FRICK INDIA LTD.versusUNION OF INDIA AND OTHERS

                         FRICK INDIA LTD.
A                                v.
                    UNION OF INDIA AND OTHERS

                            DECEMBER 21, 1989

B             [S. RANGANATHAN, KULDIP SINGH AND
                       V. RAMASWAMI, JJ.]

          Central Excise Tariff Act-Item No. 29-A-Air Conditioning and
    refrigeration equipment-Levy of excise duty under Clause (3) of Item
    29A.
c         The appellant-company was engaged in the manufacturing of air-
    conditioning 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
D   Rs.13,547.20 P in respect thereof. Again on January 21, 1969, the
    appellant 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.J9,336.87P. Both the aforesaid goods were
    manufactured at the appellant's factory. Thereafter the appellant filed
E   two refund applications of the said excise duty before the Assistant
    Collector of Customs, contending that the refrigerating and air-condi-
    tioning appliances which they had removed on the aforesaid dates were
    not excisable goods falling under Tariff Item No. 29A(3). The Assistant
    Collector of Customs rejected both the applications holding that the
    assessment was correctly made. The appellant-company preferred two
F   appeals against these orders before the Collector of Customs and Cent-
    ral Excise, Chandigarh, who dismissed 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-conditioning appliances,
    that a complete cold storage plant was not supplied to M/s. Ravi Cold
G   Storage, Ahmedabad or M/s. Gujarat Industrial Investment Corpora-
    tion Ltd., Ahmedabad and that they would fall 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.

H         Before this Court also the appellant inter alia contended that

                                      570
                          FRICK INDIA v. U.0.1.                        571

though in its sweep sub-item (3) may appear to cover all and every part
                                                                              A
of refrigerating and air-conditioning appliances and machinery of all
sorts, the words "and parts thereor' 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.
                                                                              B
      Dismissing the appeal, this Court,

      HELD: The legislative history and the notifications of the Govern-
ment show that sub-item (3) of item 29-A is a comprehensive provision
encompassing within it all sorts of air-conditioning. and refrigerating
appliances a.nd machinery and the Government of India was issuing
notifications of exemptions on the understanding that such parts are          c
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]               D

      Whether the manufacturer supplies the refrigerating or air-
conditioning 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 I

      Complete plants which are covered by items (1) and (2) cannot be        E
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 Cent-
ral Excise and Ors., [1980] ELT 600 All, overruled.
                                                                              F
      Blue Star Ltd. v. Union of India and Anr., [1980] ELT 280 Born.;
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-All; Goptal Cold Storage & Ice Factory v.
Union of India and Ors., [1985] ELT 692-All and Anil Ice Factory &            G
Anr. v. Union of India and Ors., [1984] ELT 333-Gujarat, referred to.

      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3395
of 1982.

      From the Judgment and Order dated 4.6.1982 of the Punjab and            H
         572         SUPREME COURT REPORTS              [1989} Supp. 2 S.C.R.

     A 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.
     B
               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 manufacturing
         air-conditioning and refrigeration equipment of various kinds and
     C   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 manufactu~e of goods falling under sub-items
         (2) and (3) of Tariff Item No. 29A. Against gate pass Nos. 111, 112
     D   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 Farida-
         bad and were cleared by them against the above-mentioned gate
     E   passes after payment of a duty of Rs. 13.547.20 P. Against gate pass
         Nos. 95, 9o, 97 and 98 dated January 21, 1969 the appellants had
         cleared from the factory various parts of refrigerating and air-condi-
         tioning appliances and machinery for an Ice-factory plant to one Mis
         Gujarat Industrial Investment Corporation Limited, Ahmedabad.
         These parts also were manufactured by the appellants in their factory
     F   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
     G 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 dismissed
       the appeals. Thereafter, the appellants filed writ petition in the High
     H Court of Punjab and Haryana at Chandigarh. This writ petition was
                     FRICK INDIA v. U.0.1. [V. RAMASWAMI, J.]               . 573


    dismissed by a learned Single Judge holding that the goods supplied
                                                                                    A
    are parts of a refrigerating and air-conditioning appliances, that a com-
    plete cold storage plant was not supplied to Mis 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 pre.ferred against this
    judgment was dismissed in limine by a Division Bench.                           B

