ORDER M. Katju, J.
1. This writ petition has been filed for a writ of certiorari to quash the impugned Circular dated 13-9-2000 Annexure-13 to the writ petition and for a mandamus restraining the respondents from imposing any excise duty on the grills, dampers and diffusers manufactured by the petitioner under tariff entry no. 84.15 of the Central Excise Tariff Act, 1985.
2. Heard Shri Bharatji Agarwal, learned Senior Advocate and Shri Piyusk Agarwal, learned Counsel for the petitioner and learned Counsel for the Central Government for the respondents.
3. The petitioner is a Company registered under the Indian Companies Act and has a factory at Noida where it manufactures aluminium grills, dampers and diffusers which are fixed on the walls and ceilings of buildings as ventilation opening where the air cooling/heating ventilation system or central air-conditioning system are installed in the building and sites.
4. It is alleged in Paragraph 2 of the writ petition that the air distribution products (aluminium grills, etc.) manufactured by the petitioner are tailor made as per the specifications and size of the buyers who are mainly doing the job work of erection/installation of heating, ventilation, air-cooling and air conditioning system at various premises and buildings. These grills, dampers and diffusers (namely, air-distribution products) are used by fixing them on the walls and ceilings to cover the openings to provide them with better show on the ceiling or walls through which the air flows from higher level to lower level and from inside to outside and vice versa.
5. It is alleged in Paragraph 4 of the writ petition that this fixing of goods manufactured by the petitioner does not in any way involve either changing of the temperature or any chemical or mechanical process involving change in the temperature. It is simply an opening in the walls or ceilings which facilitate the air to pass through it either from the wall or from the ceiling where it is fixed. It is alleged in Paragraph 6 of the writ petition that as per the specification of the grills manufactured by the petitioner, the same type, size or quality can be used either for general purposes, such as ventilation system in the places or rooms, or it can be used in car parking basements, industrial sheds, etc. These grills are also used as dummy grills for beautification of the interior decoration of the rooms as per the requirements of the customers. Hence, these grills are not necessarily used in the air-conditioning system but are also fixed in the immovable property like various rooms in the buildings, industrial sheds, car parking places etc. for ventilation system. In Paragraph 7 of the writ petition it is alleged that the petitioner does not manufacture the grills used in the air-conditioner, commonly known as window type air-conditioner, or split type air-conditioner which are air-conditioning machines where the grills of standard size and quality are fitted in the air-conditioner as integral and inseparable parts of the air-conditioning machines. The grills which the petitioner is manufacturing are being vised by the job workers who perform the big jobs in immovable properties for fixing it in the buildings etc. for air-conditioning systems/projects.
6. It is alleged in Paragraph 9 of the writ petition that in these projects, which are erected at the site at various places in that project, the grills are used for different purposes other than as grills of window type air-conditioner, split type air-conditioner and other grills of air-conditioning machines. Hence, they are not classifiable under Entry 84.15 of the Central Excise Tariff Act. The petitioner has alleged that the goods which the petitioner manufactures are goods made of aluminium e.g. grills, dampers and diffusers and are classifiable under Chapter 76.16 of the Central Excise Tariff Act. In Paragraph 10 of the writ petition it is alleged that the grills, dampers and diffusers manufactured by the petitioner are known as air distribution products which are neither available in the market as component parts or air-conditioners nor can they be used as such in any air-conditioner, whether window air-conditioner or split type air-conditioner. In Paragraph 11 of the writ petition it is alleged that these air distribution products manufactured by the petitioner are not known as parts of air-conditioners, since they are only fitted in the walls or ceilings through which the air passes. It is alleged that these products manufactured by the petitioner have always been classified under Chapter 76 as items of aluminium products.
7. In Paragraph 13 of the writ petition it is alleged that the grills manufactured by the petitioner are used either for general purpose or with an air-conditioning system. The grills manufactured by the petitioner are only to cover the opening on the walls or ceiling or for passing air through the same. There is no other purpose of these grills. As such it is alleged that these grills cannot be classified on the basis of their use/end-use. These are more like accessories. On the other hand, the grills used in the room/split type air-conditioner are inseparable parts specially designed for the use therein.
