2013 (11) TMI 876 - AT - Central Excise

Classification of goods supply of pre-fabricated building - Advelorem or Nil rate of duty - Whether the goods would be classifiable under Heading 7308 @ 16% advelorem or under Heading 94.06 at nil rate of duty Held that - The adjudicating authority observed that though the purchase order termed the supply as supply of pre-fabricated building , the actual supply made by the assessee are only structures - They were undertaking the work of erection of structure at site supplied by them, all other items of works were bought out items - The AC sheets which cover the structure are supplied by the customers themselves - The work order is not for a complete building but it is only for supply of pre-fabricated structure along with certain fixation work to be done at the site. The building must have a wall as is apparent from the HSN Explanatory Notes. It has been held that the structure supplied by the appellants in unassembled form cannot be treated as prefabricated building under Tariff heading 94.06. - Decided against the assessee. In respect of other purchase orders - Held that - The classification as pre-fabricated building cannot be changed for the reasons that roofing sheets or walls were bought-out items or supplied by the buyer of the product - The classification has to be decided by the facts whether the goods manufactured are made to measurements of a building and that the components manufactured and supplied will give essential characteristics of a building as may be seen from purchase orders and bills of materials. - it would be covered within the Heading 94.06 as pre-fabricated building. So, the goods supplied in respect of the other purchase orders are rightly classifiable under sub-heading No.9406.00. - Decided in favor of assessee. The finding of the adjudicating authority that though the purchase order terms the supply as supply of pre-fabricated building , the actual supply made by the assessee are steel structure is without examining all the purchase orders in proper manner - matter remanded back to the original authority to re-quantify the demand.

Issues Involved:
1. Classification of goods under Central Excise Tariff Act, 1985.
2. Applicability of duty rates.
3. Validity of purchase orders and their implications on classification.
4. Examination of adjudicating authority's and Commissioner (Appeals)' orders.
5. Penalty imposition.

Issue-Wise Detailed Analysis:

1. Classification of Goods under Central Excise Tariff Act, 1985:
The primary issue revolves around whether the goods cleared by the respondents should be classified under Heading 7308, which attracts a duty rate of 16% ad valorem, or under Heading 9406, which carries a nil rate of duty. The respondents claimed their goods as 'pre-fabricated buildings' under sub-heading 9406.00, while the Revenue argued they were 'pre-fabricated structures' under Heading 73.08.

2. Applicability of Duty Rates:
The respondents initially classified their goods under Heading 73.08 and paid the applicable duty. However, they later revised their classification to sub-heading 9406.00, claiming a nil rate of duty. The Revenue issued five Show Cause Notices proposing a demand of duty and penalties, arguing that the goods were incorrectly classified and should attract a 16% duty rate.

3. Validity of Purchase Orders and Their Implications on Classification:
The Commissioner (Appeals) examined various purchase orders and concluded that the goods supplied were indeed pre-fabricated buildings. The Revenue contended that the respondents did not supply complete buildings but only structures, which should be classified under Heading 73.08. The Tribunal noted that the classification should be based on whether the goods supplied had the essential characteristics of pre-fabricated buildings, even if some components like walls and roofs were supplied by the buyers.

4. Examination of Adjudicating Authority's and Commissioner (Appeals)' Orders:
The adjudicating authority classified the goods under Heading 73.08 and confirmed the demand of duty. The Commissioner (Appeals) set aside this order, holding that the goods were pre-fabricated buildings under Heading 9406. The Tribunal agreed with the Commissioner (Appeals) for most purchase orders but found that some orders, like those from Godrej Agrovet Ltd. and Godrej & Boyce Ltd., involved structural work rather than complete pre-fabricated buildings.

5. Penalty Imposition:
The Tribunal concluded that the issue was a classification dispute and that penalties were not sustainable. The original authority was directed to re-quantify the demand based on the modified classification.

Conclusion:
The Tribunal upheld the classification of most goods as pre-fabricated buildings under Heading 9406, except for specific orders from Godrej Agrovet Ltd. and Godrej & Boyce Ltd., which were classified under Heading 73.08. The penalties were set aside, and the original authority was directed to re-quantify the demand accordingly.

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