         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
                                                                                    c
    29A.
             REFRIGERATING AND AIR-CONDITIONING
             APPLIANCES AND MACHINERY, ALL SORTS,
              AND PARTS THEROF-                                                     D
              (I) 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.                                           E

               (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                                F
                       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           G


          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 other air-conditioning appliances
    respectively which are ordinarily sold or offered for sale as a ready           H
    574         lUPREME COURT REPORTS               [1989] Supp. 2 S.C.R.

A  assembled unit. Therefore, in order to bring it within sub-items ( 1) and
   (2) such refrigerating and air-conditioning appliances should be comp-
   lete assembled units and they must also be ordinarily sold or offered
   for sale as such ready assembled units. The illustrative examples refer-
   red 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
B in this case as such are not such complete 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
   meaning that the goods that are covered by that sub-item are parts of
   those refrigeratirtg or air-conditioning appliances which in its assemb-
   led 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,
C 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-conditioning appliances and machi-
   nery of all sorts, the words "and parts therefore" in the heading con-
D .trolled 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.

E         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
F                                                             ad valorem.

                40. REFRIGERATORS AND PARTS                   Twenty
                THEREOF. SUCH AS ARE                          per cent
                SPECIALLY DESIGNED FOR USE                    ad valorem."
                WITH REFRIGERATORS.
G
    The Notes on Clauses relating to the relevant clause in the Finance Bill
    IO of 1961 stated that Item 29 A proposes to levy an excise duty on
    air-conditioning machinery and Item 40 proposes to levy an excis.e
    duty on refrigerators and "parts thereof."

H         By the Finance Act 2 of 1962 a combined tariff entry in the form
                   FRICK INDIA v. U.0.1. (V. RAMASWAMI. J.]                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   A
    item the present tariff items 29A and 40 relating to 'Air-conditioning
    Machinery' and 'Refrigerators' respectively as well as to make it more
    comprehensive." Under .the Government of India, Ministry of
    Finance, Department of Revenue, Notification No. 80/62-Central
    Excises, dated 24th April, 1962 as subsequently amended by Notifica-          B
    tions 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
                                                                                  c
                  (ii) Compressor

                  (iii) Condenser

                 (iv) Thermostat                                                  D

                  (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 Opera-
                      ted absorption type refrigerator.
                                                                                  E
                  (vi) Starting Relay, controls (including expansion value
                       and solenoid valves) and pressure switches

                 (vii) Overload Protection/Thermal Relay

                (viii) Cabinet."                                                  F

    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 specified 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 estab-.        G
    lishments:
l
                "1. Computer rooms. 2. Research and test laborato-
                ries 3. Animal houses 4. Telephone exchanges 5.
                Broadcasting studios 6. Trawlers 7. Dams 8. Mines
                and tunnels 9. Thermal and hydel power stations             10:   H
     576         SUPREME COURT REPORTS                [ 1989] Supp. 2 S.C.R.

                 Technical buildings of Military Engineering Service 11.
A
                 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 sub-
B item (3) of Item 29A of the First Schedule. there are various other
     notifications also issued under the same sub-item which cove~ installa-
     tion of air-condition and refrigerating equipments of aln\ost all
     categories.

        The legislative history and the notifications of the Governmept
  show that sub-item (3) of Item 20A is a comprehensive provision
c encompassing within it parts of 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
D a restricted !Ileaning. 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 prefixd to sections or entries
     cannot control the plain words of the provision; they cannot also be
E    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
f'   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-condi-
     tioning appliances and machines whether they are covered or not
     covered· uniler sub-items (1) and (2) would be clearly covered under
     that sub-item. Therefore, whether the manufacturer supplied the
     refrigerating or air-conditioning appliances as a complete unit or not is
G    not relevant for the levy of duty on the parts specified in sub-item (3)
     ofitem29A.

