O.P. Engineering vs Commissioner, Trade Tax, U.P., Lucknow

Bharati Sapru, J.—1. This revision has been filed by the assessee for the assessment year 2000-01 against an order of the Trade Tax Tribunal dated April 22, 2004 by which the Tribunal has come to the conclusion that aluminium grills, diffusers and dampers are to be charged at the rate of 15 per cent, as item which are used for air-conditioners and air-coolers, etc., and not unclassified items at the rate of 10 per cent. The assessee is a registered partnership firm and carries on business of manufacture and sale of aluminium grills, which are fixed on ceiling or on the wall of the building as ventilators opening. For the years 1996-97, 1997-98, 1998-99 and 1999-2000, the items manufactured by the assessee, such as, aluminium grills, aluminium diffusers and dumpers were assessed to tax at the rate of 10 per cent. However, for the assessment year in dispute, i.e., 2000-01 assessment order was passed wherein a demand was raised from the assessee charging them to tax at the rate of 15 per cent.

Aggrieved by the order of assessment, the assessee filed a first appeal under section 9 of the U.P. Trade Tax Act. The first appeal of the assessee was allowed by the order dated May 12, 2003. Aggrieved by the order passed by the first appellate authority, Department filed a second appeal under section 10 of the Act and the appeal of the Department has been allowed and it has been held that the assessee is liable to pay tax at the rate of 15 per cent, on the items manufactured by the assessee.

It is the contention of the learned counsel for the assessee that the Tribunal has wrongly come to the conclusion that items manufactured by the assessee, used by the air-conditioning industry are only manufactured upon the orders being placed by the air-conditioning industry. He has argued that these aluminium grills, diffusers and dumpers are not used as parts of air-conditioners or air-coolers but are used on the opening of the walls on ceiling in order to facilitate the air to pass in the direction, which is required by the user and, therefore, it is not correct to say that this ventilations are component part of air-conditioners.

For this purpose, he has relied on a decision of the Division Bench of this court in the case of Caryaire Equipments India Pvt. Ltd., Noida v. Ministry of Finance, Department of Revenue, Central Board of Excise and Customs, New Delhi reported in , [2004] UPTC 252. He has argued that the Tribunal has been swayed by the fact that one or two sales have been made by the manufacturer to the industry, such as, M/s. Voltas Ltd. which is an air-conditioning industry, and, therefore, has sought the following questions of law:

"(1) Whether aluminium grills, dampers and diffusers, which are fixed on the ceiling or walls of kitchen, toilets, etc., is not used in ceiling doors, etc., hence it cannot be treated as parts or equipments of air-conditioning plant or refrigeration equipments ?

(2) Whether in view of Division Bench decision in the case of Caryaire Equipments India Pvt. Ltd. , [2004] UPTC 252 aluminium grills, aluminium diffusers and dampers have not been treated as part of air conditioner equipments, but as article made of aluminium, the Tribunal was not justified in taking a contrary view that what was taken in all previous years right from 1996-97 to 1999-2000 ?

(3) Whether the burden lies upon the Department to establish aluminium grills, aluminium diffusers and dampers fall under the category of ''refrigerators and air conditioning plant and appliances'' and the Department having not produced any material or evidence before the assessing authority or before the Trade Tax Tribunal, hence these articles of aluminium cannot be subjected to tax at the rate of 15 per cent, or 16 per cent, instead of eight per cent?

(4) Whether in view of the facts and circumstances of the case the Tribunal was justified in holding that since the applicant had sold aluminium articles to M/s. Voltas India Limited, as one of the customers, hence it should be treated as sale by completely overlooking the fact that there is no material on record that M/s. Voltas India Limited has used these aluminium grills, diffusers and dampers as component parts of air-conditioning plant and refrigeration ?

(5) Whether in absence of any material being there that these aluminium grills, diffusers and dampers which are exclusively made of aluminium and used in kitchen, toilets, doors, and windows and is used for the purposes of safety, for fresh air and for safety from direct sun light and for protection from rains/dust cannot be treated as refrigeration and air-conditioning plant and appliances or its component parts and accessories, the order passed by the Trade Tax Tribunal is valid and justified ?

(6) Whether aluminium grills, aluminium diffusers and dampers are taxable as unclassified item fall under entry ''refrigeration and air-conditioning plant and machinery'' ?"

I have heard learned counsel for the assessee and learned standing counsel for the State and have also perused the order passed by the Tribunal.

The Tribunal has considered the matter at great length and while examining the matter tried to rely upon the common parlance test to classify the item aluminium grills and has interpreted it to be meant to the part of the air-conditioning industry influenced by the fact that it found that some of the orders placed on the assessee-manufacturer from the air-conditioning industry, such as, M/s. Voltas Ltd. Therefore, upon examination of the items being manufactured by the assessee, it cannot be said that an aluminium grill on its own, can only be used by the air-conditioning industry.

On the contrary a aluminium grill can be used at any place in a house or, even in an industrial accommodation. One cannot confine its use or air-conditioning or cooling equipment alone. This issue has been examined extensively by the decision of this court in the case of Caryaire Equipments India Pvt. Ltd., Noida , [2004] UPTC 252, wherein this court while examining the same item has held that aluminium grills can be used in various rooms in the buildings, industrial sheds and car parking, etc., for ventilation and even for covering the opening of air-conditioning systems and, therefore, are only used as accessories but it cannot be said that they are an integral part of the air-conditioning system. The Tribunal has also not considered the fact that in the previous orders, the same items had not been considered as integral part of an air-conditioner or air-cooling equipment.

In view of the above, I am also of the opinion that aluminium grill cannot be said to be an integral part of the air-conditioning or air-cooling plant, and therefore, cannot be taxed at the rate of 15 per cent. The questions raised are answered in favour of the assessee and against the Department.

Thus, the revision is allowed. No order as to costs.