8. It is alleged in Paragraphs 14 to 17 of the writ petition that earlier the petitioner's products were always classified under Tariff Entry 7613.90 and not under Entry 84.15. In fact a specific order had been passed by the Adjudicating Authority namely the Assistant Collector, Central Excise, Noida in which it was specifically mentioned that grills, dampers and diffusers are liable to be classified under the respective chapter of base metal out of which they are made. The petitioner's case was duly considered and it was held that these goods do not involve the process of change of temperature and thus they are correctly classifiable under the respective chapter of the base metal out of which they are made (aluminium) and accordingly the classification was finally approved by the Assessing Authority vide order dated 19-4-1993 Annexure-1 to the writ petition. It is further mentioned in Paragraph 16 of the writ petition that a trade notice was issued by the Baroda Collectorate being Trade Notice No. 249 of 1986, dated 16-10-1986 in which it was specifically mentioned that grills, diffusers, dampers made of aluminium are classifiable under Entry 7613.90 and not entry 8415 which is applicable for air-conditioners. A true copy of the said circular/trade notice dated 16-10-1986 is annexed as Annexure-2 to the writ petition. It is alleged that this was followed not only in the case of the petitioner but throughout the country. In different States also the aluminium diffusers manufactured by other persons were also classified under Entry 7616.90 vide Annexure-3 to the writ petition.
9. It is alleged in Paragraph 18 of the writ petition that the confusion arose because of the Circular issued by the Central Board of Excise and Customs (hereinafter referred to as CBEC) on 4-7-1996. True copy of the said circular is Annexure-4 to the writ petition. In this circular the CBEC has mentioned that aluminium and steel grills used in air-conditioner are classifiable under Entry 84.15 like plastic grills used in air-conditioner which are used not merely as a decorative part and their functioning is to deflect the air in the desire direction. Hence it was stated that they are classifiable as part of the air-conditioner.
10. Against the aforesaid circular the petitioner made a representation to the CBEC for seeking a directing/clarification that the earlier Circular dated 25-9-1986 is only modified to the extent that the grills which are used in the air-conditioner, whether window air-conditioner or split air-conditioner, alone are covered under Chapter 84.15 and other grills of aluminium or steel which are used in the ceiling or window, are liable to be classified under the heading of the based metal namely Entry 7613.90 (for aluminium products) and 7308.90 (for steel products) because of their multiple use, such as, for distribution of fresh air in a ventilation system in the kitchen, car parking, industrial shed etc. for evaporative coolers and for distribution of cold and hot air in the air-conditioning system for large buildings. A true copy of the representation is Annexure-5 to the writ petition. In this representation the petitioner has specifically requested that items like diffusers, dampers and grills should not be classified under Entry 84.15 but as under Entry 7613.90.
11. The petitioner filed a writ petition being Writ Petition No. 524 of 2000 which was disposed of by means of an order dated 5-7-2000 Annexure-6 to the writ petition. In that order it was directed that the petitioner should make a representation which should be decided preferably within a month. Accordingly petitioner made a representation, true copy of which is Annexure-7 to the writ petition. Thereupon the respondent No. 1 by letter dated 1-9-2000 directed the Commissioner, Central Excise, Meerut to inform as to whether the diffusers, dampers and grills are multi purpose and are used for circulation of air in any ventilation system including supply of fresh air or exhaust air from areas such as industrial sheds, car parking places, toilets and for interior decoration of the buildings. True copy of the said letter is Annexure-8 to the writ petition.
12. Thereupon enquiries were made from the petitioner and Blue Star Ltd. by the respondent No. 4 before sending the report to the Commissioner, Central Excise, Meerut, and the petitioner submitted detailed submissions on 2-9-2000 through the Superintendent, Central Excise, Noida regarding classification of the grills, diffusers and dampers vide Annexure-9 to the writ petition. The Deputy Commissioner, Central Excise (respondent No. 4) also made enquiry from Blue Star Ltd. whether they had any manufacturing division manufacturing air-conditioners/split air-conditioners and as to whether the petitioners have sold any of their products for use in air-conditioners or split air-conditioners vide Annexure-10 to the writ petition. In reply the Senior General Manager (Commercial), Blue Star Ltd. informed by letter dated 6-9-2000 that they have a manufacturing unit in Dadra manufacturing air-conditioners /split air-conditioners but the petitioners have not sold to them any of their products for use in the air-conditioners/split air-conditioners manufactured by them vide Annexure-11 to the writ petition. Thereafter the Commissioner, Central Excise, Meerut sent his report dated 7-9-2000 to the CBEC vide Annexure-12 to the writ petition. A perusal of the report shows that the Commissioner has clearly reported that these grills are used as part of a central ventilation system in conjunction with the air circulation appliances and are also utilised for decoration of the duct openings.
