinet should they be able to substantiate this contention with requisite evidence. With these observations, the appeal is allowed and the impugned order set aside with consequential relief, if any, admissible to the appellants.”
2.4 Learned consultant, therefore, submits that the goods manufactured by the appellants are not ‘cabinets’ of an air-conditioner. Therefore, no duty liability devolves upon the goods manufactured by the appellants. Impugned order be set aside.
3.1 Learned JDR, Shri S.K. Sharma, reiterates the finding of the Collector who has held that “the cabinets can be said to be an empty enclosure. Normally in the trade, cabinets are brought and sold in unassembled condition keeping in view the convenience in packing and transportation”. He has relied, as already stated, on the statements during the course of investigation taken behind the back of the appellants rather than the statements given during the cross-examination.
4.1 We have carefully considered the pleas of both sides. Taking the overall evidence on record, as set out above, it is clear that cabinet of an air-conditioner is not a sheet-metal housing but is an assembled part complete with control panels, grill, insulation material attached thereto. Obviously, the appellants have not supplied the ‘cabinet’ in the above sense as it is known to the market and in the literature on air-conditioning brought on record by the appellants and extracted above. The appellants are not, therefore, liable to pay duty on the goods-sheet metal parts of cabinet manufactured and removed by him. Impugned order is, therefore, set aside, in so far as the appellants are concerned, while allowing his appeal with consequential relief to the appellants.