2003 (9) TMI 456 - AT - Central Excise

Issues:
1. Confirmation of demand of duty and imposition of personal penalty without Central Excise License.
2. Alleged manufacture of Sluice Gate and clearance without payment of duty.
3. Applicability of excise duty on projects undertaken by the appellants.
4. Commissioner's failure to consider relevant legal precedents.
5. Interpretation of the Karnataka High Court decision on non-excisable items.
6. Discrepancy between Commissioner's decision and legal precedents.
7. Adjudication based on precedents and confirmation of demand.

Issue 1:
The Commissioner confirmed the demand of duty and imposed a personal penalty on the appellants for engaging in the manufacture of Sluice Gate without a Central Excise License. The Commissioner alleged that the appellants failed to observe formalities under the Central Excise Tariff Act, 1985. The demand of duty amounted to Rs. 27,83,922.00, and a similar penalty was imposed on the appellants.

Issue 2:
The appellants were issued a show cause notice for the demand of duty for the period 1997-98 to 18-8-99, alleging that the appellant-company manufactured Sluice Gates and cleared them without paying duty. During investigations, a partner of the appellant-company confirmed their engagement in manufacturing machinery parts like Sluice Gates, hoists, and allied structures, along with subsequent assembly and erection at various sites.

Issue 3:
The appellants contended that they undertook turn-key projects through a tender process for different departments, involving drawing, designing, and commissioning at sites. They argued that the projects were not excisable items as they came into existence when embedded in the ground. Citing the Karnataka High Court decision, they asserted that hydraulic gates, hoists, and structurals were non-excisable items, a position upheld by the Supreme Court.

Issue 4:
The appellants brought relevant legal precedents, including the Karnataka High Court decision and a Supreme Court ruling, to the Commissioner's attention during adjudication. However, the Commissioner disregarded these precedents and erroneously confirmed the demand, considering the project as an excisable item.

Issue 5:
The Tribunal noted that the Karnataka High Court had ruled that the fabrication and assembly of hydraulic gates, hoists, and gantry cranes at a customer's site did not attract excise duty. The High Court held that such materials, made to specific requirements and embedded in the ground, were not excisable goods as they were not marketable. The Supreme Court's dismissal of the S.L.P. against the High Court's decision reinforced this position.

Issue 6:
Referring to the Karnataka High Court's decision and the Supreme Court's confirmation of the same, the Tribunal emphasized that the issue was settled law. Despite the appellants' reliance on these precedents, the Commissioner chose to ignore them and confirmed the demand based on other decisions.

Issue 7:
Given the clear precedent set by the Karnataka High Court decision, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellants. The Tribunal emphasized the necessity of following established legal principles and precedents in adjudicating such matters.

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