IMPORTANT POINT
Car air-conditioning kit was classifiable under S.No. 8 for the purpose of availing the benefit of exemption of Notification No. 166/86-CE dated 1.3.86 (as amended from time to time).

ORDER

This appeal, by the assessee, arises from the judgment of the Customs, Excise and Gold (Control) Appellate Tribunal at New Delhi (for short, the Tribunal) in Final Order No.E/195/95-81, dated March 31, 1995.

2. The appellant-assessee 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 of Notification No.166/86-CE, dated March 1, 1986 (as amended from time to time). Though the appellant sought to contend that it was only manufacturing parts of the air-conditioning kit and, therefore, the kit cannot be treated as an air-conditioner, the Assistant Collector did treat the same as air-conditioning system falling under item No.3 of Heading 8415 of the Notification. That order is said to be the subject matter of an appeal. Be that as it may, on March 20, 1990, a new Entry, item No.8, was added to the table of the Notification, which reads thus:

Sl. Heading Description of Rate Conditions No. No. or goods Sub- heading No.

08. 84. 15 Parts and acces- Sixty       

84. 18 sories of car five per

84. 19 air-conditioner cent ad

8481.10 including car valorem.

8481.91, air-conditioning

8536. 10 kit

9032.11

or

9032.91

3. Thereafter, the appellant classified the air-conditioning kits under the said entry for purposes of levy of excise duty. On October 1, 1990, the Assistant Collector, Central Excise, Division-I, Faridabad issued a notice to the appellant stating that under the said entry (sl.no.8), the sub-heading relating to compressor has not been included in the second column of the table and, as the car air-conditioning kits include compressors, they fall under item No.3 (Heading 8415.00) of the Notification; the appellant was called upon to show cause as to why excise duty amounted to Rs. 2,20,74,021.00 should not be demanded from it. We are informed that there have been series of notices and the total net demand under the said notices was in a sum of Rs. 3,68,81,590./-. The appellant replied to the show cause notice asserting that the car air-conditioning kit, inclusive of compressor, manufactured by it, is a machinery especially designed to be used for air-conditioning of motor vehicle but, 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 car air-conditioner and the car air-conditioning kit was known as such in common parlance, and, therefore, it was classifiable under sl.no.8 of the said notification.

4. The Assistant Collector by his order dated January 24, 1992 confirmed the demand. It was upheld by the Collector (Appeals) by his order dated July 13, 1992. The appellant carried the matter in appeal before the Tribunal. By the impugned order, the Tribunal dismissed the appeal. It is against that order that the appellant is in appeal before us.

5. Mr. Sridharan, the learned counsel for the appellant, contends that for the period before 1990 as well as after 1990, the case of the appellant has consistently been that a car air-conditioning kit comprises of only parts and it cannot be treated as an air-conditioning system within the meaning of item No. 3 of the said noti