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PETITIONER: FRICK INDIA LTD.

       Vs.

RESPONDENT: UNION OF INDIA AND OTHERS

DATE OF JUDGMENT21/12/1989

BENCH: RAMASWAMI, V. (J) II BENCH: RAMASWAMI, V. (J) II RANGNATHAN, S. KULDIP SINGH (J)

CITATION:  1990 AIR  689            1989 SCR  Supl. (2) 570  1990 SCC  (1) 400        JT 1989  Supl.    432  1989 SCALE  (2)1417

ACT:     Central Excise Tariff Act--Item No. 29-A--Air Condition- ing  and refrigeration equipment--Levy of excise duty  under Clause (3) of Item 29A.

HEADNOTE:     The  appellant-company was engaged in the  manufacturing of  airconditioning  and  refrigeration  equipment  under  a proper  licence. On January 21, 1970 the  appellant  cleared from  the factory cooling coils, condensers and  compressors and  supplied the same to M/s. Ravi Cold Storage,  Ahmedabad for putting up a cold storage and paid duty of  Rs.13,547.20 P in respect thereof. Again on January 21, 1969, the  appel- lant cleared from the factory various parts of refrigerating and  air-conditioning  appliances and machinery for  an  Ice factory  plant  to one M/s.  Gujarat  Industrial  Investment Corporation   Ltd.,  Ahmedabad  and  paid  a  duty  of   Rs. 19,336.87P.  Both the aforesaid goods were  manufactured  at the appellant’s factory. Thereafter the appellant filed  two refund  applications  of  the said excise  duty  before  the Assistant Collector of Customs, contending that the  refrig- erating  and  air-conditioning  appliances  which  they  had removed  on  the aforesaid dates were  not  excisable  goods failing under Tariff Item No. 29A(3). The Assistant  Collec- tor  of Customs rejected both the applications holding  that the  assessment  was correctly made.  The  appellant-company preferred  two appeals against these orders before the  Col- lector  of Customs and Central Excise, Chandigarh, who  dis- missed  both  the appeals. Thereupon the appellant  filed  a writ  petition in the High Court. The learned  single  Judge who  heard the petition dismissed the same holding that  the goods  supplied are parts of a refrigerating and  air-condi- tioning  appliances, that a complete cold storage plant  was not  supplied to M/s. Ravi Cold Storage, Ahmedabad  or  M/s. Gujarat  Industrial Investment Corporation  Ltd.,  Ahmedabad and  that  they  would fail clearly within  the  purview  of Tariff sub-item (3) of Tariff Item 29-A. An appeal preferred against  this judgment was dismissed by a Division Bench  in limine. Hence this appeal. Before  this Court also the appellant inter  alia  contended

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that 571 though in its sweep sub-item (3) may appear to cover all and every part of refrigerating and air-conditioning  appliances and machinery of all sorts, the words "and parts thereof" in the  heading controlled the meaning and restrict it  in  the context  only  to parts of a completed unit  which  as  such completed  unit would have come under sub-items (1) and  (2) of item 29-A. Dismissing the appeal, this Court,     HELD:  The legislative history and the notifications  of the  Government  show that sub-item (3) of item  29-A  is  a comprehensive provision encompassing within it all sorts  of air-conditioning and refrigerating appliances and  machinery and  the  Government of India was issuing  notifications  of exemptions on the understanding that such parts are  covered by  sub-item (3). The language used in sub-item (3) is  also wide  and comprehensive in its application and could not  be given  a restricted meaning. Sub-items (1), (2) and (3)  are independent of each other and mutually exclusive. The  scope of sub-item (3) is neither restricted nor controlled by  the provisions of sub-items (1) and (2). [576C-D]     Whether  the manufacturer supplies the refrigerating  or airconditioning appliances as a complete unit or not is  not relevant  for  the levy of duty on the  parts  specified  in sub-item (3) of item 29-A. [576F-G]     Complete  plants which are covered by items (1) and  (2) cannot be considered as parts of machinery and such complete plants would not be classifiable under sub-item (3) of  Item 29-A. [580B-C]     Mother  India  Refrigeration  Industries  Pvt.  Ltd.  v. Supdt.  of  Central  Excise and Ors., [1980]  ELT  600  All, overruled.     Blue  Star Ltd. v. Union of India and Anr.,  [1980]  ELT 280 Bom.; Joy Ice Cream, Bombay v. Union of India, [1989] 39 ELT  521  Bom.; Calicut Refrigeration Co.  v.  Collector  of Customs  & Central Excise, Cochin and Ors., [1982]  ELT  106 Ker.; Chhibramau Cold Storage v. CEGAT, [1989] ELT  161-AII; Goptal  Cold  Storage & Ice Factory v. Union  of  India  and Ors.,  [1985]  ELT 692-All and Anil Ice Factory  &  Anr.  v. Union  of India and Ors., [1984] ELT  333-Gujarat,  referred to.

