2009 (3) TMI 677 - AT - Central Excise

Summary

Issues:
1. Whether duty can be demanded on a Pneumatic Conveying System.
2. Whether the value of bought-out items should be included in the assessable value of the system.
3. Whether the erection of the Pneumatic Conveying System constitutes 'manufacture' under the Central Excise Act, 1944.

Issue 1:
The Commissioner demanded duty on a Pneumatic Conveying System, arguing that the system, whether manufactured or bought-out, was duty-paid and hence excisable. The appellant contended that the system was not marketable and therefore not excisable. They relied on various Supreme Court decisions and a Board's Circular. The Respondent argued that assembling components at the site constitutes 'manufacture' as per Section 2(f) of the Central Excise Act, citing relevant case law. The Tribunal noted the duty was paid on the system as a whole, and the question was whether the duty paid was sufficient, not whether the system was excisable. It was held that the appellants did not prove a case for waiver of pre-deposit and stay of recovery.

Issue 2:
The question arose whether the value of bought-out items should be included in the assessable value of the Pneumatic Conveying System. The Tribunal noted that the Apex Court's decision in MIL India Ltd. held that even assembling items at the site could constitute 'manufacture' under the excise law. The Tribunal emphasized that the erection of the system amounted to 'manufacture,' and the value of bought-out components should be included in the assessable value. The appellants were directed to pre-deposit a specific amount within a given period.

Issue 3:
The Tribunal considered whether the erection of the Pneumatic Conveying System constituted 'manufacture' under the Central Excise Act, 1944. It was observed that the erection of the system at the customer's site by the assessee amounted to 'manufacture.' The Tribunal emphasized that the appellants had an arguable case but needed to provide evidence of financial hardships. A pre-deposit amount was directed to be made within a specified timeframe. Compliance was to be reported on a set date.