2001 (11) TMI 785 - AT - Central Excise

D.G. sets - Excisability - Manufacturer - Duty liability - Demand - Manufacture, place of - Jurisdiction - Goods, immovable property - Evidence

Summary

Issues Involved:
1. Whether the appellants were engaged in manufacturing activities.
2. Whether the appellants were liable to pay Central Excise duty for the assembled D.G. sets.
3. Jurisdiction of the Commissioner to initiate proceedings.
4. Applicability of relevant case laws and precedents.
5. Whether the matter should be remanded for de novo consideration.

Issue-wise Detailed Analysis:

1. Engagement in Manufacturing Activities:
The appellants were accused of manufacturing and selling D.G. sets after assembling and commissioning them. They claimed to be mere dealers, purchasing duty-paid items and conducting trading activities without any manufacturing at their premises. The appellants argued that the assembly of D.G. sets was done by separate contractors at various project sites, thus not constituting manufacturing activities on their part.

2. Liability to Pay Central Excise Duty:
The Commissioner confirmed a duty demand of Rs. 17,01,614/- under Rule 9(2) read with the proviso to Section 11A(1) of the CEA and imposed a penalty of Rs. 2,00,000/- under Rule 173Q. The appellants contended that the assembly of D.G. sets at various sites did not result in the creation of excisable goods, as the final product became immovable property. They relied on several judgments, including the Supreme Court's decision in Triveni Engineering Ltd., which held that items assembled at site and becoming immovable property are not considered goods.

3. Jurisdiction of the Commissioner:
The appellants argued that the Commissionerate had no jurisdiction to initiate proceedings against them for activities carried out at various sites across the country. The Commissioner did not address this jurisdictional issue adequately, leading to questions about the validity of the demand.

4. Applicability of Relevant Case Laws and Precedents:
The Commissioner relied on the judgment in Narne Tulaman Manufacturers Pvt. Ltd. v. CCE, which the appellants argued was not applicable to their case. They cited several other judgments, including Quality Steels and Tubes v. CCE and Mittal Engineerings v. CCE, which distinguished the facts of their case and supported their contention that their activities did not constitute manufacturing.

5. Remand for De Novo Consideration:
One member (T) suggested remanding the case for de novo consideration, arguing that the appellants' activities might constitute manufacturing and that the lower authority should re-examine all evidence. Another member (J) disagreed, stating that the appellants were not engaged in manufacturing and that the demand was based on incorrect assumptions and lacked jurisdictional validity.

Majority Decision:
The third member (J) agreed with the member (J) who found that the appellants' activities did not constitute manufacturing and that the Commissioner lacked jurisdiction. The majority decision set aside the impugned order and allowed the appeal, providing consequential relief to the appellants.

Conclusion:
The Tribunal concluded that the appellants were not engaged in manufacturing activities and that the duty demand was invalid due to lack of jurisdiction and incorrect application of relevant case laws. The appeal was allowed, and the impugned order was set aside.