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 3395  of 1982. From the Judgment and Order dated 4.6.1982 of the Punjab and 572 Haryana High Court in L.P.A. No. 936 of 1982 Shankar Das and H.K. Puri for the Appellant.      A.K. Ganguli, R.P. Srivastava, P. Parameshwaran, Ms. A. Subhashini and Dalip Sinha for the Respondents. The Judgment of the Court was delivered by         V. RAMASWAMI, J. The appellants are a public limited company  having a factory at Faridabad and engaged in  manu- facturing  air-conditioning and refrigeration  equipment  of various  kinds  and  descriptions. They are  holding  a  L-4 Licence  to manufacture goods falling under Tariff Item  No. 29A  of  the Central Excise Tariff.  As  per  classification lists  submitted  from time to time under rule 173B  of  the Central Excise Rules, 1944, the company had declared in Form I that they are engaged in the manufacture of goods  falling under sub-items (2) and (3) of Tariff Item No. 29A.  Against

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gate  pass Nos. 111, 112 and 113 dated January 21, 1970  and gate pass No. 116 dated January 22, 1970 the appellants  had cleared  from  the  factory cooling  coils,  condensors  and compressors  and  supplied the same for putting  up  a  cold storage plant to one M/s Ravi Cold Storage, Ahmedabad. These parts  were manufactured by the appellants in their  factory at  Faridabad  and were cleared by them against  the  above- mentioned  gate  passes  after  payment of  a  duty  of  Rs. 13.547.20 P. Against gate pass Nos. 95, 90, 97 and 98  dated January 21, 1969 the appellants had cleared from the factory various  parts of refrigerating and air-conditioning  appli- ances  and  machinery for an Ice-factory plant  to  one  M/s Gujarat  Industrial Investment Corporation Limited,  Ahmeda- bad. These parts also were manufactured by the appellants in their factory at Faridabad and were cleared by them  against gate passes referred to above after payment of a duty of Rs. 19,336.87 P.      On the ground that parts of the refrigerating and  air- conditioning  appliances which they have removed  under  the above said gate passes are not excisable goods falling under Tariff Item No. 29A(3), they filed two refund  applications. The  Assistant  Collector  of Customs  rejected  both  these applications holding that the assessment was made correctly. The  appellants preferred two appeals agianst  these  orders before the Collector of Customs and Central Excise,  Chandi- garh,  who by his common order dated December 20, 1971  dis- missed  the appeals. Thereafter, the appellants  filed  writ petition in the High Court of Punjab and Haryana at  Chandi- garh. This writ petition was 573 dismissed  by a learned Single Judge holding that the  goods supplied  are parts of a refrigerating and  air-conditioning appliances,  that  a  complete cold storage  plant  was  not supplied to M/s Ravi Cold Storage, Ahmedabad or M/s  Gujarat Industrial  Investment Corporation Ltd. Ahmedabad, and  that they will fall clearly within the purview of Tariff sub-item (3)  of Tariff Item 29-A. An appeal preferred  against  this judgment was dismissed in limine by a Division Bench.     In  order  to  understand the argument  of  the  learned counsel  for  the  appellants, it is necessary  to  set  out Tariff Item 29-A in full at the relevant period, which reads as follows: Item No. Tariff Description                Rate of Duty 29A.     REFRIGERATING AND AIR-CONDITIONING     APPLIANCES AND MACHINERY, ALL SORTS, AND PARTS THEREOF--      (1)  Refrigerators and other refrigerat-    Thirty           ing appliances, which are ordinarily   per cent           sold or offered for sale as ready      ad valorem           assembled units, such as ice markers,           bottle collers, display cabinets           and water coolers.      (2)  Air-conditioners and other air-     Thirty           conditioning appliances, which      per cent           are ordinarily sold or offered      ad valorem           for sale as ready assembled           units, including package type           of air-conditioners and           evaporative type of coolers.      (3)  Parts of refrigerating and        Forty           air-conditioning appliances       per cent           and machinery, all sorts.         ad valorem     The  argument of the learned counsel for the  appellants was  that sub-items (1) and (2) deal with refrigerators  and other  refrigerating  appliances  and  air-conditioners  and

