1. As all these four appeals involve common questions of law and facts they were taken up together. Originally filed as Revision Applications before the Government, on transfer are being treated as appeals.
2. The appellants are manufacturers of evaporative type of coolers. The coolers manufactured by them are supplied on rate contract basis to DGS&D, New Delhi. The appellants quoted the prices of coolers of various models and also quoted price for extra water tank. The controversy in these proceedings arose from two show cause notices issued to the appellants. A show cause notice was issued on 6-9-74 demanding differential duty of Rs. 6,110/- relating to the clearances between April 1973 to March 1974. The second show cause notice was issued on 9-1-75 demanding differential duty of Rs. 8,808.90 from January 1972 to March 1973 and April 1974 to December 1974. The appellants contended that the prices quoted were accepted separately for the cooler and the extra water tank. In the initial stages while calculating the assessable value of the cooler, the price of the water tank was inadvertently included in the price of the unit. An amendment was subsequently issued by the DGS&D. The Asstt. Collector did not accept the contentions of the appellants that the price of the water tank should be excluded from the price of the unit. He confirmed the demand. On appeal the Appellate Collector rejected the plea. However on the question of time-bar, he directed the appellants to agitate this matter before the Assistant Collector for passing a formal appealable order.
3. Shri D.N. Kohli, the learned Consultant for the appellants, argued that Tariff Item 29A referred to refrigerators and other refrigerating appliances, which are ordinarily sold or offered for sale as ready assembled units such as ice makers, bottle coolers, display cabinets and water coolers. H e stated that the extra water tank is not a ready assembled unit and that it was supplied at the option of the customers.
These tanks were made out of the parts bought by the appellants and could not be included in the assessable value. He stated that even in the schedule to rate contract, the additional water tank was listed separately. For example for 'Kay' room coolers, Deluxe Model the price per unit of the air cooler was Rs. 1,229.20 and water tank 55 litres for Deluxe Model was Rs. 30/-. Item 24 refers to "additional water tank" as a distinct item. He argued that the supply of additional water tank was optional and hence additional water tank cannot be treated as integral part of the cooler. He relied on the ruling reported in 1984 (15) E.L.T. 426 (Vardhman Spinning & Weaving Mills Ltd., Ludhiana v.Collector of Customs, Bombay). In that case voltage stabilizer was not classified along with computer. Shri Kohli further argued that in respect of the identical goods another Appellate Collector has held on 18-5-82 that extra water tank was not an integral part or component of the cooler. The learned Consultant however stated that during the period when they inadvertently included the price of the water tank, they would be liable to pay the excise duty on the added value. He pleaded that the Appellate Collector has passed the orders more on conjectures than on facts.
4. Shri Mahesh Kumar, appearing for the Department, drew our attention to the Schedule to rate contract of DGS&D. At page 9 we find the following : "The prices are exclusive of excise duty on coolers i.e.(finished product) which is payable extra. The rate of excise duty is 25% ad valorem. The excise duty at present leviable in this case is Rs. 314.80, 25% on Rs. 1,259.20 which is the unit value of the stores as assessed by the Excise Authorities." In regard to 'Kay' room cooler Commercial Model the price of the unit was Rs. 1,470.20 and water tank (100 litres) was valued at Rs. 65/-. He argued that the show cause notice issued on 9-1-1975 referred to the value of the water tank. He stated that there was nothing to indicate that the cost of the extra water tank was excluded. The contract was composite and there was no evidence that such water tank was supplied separately without the cooler or vice versa. According to him the rulings cited by the consultant have no application to the facts of the present case.
5. We have to decide whether or not the value of the extra water tank should be included in the assessable value of the coolers. In the show cause notice issued on 6-9-1974, the assessable value for the Deluxe Imperial and Commercial models have been set out as including the additional water tank, because the same was charged from the buyers. It is also significant to note that Central Excise duty has been collected by the appellants on the declared prices of the coolers i.e. Rs. 1,259.20, Rs. 1,419.20 and Rs. 1,535.20. From the relevant Schedule to rate contract, we find that the cooler is valued at Rs. 1,229.20 and the water tank at Rs. 30/-. Even in regard to the excise duty, a sum of Rs. 314-80 calculated at 25% on Rs. 1,259.20 is stated to be the unit value of the stores as assessed by the Excise Authorities. In the amendment dated 4-5-1974 issued by the DGS&D the value of the unit and the water tank have been shown distinctly and the rate of excise duty is stated to be 40% ad valorem with effect from 1-3-74. The price of the water tank was included in the contract rates of DGS&D and excise duty was actually charged from the customers (vide show cause notice dated 9-1-1975). Hence there is considerable force in the argument of the learned S.D.R. that the contract was composite and that the additional water tank was considered to be part of the main unit.
6. The appellants would say that water tank was not one of the items listed in Notification 81/62. That notification exempted all parts of refrigerating appliances other than the parts mentioned therein. But that is of no consequence because the appellants have charged the price and excise duty for the additional water tank also from the buyers.
Even assuming that the appellants have bought these items from third parties, the fixture of these items to the main unit would constitute manufacture thereof and would attract excise duty.
7. The ruling reported in 1984 ECR 541 (supra) has no relevancy to the present facts. That case was in respect of voltage stabilizers which were independently assessable under Item 68. The ruling reported in 1977 CEN CUS 31(d) also does not apply to the present issue. In that ruling hours meter and wheel weights were considered as accessories of a tractor. An additional water tank cannot be considered as such. On the present facts, it is manifest that the water tank supplied by the appellants formed an integral part of the main unit and provided for the supply of water to the functioning of the cooler for a longer duration. As rightly pointed out by the Appellate Collector there is no evidence to show that a separate water tank has been supplied to any party without the cooler. The water tank by itself has no independent use and formed an inbuilt system for storing additional quantity of water. Though in one of the previous cases, another Appellate Collector has taken a different view that does not advance the case of the appellants in any way.
8. For the reasons stated above we find no merit in all the four appeals and dismiss the same.