2002 (4) TMI 402 - AT - Central Excise

Summary

Issues:
Whether Hexane Storage Tanks, crude oil storage tanks, and water storage tanks are liable to excise duty.

Analysis:
The Appeal filed by M/s. Progressive Extraction & Exports Ltd. raised the issue of the liability of Hexane Storage Tanks, crude oil storage tanks, and water storage tanks to excise duty. The Appellant argued that these tanks are not standalone storage tanks but integral parts of the solvent extraction and refining plant, classifiable as plant under Heading 84.19 of the Tariff. They contended that the tanks being immovable property and not marketable, should not attract excise duty. The Appellant also claimed eligibility for the small scale exemption under Notification No. 1/93-C.E. and raised the defense of the demand being time-barred. Various legal precedents and a clarification by the Central Board of Excise and Customs were cited in support of their arguments.

In response, the Departmental Representative emphasized that the tanks were movable, as evidenced by the fabrication process and the shifting of tanks to specially prepared pits. The Department argued that the tanks should be classified under Heading 73.09 of the Tariff and not as plants under Heading 84.19. The Department also raised concerns regarding the non-disclosure of tank fabrication activities to the Department and the lack of statutory records, invoking the extended time limit for demanding duty.

Upon consideration, the Tribunal found that the factual position regarding the movability of the tanks was not clearly established from the records. Therefore, the matter was remanded to the Adjudicating Authority for further examination of facts related to fabrication, size, and method of installation of the tanks. The Tribunal agreed with the Department on the invocability of the extended time limit due to non-disclosure of fabrication activities. It was held that the tanks should be classified under Heading 73.09 and not as plants under Heading 84.19. The Tribunal set aside the penalty and interest imposed under Sections 11AC and 11AB of the Central Excise Act, as the period involved predated the enforcement of Section 11AC. The Adjudicating Authority was directed to re-examine the availability of small scale exemption and was granted discretion to impose penalties under Rule 173Q of the Central Excise Rules if deemed necessary.