1. The facts of the case are that M/s. Usha International Ltd., (the respondent herein) filed a Bill of Entry No. 896556, dated 21-11-2008 for clearance of goods among which item at Sl. No. 1 was declared as 768 Nos. of "Shriram" Brand water dispensers model YLRS1-5K/B-20" from China. As the Bill of Entry was facilitated through RMS scheme, the goods were assessed as per the declared classification under CTH/CETH 8418 69 20. On a perusal of the import documents presented for clearance, the Docks officers raised doubt regarding content of ODS substances and returned the Bill of Entry to the appraising group for necessary action. The appellants submitted product catalogue and requested permission to bond the
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goods under Section 49 which was allowed. The appellant vide letter dated 2-2-2009 requested to issue a speaking order so as to file an appeal without clearing the goods. On a perusal of the catalogue, the original authority observed that the said model has a hot and cold Water dispenser with an inbuilt mini-refrigerator of 20 litres capacity with R-134A refrigerant for preserving/refrigerating food products. Therefore, the original authority ordered that the goods be classified under CTH 8418 69 20. As regards application of Notification No. 14/2008, dated 1-3-2008-C.E. (N.T.), Sl. No. 69, the original authority observed that all types of refrigerators incorporating a refrigerating unit, either standalone or inbuilt with other features like freezers, water coolers, etc., are covered under Sl. No. 69 of the said notification and ordered MRP based assessment for the goods. Aggrieved, appellants filed appeal before the Commissioner (Appeals), who, vide the impugned order dated 31-3-2009 allowed the appeal inter alia on the ground that since the imported goods are composite goods, the component which provides the machine its essential character has to be determined and that the principal function of the goods is that of a dispenser with added feature of mini-refrigerator. Aggrieved over the impugned order, the department has filed this appeal.
2. On 30-8-2017, when the matter came up for hearing, on behalf of the department Ld. AR, Shri K. Veerabhadra Reddy, JC referred to the grounds of appeal and reiterated the following contentions:-
(i) The goods have been described as Water Dispenser Refrigerator in the invoice. As per the Purchase Order, what is indented is Water Dispenser Refrigerator HCRFM Model. The specification of the goods mentions that the refrigerator used is R22 gas. Based on these documentary evidences, it is clear that the goods are Water Dispenser Refrigerator, though there are water dispensers without refrigerator. Therefore, it is a refrigerator with a water dispenser. Hence, the lower appellate authority holding that refrigerator is only an additional feature is not correct.
(ii) The refrigerating unit has the necessary functions of a refrigerator with provision for storage of goods as seen from the Catalogue and hence would attract RSP based assessment as provided in Notification No. 14/2008, dated 1-3-2008. The lower appellate authority holding that the impugned goods are not normal refrigerators, as the temperature cannot be controlled and the goods are not having freezing cabinet, is incorrect.
(iii) The lower appellate authority holding the goods are not liable for RSP based assessment on the count that as the goods imported is a composite machine and the principal function of the machine is water dispensing and not refrigerating, is incorrect. As per Note 3 to Section XVI of Chapter 84" composite machines consisting of two or more machines fitted together to form a whole and other machines designed for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function" and since the goods contain refrigerator and also have provision for water dispensing, refrigeration appears to be the principle function. Hence, the goods are leviable to excise duty based on MRP as per Notification No. 14/2008-C.E. (N.T.), Sl. No. 69.
3. On the other hand, on behalf of the respondent Ms. K. Nancy, Ld. Advocate submitted that the imported item is described and sold as water dispenser. It has got two pipes fitted on its body for dispensing hot and cold water. The moment dispenser is switched of even refrigerator would stop functioning. Accordingly, classification of the goods is only under CTH 8418 69 20 as water cooler.
4. Heard both sides and have gone through the facts.
5.1 From the facts on hand we find that the original authority had held that the model YLRS1-5K/B-20" declared in the invoice/Bill of Entry is not featured in the product catalogue; that catalogue describes the said model as hot and cold water dispenser with an inbuilt mini refrigerator of 20 litres capacity with R-134A refrigerant for preserving/refrigerating food products. On these grounds, the original authority concluded that the item is basically a refrigerating unit which is also used to cool and dispense stored water and hence is appropriately classifiable as other refrigerating or freezing equipment. The' original authority has also concluded that as long as the model contains a refrigerator, there will be requirement of MRP based assessment under Central Excise Notification No. 14/2008-C.E. (N.T.), dated 1-3-2008, Sl. No. 69.
5.2 In the Order-in-Appeal, the lower appellate authority delved deep into the meaning and function of a refrigerator. He further noted that although the impugned goods has an inbuilt mini-refrigerating unit, the temperature cannot be controlled and it does not have a freezing cabinet inside as found in the normal refrigerator. He therefore concluded that this is not a refrigerator in the functional sense and that further in the trade parlance the goods are known only as water dispense, sold as water dispenser and not as a refrigerator. That the inbuilt refrigerator is only an added feature to the original goods imported. He has referred to the Notes to Chapter 84 which specify that a machine which is used for more than one purpose is, for the purpose of classification, to be treated as if its principal purpose were its sole purpose, therefore when a product is capable of performing more than one function, the goods would be classified under that function which is predominant. We are unable to find fault with this analysis and conclusions of the lower appellate authority. Indubitably, the impugned goods are composite goods, and hence, the component which provides the machine its essential character will be determined the factor for classification. The principal function of the goods is that of a dispenser of hot and cold water with an added feature of a mini refrigerator. Hence, the lower appellate authority is spot on in his conclusion that the impugned items are required to be classified as water dispenser and not as a refrigerator.
6. In the event, we do not find any merits in the appeal filed by the Revenue, for which reason the same is dismissed