2002 (1) TMI 840 - AT - Central Excise

Summary

Issues:
1. Marketability of the items in question
2. Eligibility for exemption under Notification No. 66/95-C.E.
3. Limitation period for the demand

Analysis:

Marketability of the items:
The case involved the assembly of turbo and alternator to form a turbo alternator. The department contended that this assembly amounted to the manufacture of Turbo/Steam generating sets under Heading 85.02 of the Schedule to the CETA, 1985. The Commissioner confirmed the duty demand on the generating sets manufactured at the project site, applying specific rates of duty and penalties. The appellants did not contest that the assembly amounted to manufacture but argued that the assembly did not satisfy the test of marketability. They relied on the Supreme Court judgment in the case of Triveni Engineering & Indus. Ltd. v. CCE, where it was held that a turbo alternator does not pass the test of marketability as it gets dismantled into its components on removal. The Tribunal, following the Supreme Court's decision, held that the assembly of turbo and alternator did not pass the test of marketability and excisability, thereby setting aside the duty demand and penalties.

Eligibility for exemption under Notification No. 66/95-C.E.:
The appellants also argued for the benefit of exemption under Notification No. 67/95-C.E. The Revenue representative opposed this, stating that the benefit was not applicable as the site could not be considered a factory under the Central Excise Act and the final product, electricity, was non-excisable. The Commissioner supported the denial of exemption based on these grounds. However, since the Tribunal ruled in favor of the appellants on the marketability issue, the discussion on exemption became moot.

Limitation period for the demand:
The appellants contended that the entire demand was time-barred as the department was aware of the erection and commissioning activities, and there were conflicting views in previous court decisions regarding the excisability of goods erected at the site. They argued that they were under a bona fide belief that the assembly and erection did not attract excisability. However, the Tribunal did not delve into this issue as it found in favor of the appellants on the marketability aspect.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal based on the finding that the assembly of turbo and alternator did not pass the test of marketability and excisability. Therefore, the duty demand and penalties were also set aside. The other issues of exemption eligibility and limitation period for the demand were not addressed due to the favorable ruling on the main issue.