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other  air-conditioning  appliances respectively  which  are ordinarily sold or offered for sale as a ready 4514 assembled unit. Therefore, in order to bring it within  sub- items  (1) and (2) such refrigerating  and  air-conditioning appliances should be complete assembled units and they  must also  be ordinarily sold or offered for sale as  such  ready assembled  units. The illustrative examples referred  to  in the  two  sub-items make this clear according to  them.  The cold  storage  plant and ice-factory plant supplied  to  the factories  concerned in this case as such are not such  com- plete  assembled units which are ordinarily sold or  offered for  sale within the meaning of sub-items (1) and (2).  From this premise they sought to interpret sub-item (3) as  mean- ing  that  the goods that are covered by that  sub-item  are parts of those refrigerating or air-conditioning  appliances which  in its assembled form would have come as  a  complete unit under Tariff sub-items (1) and (2) of Item 29A and  are manufactured for sale. In other words, they want to restrict the content of sub-item (3) with reference to the items that may fall under sub-items (1) and (2). The further submission was  that  though in its sweep sub-item (3)  may  appear  to cover all and every part of refrigerating and air-condition- ing  appliances and machinery of all sorts, the  words  "and parts  therefore" in the heading controlled the meaning  and restrict it in the context only to parts of a completed unit which as such completed unit would have come under sub-items (1) and (2) of Item 29A. In this connection, learned counsel has  referred to certain decisions of the High Courts  which we will refer to later.     By  Finance Act of 1961 Item 29A and 40 were  introduced in  the First Schedule to the Central Excises and Salt  Act, 1944 and those two entries read as follows:       "29A. AIR CONDITIONING MACHI-   Twenty       NERY, ALL SORTS.                per cent                                       ad valorem.       40. REFRIGERATORS AND PARTS   Twenty       THEREOF. SUCH AS ARE          per cent       SPECIALLY DESIGNED FOR USE    ad valorem."       WITH REFRIGERATORS. The Notes on Clauses relating to the relevant clause in  the Finance  Bill  10 of 1961 stated that Item 29A  proposes  to levy  an excise duty on air-conditioning machinery and  Item 40  proposes  to levy an excise duty  on  refrigerators  and "parts thereof." By the Finance Act 2 of 1962 a combined tariff entry in  the form 575 prevailing in 1969 and 1970 was introduced and the Notes  on Clauses relating to this amendment stated that the  proposal is  "to combine into one item the present tariff  items  29A and 40 relating to ’Air-conditioning Machinery’ and ’Refrig- erators’ respectively as well as to make it more  comprehen- sive."  Under the Government of India, Ministry of  Finance, Department  of Revenue, Notification No.  80/62-Central  Ex- cises,  dated  24th April, 1962 as subsequently  amended  by Notifications  dated 29th December, 1962, 23rd  March,  1968 and  14th  June, 1969 all parts of  refrigerating  and  air- conditioning appliances and machinery other than the "parts" mentioned below were exempt from the payment of excise  duty leviable thereon: "(i) Cooling coils or evaporator (ii) Compressor (iii) Condenser (iv) Thermostat

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      (v) Cooling unit, and in the case of absorption types of  refrigerators  in which there is no  compressor,  heater including Burners and Baffles in a Kerosene Operated absorp- tion type refrigerator.       (vi)  Starting  Relay, controls  (including  expansion value and solenoid valves) and pressure switches (vii) Overload Protection/Thermal Relay (viii) Cabinet." There  are  a number of other notifications  also  exempting parts  of refrigerating and air-conditioning appliances  and machinery,  intended to be used for various purposes  speci- fied in the notifications, such as, use in refrigerating and air-conditioning appliances or machinery which are installed or to be installed in any of the following establishments: "1.  Computer rooms.  2. Research and test laboratories   3. Animal  houses   4.  Telephone  exchanges   5.  Broadcasting studios   6.  Trawlers  7. Dams  8. Mines  and  tunnels   9. Thermal and hydel power stations  10. 576 Technical buildings of Military Engineering Service 11.  Any Hospital  run  by the Central Government, a State  Govt.,  a Local Authority or a Public Charitable Institution and   12. Any factory." Vide  the Notification No. 93/76-CE dated  16.3.1976  issued under  subitem (3) of Item 29A of the First Schedule.  there are  various other notifications also issued under the  same sub-item  which  covers installation  of  air-condition  and refrigerating equipments of almost all categories.     The  legislative  history and the notifications  of  the Government  show that sub-item (3) of Item 20A is a  compre- hensive  provision encompassing within it parts of all  sons of air-conditioning and refrigerating appliances and machin- ery and the Government of India was issuing notifications of exemptions on the understanding that such parts are  covered by  sub-item (3). The language used in sub-item (3) is  also wide  and comprehensive in its application and could not  be given  a restricted meaning. Sub-items (1), (2) and (3)  are independent of each other and mutually exclusive. The  scope of sub-item (3) is neither restricted nor controlled by  the provisions of sub-items (1) and (2).     It  is well-settled that the headings prefixed  to  sec- tions  or  entries  cannot control the plain  words  of  the provision;  they cannot also be referred to for the  purpose of  construing  the  provision when the words  used  in  the provision  are clear and unambiguous; nor can they  be  used for  cutting  down  the plain meaning of the  words  in  the provision.  Only,  in  the case of ambiguity  or  doubt  the heading  or  sub-heading  may be referred to as  an  aid  in construing  the provision but even in such a case  it  could not  be  used for cutting down the wide application  of  the clear words used in the provision. Sub-item (3) so construed is  wide in its application and all parts  of  refrigerating and  air-conditioning appliances and machines  whether  they are covered or not covered under sub-items (1) and (2) would be  clearly covered under that sub-item. Therefore,  whether the  manufacturer supplied the refrigerating  or  air-condi- tioning appliances as a complete unit or not is not relevant for the levy of duty on the parts specified in sub-item  (3) of Item 29A.     Strong  reliance was placed by the learned  counsel  for appellants  on the decision of the Allahabad High  Court  in Mother  India Refrigeration Industries (P) Ltd. v.  Superin- tendent  of  Central Excise & Ors., [1980] ELT 600  All.  In that case the writ petitioners were the owners 577