        Strong reliance was placed by the learned counsel for appellants
  on the decision of the Allahabad High Court in Mother India Refri-
  geration Industries (P) Ltd. v. Superintendent of Central Excise & Ors.,
H 11980] ELT 600 All. In that case the writ petitioners were the owners
                  FRICK INDIA v. U.0.1. (V. RAMASWAMI, J.]                577

    of a old storage plant. The writ petitioners themselves installed and
    assembled the cold storage plant. Part of the plant consisted of erect-      A
'   ing 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.           B
    The result was that the various pipes constituted 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 petitioners bought the pipes and the bends from the market and
    got them placed at the factory site and got them welded. The depart-
    ment, in the view that the·.conghnoeration of pipes manufactured by
    the petitioner, constituted~anufacture of cooling coils which are parts      c
    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               D
    known to refrigeration technology. The High Court accepted these
    findings. However, it held that parts of refrigerating and air-condi-
    tioning 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 con-
    clusion on the grounds that:                                                 E
                "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     F
                ready. assembled units. On any other interpretation the
                words 'thereof' occurring in the heading 29A will be
                redundant. An interpretation which makes any part of a
                statute redundant has to be discarded."

    ~~                                                                           G
                "When an entry in the schedule specifically refers to and
                restricts 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    H
                the words 'parts thereof'."
    578         SUPREME COURT REPORTS              [1989] Supp. 2 S.C.R.

A We are afrai.d that both these reasons are fallacious and not accept-
  able. As already stated neither can sub-entry (3) be said to t.ake its
  colour from sub-entries (I) and (2) nor could those sub-entries or
  heading curtail the plain meaning of the words used in sub-entry (3).
  We, therefore, hold thai the Mother India Refrigeration Industries (P)
  Ltd. v. Supdt. of Central Excise & Ors. 's, case (supra), was wrongly
B 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 question when we consider that Tariff Advice in
  a latter part of this judgment.

       The decisions of the Bombay Hig!J Court in Blue Star Ltd. v.
C Union of India & Anr., [1980] ELT 28fPBom. and Joy Ice Cream,
  Bombay v. Union of India, [1989] 39 ELT 521 Born., related to the
  scope of Tariff item 29A(l) and not Item 29A(3) with which we are
  concerned. In the view we have taken that sub-entries ( 1) and (2) of
  Entry 29A cannot control or restrict the meaning of such entry (3) it is
D 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 Refrigeration
    Co. v. Collector of Customs & Central Excise, Cochin & Ors., [1982]
    ELT 106 Ker., also does not touch upon the question with which we
E   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,
    therefore, they do not advance the case any further.
F
         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:

G              "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
H              goods which fall within the description of the said entry,
                                                                              .,
              FRICK INDIA v. U.0.I. [V. RAMASWAMI, J J                579

           namely, "Parts of refrigerating and air-conditioning
           appliances and machinery, all sorts". H is not disputed that      A
           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            B
           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
                                                                             c
           "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       D
           goods which are manufactured for the purpo'se 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 Cl. (3) is concerned the tariff descrip-
           tion is "parts of refrigerating and air-conditioning applian-     E
           ces 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.''                                                   F

      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 assembled unit for purposes of countervailing      G
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 units, had
staed as follows, with reference to sub-item (3):

           "Sub-item (3) of item 29A of the Central Excise Tariff            H
    580         SUPREME COURT REPORTS                [1989] Supp. 2 S.C.R.

A              refers to parts of machinery ano 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."

B As may be seen from this paragraph it consists of two parts, the first
  portion referring to parts of machinery and appliances and the second
  portion referring to complete plants which cannot be considered as
  parts of machinery. The whole argument arose because of the compo-
  site sentence used in this paragraph. It only means complete plants
  which are covered by Items (I) and (2) cannot be considered as parts
  on machinery and such complete plants .would not be classifiable under
C 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 apeal fails and it is dismissed
    with costs.
D
    Y. Lal                                                Appeal dismissed.