2010 (10) TMI 456 - AT - Central Excise

Demand - Classification - It is settled law that the burden to prove the exciseability is on the department - the goods have not reached the excisable stage and at any rate there is no removal to attract liability of duty - there is no need to go into other aspects as to whether the respondent is the manufacturer or the contractor, who was hired for fabrication of the vessel should be treated as manufacturer and as to whether Notification No. 67/95 is applicable or not - The goods should be excisable before any exemption notification can be considered - Decided in the favour of the assessee

Summary

Issues:
Appeal against order of Commissioner (Appeals) regarding excisability of M.S. storage tank, applicability of duty under CETA, 1985, and eligibility for exemption under Notification No. 67/95.

Analysis:

1. Excisability of M.S. Storage Tank:
The respondent procured duty paid items and hired M/s. M.G. Enterprises for fabrication of M.S. storage tanks. The department contended that the tank is excisable under chapter sub-heading No. 7309.00 of CETA, 1985. The original authority confirmed duty demand, but the Commissioner (Appeals) held that the tank was not movable, not manufactured by the respondent, and eligible for exemption under Notification No. 67/95. The department argued that the tank was movable, and the respondent should be considered the manufacturer. However, the Commissioner (Appeals) decision was upheld as the tank was incomplete, not utilized, and not "removed" for use, thus not reaching the excisable stage.

2. Manufacturer of M.S. Storage Tank:
The department contended that the respondent, providing raw materials and facilities, should be treated as the manufacturer, not the hired contractor. The Commissioner (Appeals) decision was supported by the respondent's advocate, emphasizing the sophisticated nature of the work done by the contractor. The Tribunal agreed with the Commissioner (Appeals) that the goods were incomplete, and the question of manufacturer identity did not need to be addressed due to the lack of excisability.

3. Eligibility for Exemption under Notification No. 67/95:
The department argued against the applicability of the exemption, citing that the goods did not qualify as capital goods under Rule 57Q of the Central Excise Rules. The respondent's advocate defended the exemption claim, stating the M.S. vessel could be classified as machinery or an accessory for manufacturing thinner and industrial solvents. However, the Tribunal did not delve into this issue as the goods did not reach the excisable stage, rendering the question of exemption moot.

In conclusion, the Tribunal rejected the department's appeal as the M.S. storage tank did not attract excise duty due to its incomplete state and lack of removal for use by the respondent. The cross objection in support of the Commissioner (Appeals) decision was also disposed of accordingly.