Full Judgment Text
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CASE NO.:
Appeal (civil) 8066-8068 of 2001
PETITIONER:
Fedders Lloyd Corportion Ltd
RESPONDENT:
Commissioner of Central Excise, Mumbai
DATE OF JUDGMENT: 03/12/2007
BENCH:
ASHOK BHAN & V.S. SIRPURKAR
JUDGMENT:
J U D G M E N T
CIVIL APPEAL NO(S). 8066-8068 of 2001
BHAN, J.
1. The present appeals under Section 35L(b) of the
Central Excise Act, 1944 (for short "the Act") have been
filed by the assessee against the impugned final Order
nos. 242-244/2001-B dated 1st May, 2001 in appeal Nos.
E/761-763/98-B passed by the Customs, Excise & Gold
(Control) Appellate Tribunal, New Delhi (for short "the
Tribunal"), rejecting the appeals filed by the appellant
on merits and limitation.
2. The issue before the Tribunal was, whether the
appellant was manufacturing split air-conditioners
classifiable under Tariff Heading 84.15 of the Central
Excise Tariff Act.
3. The appellant, Fedders Lloyd Corporation Ltd.,
cleared condensing units from their unit at Kalkaji, New
Delhi to Mumbai, where the appellant purchased cooling
units from local manufacturers fabricated on order with
motors, etc., supplied by the appellant. After carrying
out certain tests for quality by filling gas, affixing
the brand name ‘Fedders Lloyd’, the complete unit was
cleared along with pipe kits, electrical cord, remote
control, etc., to various customers from their
warehouse/godown at Mumbai. The invoices were raised by
the appellant’s Mumbai office for supply of split air-
conditioners.
4. A show cause notice dated 3rd April, 1996 was issued
to the appellant, alleging that 412 nos. split air-
conditioners were clandestinely removed by the appellant
without payment of duty, involving evasion of central
excise duty to the tune of Rs.56,14,293/- during the
period October 1991 to April 1996. It was also stated
that the department was unaware of the fact that the
appellant was manufacturing split air-conditioners.
5. The demand raised in the show cause notice was
confirmed in the order-in-original. Appeals filed by
the appellant before the Tribunal were dismissed.
Aggrieved against the same, the present appeals have
been filed.
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6. Counsels for the parties have been heard at length.
7. Records reveal that during the course of
investigation, statements of Shri Shivshankar Upadhyay,
partner of New Gold Air Conditioners, who had supplied
the cooling units to the Mumbai Branch of the appellant,
was recorded wherein he confirmed that they had filed a
declaration with the excise authorities that they were
manufacturing sheet metal bodies of air-conditioners.
He also confirmed that the electric motors to be fitted
with cooling units were supplied by the appellant.
Statement of Shri R.P. Gupta, Commercial Manager of the
appellant, was also recorded wherein he had stated that
the appellant had supplied electrical motors to be
fitted with the cooling units to the local manufacturers
so that check on the quality can be kept. These cooling
units were received by them at their godown at
Kunjurmarg from where complete units of split air-
conditioners were supplied to various customers. That
the complete units of split air-conditioners were
delivered after putting together condensing units
received from New Delhi and cooling units procured
locally along with other associates and that their
invoice was raised from Mumbai administrative office.
Shri K.A. Bhatia, Project Manager of Air Serco Pvt.
Ltd., whose statement was also recorded, stated that
after receiving the air-conditioners complete in all
respect along with necessary accessories, were supplied
by the appellant to Air Serco Pvt. Ltd., which is a
sister concern of the appellant and undertakes the job
of installation and servicing of air-conditioners at
Mumbai. Statement of Shri K. Vijayan, Commercial
Executive of the appellant, was also recorded wherein he
stated, inter alia, that he was looking after the
finished stores of the appellant at Devidayal Compound,
Kanjumarg, situated in the premises of M/s. Air Serco
Pvt. Ltd. and that his job was to look after the stock
of the finished goods received in the godown from New
Delhi and from local manufacturers such as New Gold Air-
conditioners, and to maintain relevant records. He
further stated that at Kanjumarg godown, before delivery
of the split air-conditioners, gas is filled in the
condenser for carrying out certain checks for leakage of
gas.
8. From the statements of S/Shri Shivshankar Upadhyay,
R.P. Gupta, K. A. Bhatia and K. Vijayan, it is evident
that the appellant’s Mumbai Branch received condensing
units cleared from their manufacturing unit at New Delhi
on payment of appropriate central excise duty as parts
of air-conditioners and procured cooling units
manufactured locally at Mumbai. At their workshop-cum-
godown, certain checks for quality were conducted by
filling the gas and the brand name "Fedders Lloyd" was
affixed on the cooling units and, thereafter, these
units were cleared along with pipe kits, electrical
cord, remote control etc. to various customers and the
same was installed by the appellant’s sister concern,
M/s. Air Serco Pvt. Ltd., on behalf of the appellant.
The invoice was raised by the appellant’s Mumbai office
for supply of split air-conditioners. No excise duty
was paid on such split air-conditioners as they were
supplied from Mumbai to their various customers in
Gujarat and Goa. The statements of these persons
clearly show that a complete split air-conditioner came
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into existence at Kanjumarg Workshop of the appellant.
9. We do not find any substance in the submissions
advanced on behalf of the appellant that no change in
the name, character and use of the product or
transformation of the raw material into finished product
came into existence; the cooling units or condensing
units by themselves cannot function as air-conditioners.
They have to be joined together with pipe kits,
electrical cord and remote control, etc. to function as
a complete air conditioner unit. This process was
carried at the factory-cum-godown of the appellant at
Kunjurmarg.
10. Section 2(f) of the Central Excise Act defines
"manufacutre" as:
"(f) "manufacture" includes any process, --
(i) incidental or ancillary to the
completion of a manufactured
product; and
(ii) which is specified in relation to
any goods in the Section or
Chapter notes of the Schedule to
the Central Excise Tariff Act,
1985 (5 of 1986) as amounting to
manufacture"
11. Clause (f) gives an inclusive definition of the
term "manufacture". According to the dictionary, the
term "manufacture" means a process which results in an
alteration or change in the goods which are subjected to
the process of manufacturing leading to the production
of a commercially new article. As to what constitutes
manufacture would depend upon the facts of each case.
As noticed earlier, condensing units were manufactured
by the appellant at its factory at New Delhi and the
cooling units were procured from the local market for
which the electrical motors were supplied by the
appellant. Neither the condensing unit nor the cooling
unit by itself is a complete air conditioner. It is
only when these two, i.e. condensing unit and cooling
units are put together the complete unit of air
conditioner fit for use came into existence at the
Kanjumarg workshop. Air conditioner is a commercially
new article than either the condensing unit or the
cooling unit.
12. For the reasons state above, the contention of the
appellant that there is no manufacture at their Bombay
Unit stands belied and cannot be accepted.
13. The Tribunal in its order has relied upon Rule 2(a)
of the Rules of Interpretation. Counsel for the
appellant has contended that the said rule is not
applicable. In our view, reference to the applicability
of the rule 2(a) is not necessary and the matter can be
decided without reference to that rule. The issue of
clearing complete units of air-conditioners from Bombay
Branch of the appellant was evident from the depositions
of the appellant’s own employees and the partners of New
Gold Air-conditioners who had supplied the cooling units
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and the invoice raised by the appellant.
14. For the foregoing reasons, we have no reason to
differ with the concurrent findings on facts recorded by
the authorities below that the appellant was indeed
manufacturing the split air-conditioners, as stated in
the show cause notice.
15. The appeals are dismissed, accordingly, with no order
as to costs.