2011 (3) TMI 1198 - AT - Central Excise

Chiller packages installed in the premises of M/s. Hindustan Lever Limited by assessee - whether are excisable goods classifiable under Heading No. 8419.10 and liable to duty @ 40% ad valorem? - - Held that - The chiller plant erected and commissioned at site is an immovable property. Only the various components which has gone into the manufacture, therefore, can be removed and transported. The plant as a whole cannot be transported from one place to another. From the above it is clearly seen that the product in question, chiller plant, erected and commissioned at site by M/s. Voltas Limited out of duty paid components and erected and commissioned at the site of the factory premises of M/s. Hindustan Lever Limited cannot be called as goods and accordingly they are not liable to excise duty - decided in favour of Assessee.

Summary

Issues Involved:
Classification of chiller plant under Heading No. 8419.10 for excise duty liability, time-barred show cause notice, nature of chiller plant as movable or immovable property, applicability of CBEC circulars, interpretation of judicial pronouncements.

Analysis:

1. Classification of Chiller Plant: The case involved the classification of a chiller plant under Heading No. 8419.10 for excise duty liability. The department contended that the chiller plant installed at the customer's site was movable and thus liable to duty. However, the appellant argued that the chiller plant was part of a larger refrigeration system, immovable in nature, and not liable to excise duty. The Central Board of Excise and Customs' circular clarified that refrigeration systems as a whole are not excisable goods. The Tribunal found that the chiller plant, being part of the refrigeration system, was immovable and not subject to excise duty.

2. Time-Barred Show Cause Notice: The appellant contended that the show cause notice issued after 5 years from the activity's undertaking in 1996 was time-barred. The department argued that the notice was within time as per the completion date provided by the customer. The Tribunal noted the completion date and upheld the appellant's argument, stating that the notice was indeed time-barred.

3. Nature of Chiller Plant: The crucial issue was determining the nature of the chiller plant as movable or immovable property. The appellant asserted that the chiller plant, being part of a larger system and grouted to the ground, was immovable and not liable to duty. The Tribunal referred to judicial pronouncements and held that the chiller plant, being incapable of being moved as a whole, was immovable property and not subject to excise duty.

4. Applicability of CBEC Circulars and Judicial Pronouncements: The Tribunal extensively analyzed CBEC circulars and judicial precedents to ascertain the excisability of the chiller plant. The judgments in cases like Triveni Engineering & Industries Ltd. and Mahindra & Mahindra Ltd. were cited to support the appellant's argument regarding the immovable nature of the chiller plant. The Tribunal concluded that the chiller plant, being immovable and consisting of duty-paid components, was not liable to excise duty.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the lower appellate authority's orders and allowing the appeal based on the immovable nature of the chiller plant and its assembly out of duty-paid components. The judgment emphasized the distinction between movable parts and the immovable chiller plant, ultimately absolving it from excise duty liability.