2012 (9) TMI 77 - AT - Central Excise

Pre-fabricated segments and launching trusses - falling under Heading 8425 of the Central Excise Tariff - Demand of duty, interest and penalty thereon - Held that - As the launching trusses are trusses, which are steel structures fabricated from structural steel, with sophisticated equipment, moving forward on bridge piers span by span and are used for placing pre-fabricated segments on the piers the Commissioner in his order does not discuss as to how a launching truss, which is a giant steel structure, is covered by 8425 which defines Pully tackles and hoists, other then skip hoists; winches and capstans, Jacks . As decided in MAHINDRA & MAHINDRA LTD. Versus C.C.E., AURANGABAD, CHANDIGARH, KANPUR & CHENNAI 2005 (11) TMI 103 - CESTAT, NEW DELHI trusses are classifiable under heading no.73.08. Claim for exemption under Notification no.3/05-CE dated 24.2.2005 - Held that - As the Commissioner in his impugned order has not discussed the eligibility of the launching trusses for. notification no. 3/05-CE, probably for the reason as according to him launching trusses as classifiable under 8425 to which this notification is not applicable. But since the goods have been held to be classifiable under 73084000, the eligibility for notification no. 3/05-CE would have to be considered for which it has to be ascertained - and the matter is remanded to Commissioner for denovo adjudication - set aside the duty demanded - in favour of assessee.

Summary

Issues Involved:
1. Classification of launching trusses.
2. Marketability and excisability of launching trusses.
3. Eligibility for exemption under Notification No. 3/05-CE.
4. Duty demand and penalties imposed.

Issue-wise Detailed Analysis:

1. Classification of Launching Trusses:
The primary issue was whether the launching trusses fabricated by the appellant are chargeable to duty and under which heading they should be classified. The Department classified the launching trusses under heading 8425 of the Central Excise Tariff, which covers "Pully tackles and hoists, other than skip hoists; winches and capstans, Jacks." However, the Tribunal found that the launching trusses, being steel structures fabricated from structural steel and used for placing pre-fabricated segments on the piers, are more appropriately classifiable under sub-heading 73084000, which pertains to trusses. This conclusion was supported by the larger bench judgment in the case of Mahindra & Mahindra Ltd. Vs. CCE, which held that trusses are classifiable under heading 73.08.

2. Marketability and Excisability of Launching Trusses:
The Tribunal examined whether the launching trusses are marketable and hence excisable. The Department argued that the launching trusses are marketable products, citing the larger bench judgment in Mahindra & Mahindra Ltd. Vs. CCE, which stated that trusses are commercial articles with distinct character and identity. The Tribunal agreed, noting that trusses are recognized as marketable commodities in the field of structural engineering. Therefore, the launching trusses were deemed excisable goods chargeable to duty under sub-heading 73084000.

3. Eligibility for Exemption under Notification No. 3/05-CE:
The appellant claimed that the launching trusses, being fabricated at the site and site-specific, should be exempt from duty under Notification No. 3/05-CE, which prescribes a 'nil' rate of duty for goods of heading 7308 fabricated at the site of work for use in construction work at such site. The Tribunal noted that the Commissioner had not discussed the eligibility for this exemption, likely because he classified the trusses under heading 8425. Since the Tribunal reclassified the trusses under 73084000, it remanded the matter to the Commissioner to ascertain whether the launching trusses were fabricated at the site and used exclusively for the construction of the elevated viaduct at that site, thereby determining their eligibility for the exemption.

4. Duty Demand and Penalties Imposed:
The Commissioner had confirmed a duty demand of Rs. 2,72,74,400/- on the pre-fabricated segments and launching trusses, imposed an equivalent penalty on the appellant under Section 11 AC, and imposed a penalty of Rs. 50 Lakhs on Shri B.K. Sinha, Dy. General Manager of the appellant company under Rule 26 of Central Excise Rules, 2002. Additionally, the Commissioner ordered the confiscation of 810 prefabricated segments and 3 launching trusses valued at Rs. 16,55,00,000/- with an option to redeem on payment of a redemption fine of Rs. 4 crores. The Tribunal set aside these orders concerning the launching trusses and remanded the matter for de novo adjudication to determine the eligibility for exemption under Notification No. 3/05-CE. The duty demand and penalties would only arise if the appellant was found not eligible for the exemption.

Conclusion:
The Tribunal concluded that the launching trusses are excisable goods classifiable under sub-heading 73084000 and remanded the matter to the Commissioner to determine their eligibility for exemption under Notification No. 3/05-CE. The Tribunal set aside the duty demand, confiscation, and penalties related to the launching trusses, pending the outcome of the remanded adjudication.