2008 (7) TMI 1015 - AT - Central Excise

Summary

Issues involved: Appeal against Order-in-Original regarding excisability of items fabricated by the appellant and imposition of duty and penalties.

Summary:
The appeal was filed against Order-in-Original No. 35/2003-04 passed by the Commissioner of Central Excise, Visakhapatnam. The appellant, engaged in interior decoration work, was alleged to be manufacturing excisable furniture. The Tribunal remanded the matter to examine in light of relevant circulars and Supreme Court decisions. The impugned order was challenged by the appellants, who argued that the items manufactured by them, permanently fixed to walls, cannot be moved without damage, citing a Supreme Court ruling. They also contended that the longer period for issuing Show Cause Notice was unjustified due to doubts regarding excisability settled by the Supreme Court. The Tribunal found that the items fixed by the appellant cannot be considered furniture as per the cannibalization test, as established by the Supreme Court. Additionally, the demand was held to be time-barred. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.

The Tribunal carefully considered the issue and found that the items fabricated by the appellant, permanently fixed to the room, cannot be moved without damage, aligning with the Supreme Court's observations in Craft Interiors case. The test of cannibalization was applied, leading to the conclusion that the items cannot be considered furniture. The department's case was deemed weak on merits, and the demand was considered time-barred, warranting the setting aside of the impugned order and allowing the appeal with consequential relief.