2014 (2) TMI 163 - AT - Central Excise

Duty demand - sizing and warping machines which is assembled at site - whether appellant is required to discharge the Central Excise duty on the machines parts of which were cleared on payment of appropriate duty and got assembled at the site of their purchasers, are liable for Central Excise duty as fully manufactured in the hands of main appellant - Held that - it transpires that the adjudicating authority has erred in coming to conclusion that he is empowered to the demand duty on sizing machines, which are assembled and comes into existence at the site of the buyers of the appellant which are situated beyond jurisdiction of adjudicating authority / the Commissioner of the Central Excise, Ahmedabad -I. In our view, the adjudicating authority has totally misread the provisions in as much as, he has recorded no findings on this specific averments, while it is admitted that sizing machines to come to existence, various parts are purchased by the appellant from outside and delivered by such sellers directly at the site of assembling. Appellants were informing the Department regarding the activities of manufacture of sizing machines / items thereof. We also find that appellant had informed the Department about the purchase of various parts which are required for erection / assembling of sizing machine at their customer s premises - The said correspondence clearly demonstrate that the appellant had not suppressed any facts from the Department; we are of considered view that there cannot be any demand by invoking extended period of limitation, in respect of demands on manufacturing of sizing machine - Decided in favour of assessee.

Summary

Issues:
1. Whether the appellant is liable to discharge Central Excise duty on machines assembled at the site of purchasers.
2. Jurisdiction of the adjudicating authority to decide duty liability.
3. Applicability of penalties and interest on duty demands.
4. Whether extended period of limitation can be invoked.
5. Consideration of duty liability on sizing machines.

Analysis:

Issue 1:
The main issue in the appeal was whether the appellant, a manufacturer of sizing and warping machines, is required to pay Central Excise duty on machines assembled at the site of purchasers. The adjudicating authority held that the appellant, responsible for erecting the machines, is liable for duty. However, the appellate tribunal differentiated between warping and sizing machines, upholding duty liability on warping machines but setting aside the demand on sizing machines as they were assembled at the buyers' premises.

Issue 2:
The jurisdiction of the adjudicating authority to decide the duty liability was contested. The tribunal found that the authority misinterpreted the provisions as sizing machines were assembled at the buyers' sites, beyond the jurisdiction of the authority. Citing relevant case law, the tribunal set aside the demand of Excise duty on sizing machines.

Issue 3:
Regarding penalties and interest, the tribunal upheld the duty liability on warping machines but directed a reworking of the duty amount due to the cum duty price consideration. The appellant was held liable to pay interest and a penalty under Section 11AC of the Central Excise Act, 1944, with a 25% reduction in penalty amount.

Issue 4:
The appellant argued against the invocation of the extended period of limitation, stating that they had filed monthly returns and corresponded with authorities regarding clearances and purchases. The tribunal agreed that no suppression of facts occurred, leading to the setting aside of demands based on the extended limitation period.

Issue 5:
The tribunal found merit in the appellant's contentions that the demands on sizing machines should be set aside due to jurisdictional issues and lack of suppression of facts. Correspondence with authorities and informing them of manufacturing activities supported the decision to nullify duty demands on sizing machines and penalties imposed on the appellant and partner.

In conclusion, the tribunal disposed of the appeals by upholding duty liability on warping machines, revising the duty amount, setting aside penalties on sizing machines, and nullifying penalties on the appellant and partner due to jurisdictional and limitation issues.