2007 (8) TMI 14 - SC - Central Excise

Classification Revenue contended that fabrication of plant out of duty paid bought out items amount to manufacture of a new marketable commodity and accordingly duty demanded alongwith penalty Matter remanded for fresh consideration

Summary

Issues:
Classification of "electric power fencing system by use of solar power" under sub-heading 8543.90, invocation of larger period under Section 11A of the Central Excise Act, 1944, duty demand confirmation, penalty imposition under Section 11AC, applicability of Modvat credit and cum duty benefit, time-barred demands, reduction of penalty on Managing Director, excisability of plant and machinery assembled at site, remand for fresh consideration based on relevant judgments and circular.

Classification Issue:
The Commissioner confirmed duty demands on the "electric power fencing system by use of solar power" under sub-heading 8543.90 as "other electrical machinery and apparatus having individual functions." The Tribunal upheld this classification, considering the item as an electrical appliance with individual functions, powered by solar power, and satisfying the tariff description. The Tribunal also addressed the appellant's contention regarding the item's classification and its components, emphasizing the assembly process and the distinct nature of the final product.

Time-barred Demands and Penalty Reduction:
The Tribunal acknowledged the appellant's plea regarding time-barred demands, citing relevant judgments like Cosmic Dye Chemical v. CCE, Bombay, and reduced the penalty on the Managing Director from Rs. 5 lakhs to Rs. 50,000. The matter was remanded to the Commissioner for reworking duty computation, extending Modvat credit and cum duty benefit as requested by the appellant.

Excisability of Plant and Machinery Issue:
The appeal raised concerns regarding the excisability of plant and machinery assembled at the site. Citing various judgments, Circular No. 58/1/2002-CX clarified the criteria for excisability, emphasizing the new identity, character, and use of manufactured goods distinct from their components. The Circular differentiated between systems like refrigeration/air conditioning plants and individual machines, providing guidance on classification and excisability.

Remand and Fresh Consideration:
Considering the factual aspects overlooked by the Tribunal, the matter was remitted for fresh consideration based on relevant judgments like Commissioner of Central Excise, Indore v. Virdi Brothers and Circular No. 58/1/2002-CX. The decision aimed to ensure a comprehensive evaluation of the excisability of plant and machinery assembled at the site, aligning with legal precedents and clarifications provided by the Circular.

This detailed analysis covers the classification issue, time-barred demands, penalty reduction, excisability of plant and machinery, and the remand for fresh consideration, addressing the legal complexities and interpretations involved in the judgment.