2005 (8) TMI 6 - AT - Central Excise

Manufacture - movable - solar poer electric fencing system cabable of being relocated after dismantling without being destroyed - liable to duty

Summary

Issues: Classification of electric power fencing system under sub-heading 8543.90, Invocation of larger period under Section 11A, Penalty on Managing Director, Modvat credit, Time-barred demands

Classification Issue:
The appeals arose from confirming demands on bringing into existence an electric power fencing system using solar power, classified under sub-heading 8543.90. The Commissioner invoked a larger period under Section 11A to confirm duty demand and impose a penalty. The Revenue argued that the process of erection of the fence at the site creates a new product distinct from all used products, which can be moved without modification, making it excisable under the said tariff heading. The appellants contended that the item is fixed on walls and poles, not classifiable as electrical machinery under Heading 8543.90, and relied on various judgments to support their position.

Time-barred Demands Issue:
The appellants argued that the demands are mostly time-barred as the department was aware of all details collected in 1998, and the show cause notice issued in 2003 should make the demands time-barred. They cited several judgments to support their plea, emphasizing that the demands are partly time-barred.

Modvat Credit Issue:
The appellants requested Modvat credit and cum-duty benefit, citing judgments such as Keltron v. CCE, Cochin and others. They argued that duty paid inputs should be granted Modvat credit, and the duty should be treated as cum-duty, as per relevant judgments.

Penalty on Managing Director Issue:
A penalty of Rs. 5 lakhs was imposed on the Managing Director, which the Tribunal deemed excessive and reduced to Rs. 50,000. The matter was remanded to the Commissioner for reworking after granting Modvat benefit and treating clearances as cum-duty, as requested by the appellants based on relevant judgments.

Judgment Summary:
After considering the arguments and examining the impugned order and evidence, the Tribunal concluded that the electric power fencing system is classifiable under sub-heading 8543.90 as an electrical appliance with individual functions. The item, powered by solar energy, is movable and satisfies the tariff description. The Tribunal accepted the plea that the demands are partly time-barred due to the department's awareness of details collected in 1998. The penalty on the Managing Director was reduced, and the matter was remanded for reworking after granting Modvat credit and treating clearances as cum-duty. The appeals were allowed for recomputation of duty, with the final order pronounced on 8-8-2005.