2007 (5) TMI 48 - AT - Central Excise

Demand,interest and penalty Revenue contended that appellant manufactured and cleared conveyor system which aid in movement of materials, considered as good and it was ineligible for benefit of Notification No.3/2001 held that system was not excisable

Summary

Issues:
Appeal against confirmation of duty demand, denial of benefit of exemption notifications, imposition of penalty and interest for non-payment of duty on Material Handling Systems.

Analysis:
The appeal was against the confirmation of duty demand and denial of exemption notifications for Material Handling Systems. The appellants, engaged in manufacturing such systems, argued that the items were immovable property once set up at the customer's premises, making them ineligible for duty. The Commissioner, however, rejected this argument, stating the items were not entitled to the benefit of the said Notification. The Chartered Accountant representing the appellants cited various judgments to support their claim, emphasizing that the issue was whether the product was immovable property, not its excisability. The Commissioner's decision was based on the belief that the entire conveyor system was not transportable, but the show cause notice did not allege this. The appellants contended they purchased duty-paying parts and assembled them into immovable property as per design. The Tribunal found merit in the appellants' argument, stating the entire system emerged as immovable property with civil construction, aligning with previous judgments.

In the case of McNally Bharat Engg., the Tribunal held that Material Handling Equipment becomes immovable when embedded in earth, similar to the present case. In Fenner (India) Ltd., the Mumbai Bench found conveyor systems to be immovable property due to assembly and civil work, a situation mirrored in this case. Similarly, in the TRF Ltd. case, the Mumbai Bench ruled belt conveyor systems as immovable and non-excisable. Given these precedents, which align with the facts of this case, the Tribunal set aside the impugned order and allowed the appeal.