LexCOMMISSIONER OF CENTRAL EXCISE, DELHI versus CARRIER AIRCON LTD.
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A COMMISSIONER OF CENTRAL EXCISE, DELHI v. , CARRIER AIRCON LTD. ) ~ JULY 5, 2006 B [ASHOK BHAN AND DR. AR. LAKSHMANAN, JJ.] Central Excise Tariff Act, 1985; Chapter Headings 84.15 and 84.18: ~ c Classification-Chillers-Tariff Headings 84.15 or 84. I 8-Held: Primary function of a chiller is to chill the water/liquid, the water/liquid so chilled put to use.for air-conditioning/refrigeration etc. thereafter-End use to which the product put to use by itself cannot be determinative of the classification of the product-Tariff Entry 84.15 intended to cover the machines which are used for changing temperature and humidity-Since the chiller itself is not capable D of performing such functions, ii falls outside the purview of Entry 84.15-The chillers in question are cleared as separate elements and not as air-conditioning machines, hence, they could appropriately be classified under Tariff Entry 84.18 of the Act. The question which arose for determination in this appeal before this E Court was as to whether the chillers being manufactured by the assessee- respo111dent are classifiable under Chapter Heading 84.18 of the Schedule to the Central Tariff Act as claimed by them or under Chapter Heading 84.15 as contended by th1! Revenue. Revenue contended that the chillers are nothing but an integral part F of the central air-conditioning system and a complete central air- conditioning system coml!S into existence when chiller is fitted with the air handling unit; that more than 90% of the chillers manufactured and cleared by the assessee were being used in the commissioning of central air-conditioning plants. G Assessee contended that the primary function of the chiller is only to produce chilled water/liquid and the function of the chiller comes to "<.,. an end once the chilled water/liquid is produced. Dismissing the appeals, the Court 254 • H COMMISSIONER OF CENTRAL EXCISE, DELHI r. CARRJER AIRCON LTD. 25 5 HELD:l.I. It is established that the primary function of the chiller A is to refrigerate or chill water/liquid irrespective of its industrial or other application to which the chilled water is put to use. 1261-H; 262-A] Indian Aluminium Cables Ltd v. Union of India & Ors .. 11985] 3 SCC 284, relied on. 1.2. Tariff Heading 84.15 covers air-conditioning machines which B control and maintain temperature and humidity in closed places. The main function of air-conditioning system is to control temperature, which is not done by a chiller. A reading of the tariff entry 84.15 would show that it is intended to cover only those machines which comprise of elements for changing temperature and humidity and chillers would fall outside the C purview of the said entry. 1262-D-E] 1.3. The function of the chiller is only to chill water or bring it to a very low temperature, and it is the air··h:tndling unit having an independent and distinct function which produces the effect of air- conditioning, controlling the ttmperature and the humidity. The chiller D itself does not do any air-conditioning as it is designed only to refrigerate or produce chilled water/liquid. 1263-E-F] 1.4. The use of the chillers in the air-conditioning system would not take away the primary or basic function of the chiller which is to produce chilled water by using a refrigerating circuit. Accordingly, the chillers in E question shall fall under specific Heading 84.18 of the Tariff Act. This view is supported by the explanatory notes of H.S.N. below Heading 84.15. Since chillers manufactured by the respondent are cleared as separate elements and not as air-conditioning machine, therefore, the same have to be classified under tariff entry 84.18 as refrigerating or freezing equipments F as the basic function of the chillers is to chill the water or liquid. Chillers manufactured by the respondent cannot be classified under Heading 84.15 simply because 90% of the chillers manufactured by the respondent were being used in the c~mmissioning of central air-conditioning plant. End use to which the product manufactured is put to cannot determine the classification of the product when the product manufactured falls under G a specific Heading. 1262-G-H; 263-A-B-C] 1.5. Chillers in the domestic and international trade parlance are known as refrigerating equipment. The trade identifies chillers as refrigerating machinery on the basis of its function of chilling water using refrigerating circuit. Even by t
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