2012 (6) TMI 530 - AT - Central Excise

Duty demand on fabrication of nitrogen/oxygen plant as it amounts to manufacture - assessee contested to grant of exemption in view of the provisions of Notification no. 67/95-CE - Held that - As the Nitrogen/oxygen plants are assembled at the customers place i.e factory of the manufacturer the Notification no. 67/95-CE dt. 16.03.1995 provides exemption from payment of excise duty in respect of capital goods as defined in the Cenvat Credit Rules manufactured in the factory and used in the factory of production if the same are used in the manufacture of excisable goods - the applicants had made out a strong case in their favour in view of the provisions of Notification no. 67/95-CE - the pre-deposit of dues are waived and recovery of the same is stayed during the pendency of the appeal

Summary

Issues:
1. Waiver of pre-deposit of duty, interest, and penalty.
2. Classification of Nitrogen/Oxygen Plants as excisable goods.
3. Applicability of Notification no. 67/95-CE to capital goods used in the manufacture of excisable goods.

Analysis:
Issue 1: The applicant sought waiver of pre-deposit of duty, interest, and penalty amounting to Rs.1,96,36,714. The contention of the applicant was that the Nitrogen/Oxygen plants, once assembled at the customer's site, became immovable property and thus not excisable goods. They also argued that the capital goods used in manufacturing the plants were exempted under Notification no. 67/95-CE.

Issue 2: The Revenue argued that the assembly of the Nitrogen/Oxygen plants constituted manufacture, making them dutiable products. They relied on precedents such as the decision in the case of Mahindra & Mahindra Ltd. vs. CCE, Aurangabad, and the Supreme Court rulings in the cases of Narne Tulaman Manufacturers Pvt. Ltd. vs. Collector of C.E and Solid & Correct Engineering Works. The Revenue contended that the plants were not immovable property and were subject to duty.

Issue 3: The Tribunal noted that the Nitrogen/Oxygen plants were assembled at the customer's factory, not the manufacturer's premises. However, the Tribunal found that the exemption under Notification no. 67/95-CE applied to capital goods manufactured in the factory of production and used in the manufacture of excisable goods. As the plants were fabricated in the customer's factory and used in manufacturing excisable goods, the Tribunal held that the appellant had a strong case for exemption. Consequently, the pre-deposit of dues was waived, and recovery stayed during the appeal's pendency.

In conclusion, the Tribunal granted the waiver of pre-deposit based on the application of Notification no. 67/95-CE to the capital goods used in the manufacture of excisable goods, despite the Revenue's arguments regarding the dutiability of the Nitrogen/Oxygen plants. The case was directed for regular hearing on a specified date.