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Of  a  old storage plant. The  writ  petitioners  themselves installed and assembled the cold storage plant. Part of  the plant consisted of erecting locally what are called  cooling coils and condensers. Generally cooling coils and condensers contain  a  very long length of pipes made in  a  particular shape.  The petitioners in that case, however, bought  pipes of  various  lengths, erected them one after the  other  and joined one with the other with a ’U’ shape bend. These bends were  welded. The result was that the various pipes  consti- tuted an unit indesigning the plant. This part of the  plant was  necessary in order to pass the cooling gas  through  it and thereby cool the chambers of the storage. The  petition- ers  bought the pipes and the bends from the market and  got them  placed  at the factory site and got them  welded.  The department,  in  the view that the conglomeration  of  pipes manufactured  by the petitioner, constituted manufacture  of cooling  coils  which are parts of  refrigerating  and  air- conditioning appliances and machinery covered by Item 29A(3) called upon the petitioners to pay excise duty on its value. All the authorities found that the erection and installation by  the  petitioners, by laying pipes and  joining  them  by welded  bends, amounted to the manufacture of cooling  coils and  condensers  as known to refrigeration  technology.  The High  Court accepted these findings. However, it  held  that parts of refrigerating and air-conditioning appliances which answer the description given in sub-items (1) and (2)  alone are liable to duty under Entry 29A(3) and not all parts used in refrigeration technology. The learned judges reached this conclusion on the grounds that: "The heading of Entry 29A makes it clear that only parts  of such  refrigerating  and  air-conditioning  appliances   and machinery  as are covered by sub-entries (1) and  (2)  alone are  liable to duty. In other words, the parts  in  question should be such as are ordinarily sold or offered for sale as ready.  assembled  units. On any  other  interpretation  the words ’thereof’ occurring in the heading 29A will be  redun- dant.  An interpretation which makes any part of  a  statute redundant has to be discarded." and that "When  an  entry in the schedule specifically refers to  and  re- stricts  the applicability of duty to goods which  are  assembled units  and which are generally offered for sale, the  concept  of sale  is necessarily brought in. As already seen,  sub-entry  (3) takes  it  colour  from sub-entries (1) and (2)  because  of  the specific  directive  of  the heading by using  the  words  ’parts thereof’." 578 We are afraid that both these reasons are fallacious and not acceptable.  As already stated neither can sub-entry (3)  be said  to  take its colour from sub-entries (1) and  (2)  nor could those sub-entries or heading curtail the plain meaning of the words used in sub-entry (3). We, therefore, hold that the Mother India Refrigeration Industries (P) Ltd. v. Supdt. of  Central  Excise  & Ors. ’s, case  (supra),  was  wrongly decided  and accordingly we overrule the same.  The  learned Judges  have also relied on a Tariff Advice dated  September 30,  1969  given under the Customs Act for  the  purpose  of levying  countervailing duty. We shall deal with this  ques- tion when we consider that Tariff Advice in a latter part of this judgment.     The decisions of the Bombay High Court in Blue Star Ltd. v.  Union of India & Anr., [1980] ELT 280 Bom. and  Joy  Ice Cream,  Bombay  v. Union of India, [1989] 39 ELT  521  Bom., related  to  the scope of Tariff item 29A(1)  and  not  Item 29A(3)  with  which we are concerned. In the  view  we  have