They are also utilised in false ceilings and walls. It is stated in the report dated 7-9-2000 (vide Annexure-12 to the writ petition) that the grills are not being sent to the manufacturers of air-conditioners of different brands.
13. In Paragraph 27 of the writ petition it is alleged that inspite of the report of the Commissioner, Central Excise, Meerut the CBEC by its impugned circular letter dated 13-9-2000 has again mentioned that the earlier Circulars dated 2-5-1995 and 4-7-1996 are not restricted to the grills specially designed for use as part of air-conditioners or split type air-conditioners. A true copy of the said circular is annexed as Annexure-13 to the writ petition. It is this circular which has been challenged in this writ petition.
14. It is alleged in Paragraph 28 of the writ petition that the stand taken by the CBEC that the grills used with the air-conditioning machine/systems which is held excisable under Chapter 84.15 is misconceived as it is a known fact that the air-conditioning systems/machine erected at the site/building are not movable goods and hence would not be termed as goods liable for excise duty under the Central Excise Act. The petitioner has relied on the decision of the Supreme Court in Triveni Engineering and Industries Ltd. v. Commissioner of Central Excise, 2000 (120) E.L.T. 273 in which it was held that fixing of steam turbine, alternators, coupling and aligning them in a specified manner and installation and erection of turbo alternator on the platform would be immovable property, and as such it cannot be excisable goods. On the same reasoning, the air-conditioning system, the chilling machine, cooling towers, air treatment unit (air handling units), ducting, piping, insulation, pumps and electric panels and grills, diffusers, dampers, fire dampers, etc. are installed/fixed/erected in with each other to form an air-conditioning system or project and hence becomes immovable property and cannot be called as excisable goods. Even the department has not raised any demand or excise duty on such air-conditioning system to any job worker involved for erection of these systems/projects. The grills manufactured by the petitioner are used in air-conditioning systems, ventilation systems, basements, car parking, kitchens, industrial sheds, evaporative coolers and dummy grills for interior decoration in rooms/buildings. However, they cannot be used in the air-conditioning machines, room/split air-conditioners as these are not designed for use therein.
15. A counter affidavit has been filed by the respondents and we have perused the same. It is alleged in Paragraph 4 that the petitioner is manufacturing grills etc. of aluminium which are used for air-conditioning systems and the party has mainly supplied the same to four buyers viz. M/s. Blue Star Ltd.; M/s. Dyna Aircon, Delhi; M/s. CTC Dabur, Delhi and M/s. HVAC Systems Pvt. Ltd. It is alleged in Paragraph 5 of the same that the grills, dampers and diffusers being the essential parts are used to throw the air in connection with the air-conditioning machine. In Paragraph 6 of the same it is stated that for an item to be treated as a part of an air-conditioning plant it is not necessary that the items must be involved either in the change of temperature or in any chemical change. It is alleged in Paragraph 8 of the same that the petitioner sends its products to above-mentioned Companies which uses them for air-conditioning purpose. It is alleged in Paragraph 9 of the same that the products manufactured by the petitioner are known as part of air-conditioning machine and hence are rightly classifiable under Entry 84 of the Central Excise Tariff Act.
16. A rejoinder affidavit has also been filed and we have perused the same. In Paragraph 5 of the same it is stated that the parties referred to by the respondents namely, M/s. Blue Star Ltd.; M/s. Dyna Aircon Delhi; M/s. CTC Dabur, Delhi and M/s. HVAC Systems Pvt. Ltd. have not purchased the grills, dampers and diffusers for use either in air-conditioners (split or room) or in the air-conditioning machines. All these buyers are engaged in the job work of erection/installation of heating, ventilation, air-cooling and air-conditioning systems at various premises and buildings. The enquires made by the respondent No. 4 the Deputy Commissioner, Central Excise, Noida and the documents annexed as Annexures-13 and 14 to the writ petition confirms these facts. The air-conditioning machine mentioned in the Circular dated 13-9-2000 is different from the air-conditioning systems/projects erected/installed by the aforesaid buyers. The grills manufactured by the petitioner are not fitted with any machine, instead these are fixed on the ceilings and walls of the buildings/premises where the air-conditioning systems has to be installed. These grills, dampers and diffusers are not part or essential parts of the air-conditioning machine. They are fixed on the walls and ceilings of the premises to cover the opening of the ducts and give entry to the air passing through it. It is alleged in Paragraph 7 of the rejoinder affidavit that an item to become a part of the air-conditioning