2002 (10) TMI 392 - AT - Central Excise

Issues Involved:
1. Whether the assembly of various parts and accessories at site results in the creation of a generator set for classification under Chapter Heading 85.02 of CETA, 1985, or if it constitutes an immovable property.
2. Whether the extended period of five years for issuing a show cause notice under Section 11A(1) of the Central Excise Act, 1944, is applicable due to alleged willful suppression of facts with intent to evade payment of central excise duty.

Issue-wise Detailed Analysis:

1. Classification of Generator Set:
The primary issue was whether the assembly of parts at the site resulted in the creation of a generator set classifiable under Chapter Heading 85.02 of CETA, 1985, or if it constituted an immovable property. The Tribunal had initially remanded the case to the Commissioner for de novo consideration to determine if the generator set was an immovable property, as it was set up brick by brick and fixed to the earth, making it non-exigible.

The Commissioner, in his impugned order, relied on his earlier order, which had been set aside by the Tribunal. The Tribunal noted that the Commissioner failed to re-apply his mind and analyze the statement of Shri S. Viswanathan, which was crucial in determining whether an immovable property came into existence. The Tribunal found that the statement of Shri S. Viswanathan clearly established that the generator set was an immovable property, as it was permanently attached to the foundation and integrated with other auxiliary systems.

The Tribunal referred to the Supreme Court's judgment in Triveni Engineering & Indus. Ltd. v. CCE, which held that a steam turbine and alternator installed on a platform specially constructed on the land were immovable properties and not excisable goods. The Tribunal also cited similar decisions from other benches, reinforcing that the assembly of diesel generator sets at the site resulted in immovable property and not excisable goods.

2. Extended Period of Limitation:
The second issue was whether the extended period of five years for issuing a show cause notice under Section 11A(1) of the Central Excise Act, 1944, was applicable due to alleged willful suppression of facts with intent to evade payment of central excise duty.

The Tribunal found that the appellants had disclosed all material facts to the department as early as 1993, and there was no willful suppression. The department was aware of the facts, and the appellants had a bona fide belief that their activity did not result in the manufacture of excisable goods, based on a Board circular from 1986, which was withdrawn only in 1999. The Tribunal noted that the show cause notice issued on 19-1-1999 was beyond the period of five years from the date the department became aware of the facts, making the demand time-barred.

Majority Order:
The majority order, delivered by Member (Judicial) and the Third Member, held that the DG sets installed, tested, commissioned, and handed over by the appellants to M/s. Neyveli Lignite Corporation were not excisable as they constituted immovable property. Consequently, the demand for duty was unsustainable, and the appeal was allowed with consequential relief.

Separate Judgment by Member (Technical):
Member (Technical) delivered a separate judgment, disagreeing with the majority. He held that the DG sets were excisable goods as they were assembled before being fixed to the concrete foundation and were capable of being removed as such to the market. He also upheld the extended period of limitation, stating that the appellants had not taken a central excise license and had not sought clarification from the department, indicating willful suppression.

Conclusion:
The majority order concluded that the DG sets were immovable property and not excisable goods, and the demand for duty was time-barred. The appeal was allowed with consequential relief.

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