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taken  that  sub-entries  (1) and (2) of  Entry  29A  cannot control or restrict the meaning of such entry (3) it is  not necessary  for us to go into the scope of Entry 29A (1)  and (2). These decisions, therefore, are no relevance.     The decision of the Kerala High Court in Calicut Refrig- eration Co. v. Collector of Customs & Central Excise, Cochin &  Ors., [1982] ELT 106 Ker., also does not touch  upon  the question  with which we are concerned. The decision  of  the Allahabad  High Court in Chhibramau Cold Storage  v.  CEGAT, [1989] ELT 161 All. and Goptal Cold Storage & Ice Factory v. Union of India & Ors., [1985] ELT 692 All., simply  followed the  decision in Mother India Refrigeration  Industries  (P) Ltd. v. Supdt. of Central Excise & Ors., (supra) and, there- fore, they do not advance the case any further.     On  the  other hand, we have a decision of  the  Gujarat Court  in Anil Ice Factory & Anr. v. Union of India &  Ors., [1984] ELT 333 Guj., wherein M.P. Thakkar, Chief Justice, as he  then was, referred to the Allahabad High Court  judgment and dissenting from it held: "On  taking  a close look at Item 29A it will be  seen  that what  is printed at the top of the entry as "caption"  indi- cates the nature of the goods covered by the entry. It  does not more than indicate what is the nature of the goods which are  specified in the said entry. Cls. (1), (2) and (3)  are independent  of  each other. Clause (3) in terms  refers  to goods which fall within the description of the said entry, 579 namely,  "Parts of refrigerating and air-conditioning appli- ances  and  machinery, all sorts". It is not  disputed  that cooling coils and condensers would fall within the  category of  "appliances and machinery". Counsel however argues  that we must first read the scope of cl. (1) and cl. (2) and draw an inference therefrom that the goods covered by entry, will attract excise duty only provided they are manufactured  for sale.  We see no valid reason for reading the entry in  that manner.  Each of the three sub-clauses referes to  different entries and specifies different rates of duty for the  goods falling within the respective entries." and that "As we indicated earlier, in the first place the purpose  of the caption is to provide a clue to the nature of the  goods which  are covered by the entry. But even otherwise  if  the caption is read in the manner in which it has been worded it does not justify or warrant an inference that it related  to goods which are manufactured for the purpose of sale.  Entry 29A  adverts  to goods which would fall within  one  or  the other  of the three classifications specified  therein.  The description  of each category of goods if clearly  mentioned in  col.  (2).  So far as CI. (3) is  concerned  the  tariff description is "parts of refrigerating and  air-conditioning appliances   and  machinery".  We  cannot  read  the   words ’manufactured  for sale’ in entry No. 3 by drawing upon  the theory of "Taking colour" which has no application in a case like  the present one. If we inject these words we would  be re-writing this section and we would be legislating which we cannot do."     The  learned counsel for the appellants then  relied  on the  Trade  Advice dated 30th September, 1969 given  by  the Central  Board of Excise and Customs, New Delhi, in  respect of classification of refrigerating machinery and ice  making plant which are not sold or offered for sale as ready assem- bled  unit  for purposes of countervailing  duty  under  the Customs  Act.  After referring to sub-items (1) and  (2)  of Item  29A as covering complete plant and equipment  which  a re-ordinarily  sold or offered for sale as  ready  assembled

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units,  had  stated as follows, with reference  to  sub-item (3): "Sub-item (3) of item 29A of the Central Excise Tariff 580 refers  to parts or’ machinery and appliances  and  complete plants  which cannot be considered as "parts  of  machinery" would  not  be classifiable under sub-item (3) to  item  29A C.E.T. also." As may be seen from this paragraph it consists of two parts, the first portion referring to parts of machinery and appli- ances  and the second portion referring to  complete  plants which cannot be considered as parts of machinery. The  whole argument  arose  because of the composite sentence  used  in this  paragraph.  It only means complete  plants  which  are covered  by Items (1) and (2) cannot be considered as  parts on  machinery and such complete plants would not be  classi- fiable  under sub-item (3) of Item 29A. The reliance  placed by the learned counsel on this notification does not in  any way advance the case of the appellants.     In the foregoing circumstances, the appeal fails and  it is dismissed with costs. Y.    Lal                                             Appeal dismissed. 581