2002 (1) TMI 483 - AT - Central Excise

Summary

Issues:
1. Liability to pay duty on the entire contract value of hydraulic lift.
2. Duty collection from customers not deposited with the revenue.
3. Imposition of penalties under various provisions.

Analysis:

Issue 1: Liability to pay duty on the entire contract value of hydraulic lift
The appellants were involved in the installation and erection of hydraulic lifts, manufacturing some components in their factory and obtaining others from external manufacturers. The Commissioner of Central Excise held that duty should be paid on the entire contract value of the hydraulic lift as the appellants were engaged in clearances of the entire lift in a dismantled condition. The appellants argued that the lift, when installed, becomes immovable property and is not excisable goods. They cited a Chennai Bench Tribunal case and Supreme Court judgments to support their position. The Tribunal agreed with the appellants, stating that duty should only be paid on the parts manufactured by them and cleared from their factory under a specific Central Excise Tariff heading.

Issue 2: Duty collection from customers not deposited with the revenue
The appellants admitted their liability to pay an amount collected from customers but not deposited with the revenue under Section 11D of the Central Excise Act, 1944. The Tribunal confirmed the demand for duty calculated in excess from the customers but not deposited to the Central Government.

Issue 3: Imposition of penalties under various provisions
A substantial penalty was imposed on the appellants under Section 11AC of the Act. However, as a major portion of the duty was set aside by the Tribunal, the penalty was reduced significantly. Additionally, penalties imposed under other rules were either set aside or reduced. The total penalty amount was adjusted accordingly based on the Tribunal's decision regarding the duty liability.

In conclusion, the Tribunal ruled in favor of the appellants regarding the duty liability on the hydraulic lift, directing payment only for the parts manufactured by them. The demand for duty collected from customers but not deposited was upheld. The penalties imposed were adjusted and reduced in light of the Tribunal's decision on the duty liability issue.