2001 (9) TMI 688 - AT - Central Excise

Issues Involved:
1. Whether Electrostatic Precipitator (ESP) and Conveyor Belt System, erected at site, are "goods" exigible to Central Excise duty.
2. Marketability and transportability of ESP and Conveyor Belt System.
3. Time-barred demand of duty.
4. Penalty and interest under Central Excise Act.

Detailed Analysis:

1. Exigibility to Central Excise Duty:
The primary issue is whether the ESP and Conveyor Belt System, erected at the site, qualify as "goods" and are thus subject to Central Excise duty. The Appellant argued that both systems were immovable properties, erected bit by bit with civil foundations and permanent structures, making them non-transportable and non-marketable. The Appellant relied on the Supreme Court's decision in Triveni Engineering & Industries Ltd., which held that machinery fixed on a concrete base does not meet the test of permanency and marketability required for excise duty.

2. Marketability and Transportability:
The Appellant contended that both systems came into existence as immovable properties and could not be transported or marketed without dismantling, which would damage the systems. The Appellant cited various judgments, including Quality Steel Trubo (P) Ltd. and Fenner India Ltd., to support the argument that systems erected on-site using various components are not excisable goods. The Respondent, however, argued that the parts/components were in SKD (Semi-Knocked Down) conditions, constituting a complete machine, and thus marketable. The Respondent also mentioned an instance where M/s. ACC Ltd. transferred an ESP between factories, suggesting marketability.

3. Time-Barred Demand of Duty:
The Appellant argued that the demand for duty was time-barred since the show cause notice was issued on 13-12-97, while the ESP and Conveyor Belt were erected between 1991 and 1993. The Appellant highlighted that the Department was aware of the erection activities through various communications and inspections, negating any suppression of facts. The Respondent countered that the demand was not time-barred as the investigation was ongoing, and the show cause notice was issued post-investigation.

4. Penalty and Interest:
The Appellant argued against the imposition of penalties and interest, citing that Sections 11AC and 11AB of the Central Excise Act came into effect after the relevant period. The Appellant also claimed no contravention of any legal provisions, thus negating the applicability of Rule 173Q penalties.

Judgment:
The Tribunal held that the Revenue failed to establish the marketability of the ESP and Conveyor Belt System. The detailed process of erection and installation, which involved permanent civil foundations and structures, indicated that these systems were immovable properties. The Tribunal applied the test of permanency from the Supreme Court's decision in Municipal Corporation of Greater Bombay v. Indian Oil Corporation Ltd., concluding that the systems could not be taken to the market "as such" and sold. The Tribunal also found the example of ESP transfer by M/s. ACC insufficient to prove marketability. Consequently, the Tribunal set aside the impugned order and allowed the appeal, ruling that the ESP and Conveyor Belt System were not exigible to Central Excise duty.

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