machine either should be attached with that machine, as its integral and inseparable part, or at least it should be involved in the change of temperature and humidity. For grills used in the room air-conditioner or split air-conditioner though these are not involved in the change of temperature at least these are attached with the room air-conditioner or split air-conditioners as its integral part. However, the grills manufactured by the petitioner are neither attached with any such machine nor are these involved in the change of temperature. In Paragraph 9 of the same it is stated that the four parties mentioned by the respondents are not using the grills bought from the petitioner in the manufacture of air-conditioners or air-conditioning machines. These buyers are job workers engaged in erection/installation of air-conditioning systems, air-cooling systems, heating systems and air ventilation systems etc. These grills bought from the petitioner are fixed in the immovable properties like various rooms, industrial sheds, car parking, toilets, kitchens, etc. for ventilation or for covering the opening of ducts of the air-conditioning systems. After fixing the grills on the buildings they become a part of the building. Many grills are fixed on the walls as dummy grills for beautification and interior decoration of the rooms, which are not used even for passing of the air either in the ventilation system or in the air-conditioning system. It is alleged that air-conditioning systems/projects are different from the air-conditioning machines. The grills manufactured by the petitioner are not part of air-conditioning machines but are accessories of the air-conditioning systems/projects as these are fixed on the ceilings or walls of the building. Hence they are not classifiable under Chapter 8415 of the Central Excise Tariff Act, as they are not attached with any machine nor do they form integral and inseparable part of air-conditioning machine nor change any temperature or humidity.
17. Having heard learned Counsel for the parties we are of the opinion that this petition deserves to be allowed.
18. It may be mentioned that an additional rejoinder affidavit has been filed in which copy of a judgment of the Banglore Bench of CEGAT in Airgrill Industries v. Commissioner, Central Excise, 2001 (132) E.L.T. 646 has been annexed. In this judgment the matter has been discussed in great detail by the CEGAT and it has been held that these grills are classifiable under Chapter 76 vide Annexure-ARA-2 to the rejoinder affidavit. Against that judgment of the CEGAT an appeal was filed before the Supreme Court being Civil Appeal No. 13256 of 2001 which was dismissed on 21-9-2001 [2002 (141) E.L.T. A90 (S.C.)] vide Annexure-ARA-3 to the additional rejoinder affidavit.
19. We have carefully perused the judgment of the CEGAT, Banglore Bench and we are in respectful agreement with the same. Since we agree with the reasonings given in the judgment of the CEGAT it is not necessary for us to repeat the said reasoning given by the CEGAT in its judgment again as we are in full agreement with the same and are endorsing the same.
20. It may be mentioned that the department had throughout classified the product of the petitioner under Tariff Entry Chapter 7613.90. This is evident from the orders of the Assistant Collector, Central Excise, Noida dated 19-4-1993 vide Annxeure-1 to the writ petition and the Circular/Trade Notice dated 16-10-1986 issued by the Baroda Collectorate, copy of which is Annexure-2 to the writ petition. It is also evident from the report of the Commissioner, Central Excise dated 7-9-2000 vide Annexure-12 to the writ petition.
21. It may be mentioned that the Commissioner, Meerut before sending his report dated 7-9-2000 had made enquiries from the relevant authorities and his report has considered all the facts and there was no reason as to why the same should not be accepted. As per the clear finding in his report, the Commissioner, Central Excise, Meerut has observed that the aluminium grills, diffusers and dampers manufactured by the petitioner were not used by the air-conditioner manufacturers at all for air-conditioning machines vide Paragraph 3 of the report dated 7-9-2000. Thus it is evident that the aluminium grills, diffusers and dampers manufactured by the petitioner are general purposes aluminium grills classifiable under Chapter 76 as articles of aluminium. It seems evident to us that CBEC while issuing the impugned Circular dated 13-9-2000 ignored this important fact and did not clarify the classification of the aluminium grills, diffusers and dampers manufactured by the petitioners with regard to the factual position stated by the Commissioner Central Excise, Meerut. In the judgment of the CEGAT Bench of Banglore referred to above it has been held that aluminium grills are classifiable under Chapter 76 as articles of aluminium for the reason that these aluminium grills are used in the installation of the air-conditioning systems at the sites/building which are not excisable at all. The Supreme Court has dismissed the appeal against the judgment of the CEGAT, Banglore Bench.
