G. Sankaran, Sr. Vice President

1. This appeal is against Order No.l/82/TI-29A dated the 23rd November, 1982, passed by the Additional Collector of Central Excise, Indore, whereby he held that the benefit of duty concession in terms of Central Excise Notification No. 56/78 dated 1-3-1978 was not admissible in respect of two air conditioners installed by the appellants, one in the pump maintenance (burn-out) Section and the other in the instrument shop, on the ground that these two places were used for purposes other than for the manufacture of goods. The Additional Collector, therefore, called upon the appellants to pay the differential duty on the two air conditioners in terms of the show cause notice dated 22-12-1979 issued by the Superintendent of Central Excise, Ujjain.

2. We have heard Shri Vivek Gambhir, Advocate, for the appellants and Shri K.C. Sachar, Departmental Representative, for the respondent and have read the record.

3. Central Excise Notification No. .56/78 issued under Central Excise Rule 8(1) fixes a concessional rate of duty for room air conditioners falling under Item No. 29A(2) of Central Excise Tariff Schedule subject to the conditions set out in the notification. One of the conditions is that the Collector of Central Excise is satisfied that the air conditioners are required for use in any of the establishments specified in the Schedule to the notification. Serial No. 12 of the Schedule reads : "Any factory", "Factory" has been defined for this purpose as "any premises including the precincts thereof where any goods are manufactured or are stored, but does not include any premises which are used for other purposes".

4. The case for the department, as briefly noted already, is that the two air conditioners in question were used in two places in the factory which were not engaged in the manufacture of any goods. The two places were the instrument shop and the pump maintenance or burn-out Section of the factory. The case of the appellants is that for the efficient and uninterrupted sophisticated continuous process employed for them for the manufacture of nylon and polyester yarn, various electronic instruments are required to control temperature and other parameters. These instruments can work accurately only at specified temperatures and in a dust free atmosphere. If such conditions are not present the final products would not be of the desired quality. Similarly, the air conditioner installed in the pump maintenance or burn-out Section is required to control variations in the speed of the metering pump which control the flow of the raw material in process. The Additional Collector has held that the notification envisages duty concession only in respect of air conditioners installed in those places of the factory where goods are manufactured or are stored. He has held that the two places referred to earlier could not be considered to be such places though the air conditioners installed in those places might help to control certain instruments. No manufacturing activity as taking place in either of the two places. It is on this basis that the Additional Collector has denied the benefit of the duty concession.

5. It is urged before us for the appellants and it is also apparent from the record that the appellants had applied for and obtained permission from the Central Excise authorities to avail themselves of the duty concession under Notification No. 56/78 dated 1-3-1978 which inter alia lays down that the procedure laid down in Chapter X of the Central Excise Rules should be followed. By a letter dated 23-10-1978 enclosing an application in the prescribed form AL6, the appellants had sought concession in respect of 3 air conditioners required to be installed in the testing room (instrument shop) and the spinning department. A ground plan had also been enclosed with the application in which the proposed location of the air conditioners had been marked. The purpose for which the air conditioners were requir