22. It may be mentioned that dismissal of an SLP without giving reasons does not amount to merger of the judgment of the High Court in the order of the Supreme Court vide Kunhayammed v. State of Kerala, 2001 (129) E.L.T. 11 (S.C.) = (2000) 6 SCC 359. However, in our opinion dismissal of an appeal under Section 35L(b) by the Supreme Court would amount to a merger even if the Supreme Court does not give reasons. This is because Article 136 of the Constitution is not a regular forum of appeal at all. It is a residuary provision which entitles the Supreme Court to grant at its discretion Special Leave to Appeal from any judgment, decree, order etc. of any Court or Tribunal in India. This is an exceptional provision in the Constitution which enables the Supreme Court to interfere wherever it feels that injustice has been done but it is not an ordinary forum of appeal at all. In fact unless leave is granted by the Supreme Court under Article 136 no appeal is registered. Article 136 is a discretionary power in the Supreme Court and it does not confer a right of appeal upon a party but merely vests discretion in the Supreme Court to interfere in exceptional cases vide State of Bombay v. Rusy Mistry and Anr., AIR 1960 SC 391, Municipal Board v. Mahendra, AIR 1982 SC 1293 etc.
23. Article 136 does not confer a right to appeal at all. It only confers a right to apply for a Special Leave to Appeal vide Bharat Bank v. Its Employees, AIR 1950 SC 88. It is for this reason that a dismissal of an SLP does not amount to merger of the order of the High Court or the Tribunal with the order of the Supreme Court. The Supreme Court can reject an SLP without even going into the merits of the case e.g. if it believes that the matter is not so serious as to require consideration by the Supreme Court or for any other reasons.
24. On the other hand Section 35L provides a regular forum of appeal. Hence if an appeal under Section 35L is dismissed by "the Supreme Court, whether by giving reasons or without giving reasons in either case. The doctrine of merger will apply and the judgment of the High Court or the Tribunal will merge into the judgment of the Supreme Court. Hence in our opinion the judgment of the Supreme Court dismissing the appeal against the order of the CEGAT is binding on us. Apart from that, even on merits we agree with the judgment of CEGAT. In our opinion it is absolutely clear from the facts of the case that the aluminium grills, diffusers and dampers manufactured by the petitioner which are used for fixing on the walls and ceilings would be covered by the Trade Notice dated 16-10-1986 Annexure-2 to the writ petition and are not classifiable under Tariff Entry 84.15. In our opinion in view of the clear finding in the report of the Central Excise Commissioner dated 7-9-2000 Annexure-12 to the petition as well as in the order of the CEGAT, Bangalore that the aluminium grills are of different sizes and are utilised in false ceiling and walls connected with the ducts in the centrally air-conditioning plant or hot-air for heating in the building and ventilation system which are installed in the building, the products, manufactured by the petitioner can only be classified under Chapter 76 as articles of aluminium. The same are admittedly not sent to the manufacturers of air-conditioners for use in air-conditioning machines. Hence even assuming that the order of the CEGAT, Bangalore Bench has not merged into the order of the Supreme Court we are satisfied on merits that the order is correct.
25. Learned Counsel for the respondents submitted that the questions of classification of the petitioner's product should be left to the Central Excise authorities and hence the petitioner has an alternative remedy before such authorities and this Court should not exercise its jurisdiction under Article 226 of the Constitution. We cannot accept this submission for two reasons. Firstly, a Circular dated 13-9-2000 has been issued by the CBEC and hence obviously the Central Excise authorities cannot take a view contrary to that circular. Secondly, the Commissioner's report dated 7-9-2000 and the CEGAT, Bangalore Bench have discussed the factual matters connected to this controversy in detail, and hence it would be a mere duplication of work if again the matter is investigated, especially when the order of the CEGAT, Bangalore Bench has been upheld by the Supreme Court. It has been held in M/s. Canon India Pvt. Ltd. v. State of U.P., 2003 UPTC 10 (vide Paragraph 25) that where the controversy is likely to be of a recurring nature and involves only questions of law then it should be decided by the High Court instead of dismissing the writ petition on the ground of alternative remedy. In our opinion only a question of law is now involved because there is now no factual dispute since the Commissioner, Central Excise as well as the CEGAT, Banglore Bench have investigated the facts in detail and have given their findings.
26. For the reasons given above the petition is allowed.
27. The impugned Circular dated 13-9-2000 is quashed. The respondents are restrained from imposing any excise duty on the grills, diffusers and dampers manufactured by them under Tariff Entry 84.15. They should be classified only under Tariff Entry 76 of the Central Excise Tariff Act as held by the CEGAT, Banglore Bench.