2007 (9) TMI 201 - AT - Central Excise

Grinding room/enclosure - in the present case the erection was done piece by piece and along with civil work and it had brought in existence immovable property - They contend that it becomes an immovable property, as it cannot be removed and if it is removed, it becomes a waste - so no duty is leviable thereon - appellants being young entrepreneurs held bonafide belief that they are eligible for certain exemption as well as for waiver of duty - penalty in this matter is restricted to Rs.25,000

Summary

Issues:
1. Duty liability on the manufacture of Pollution Control Equipments and Parts thereof.
2. Excisability of the item grinding room/enclosures.
3. Imposition of penalty under Section 11AC.

Issue 1: Duty liability on the manufacture of Pollution Control Equipments and Parts thereof.

The appeal arose from the dismissal of contentions regarding the SSI exemption limit, clandestine removal, and the creation of new goods. The appellants manufactured Pollution Control Equipments and Parts falling under various Chapter headings. The focus was on the non-excisability of the grinding room/enclosures created with civil work. The Order-in-Original referenced the Sirpur Paper Mills case to establish that fixing something to the ground does not make it immovable property. The appellants did not contest the duty liability on Pollution Control Equipments but sought waiver for the grinding room/enclosures.

Issue 2: Excisability of the item grinding room/enclosures.

The learned Counsel argued that the grinding room is immovable property as it cannot be removed without becoming waste. They cited relevant judgments to support their contention. The grinding room was described as a soundproof enclosure with specific features for air ventilation and exhaust systems, making it an integral part of the immovable property. The Tribunal agreed, applying principles from previous cases, and ruled that no duty is leviable on the grinding room/enclosure.

Issue 3: Imposition of penalty under Section 11AC.

The appellants challenged the excessive penalty imposed, claiming no intention to evade duty. The learned JDR opposed, stating the penalty was justified under Section 11AC. The Tribunal considered the facts and circumstances, noting the appellants' genuine belief in eligibility for exemptions. Citing the State of Madhya Pradesh v. BHEL case, the Tribunal exercised discretion to reduce the penalty to Rs. 25,000. The Commissioner was directed to re-work the duty amount excluding the grinding room/enclosure. The appeal was disposed of accordingly.

This detailed analysis covers the duty liability on Pollution Control Equipments, the excisability of the grinding room/enclosures, and the imposition of penalties under Section 11AC as addressed in the judgment by the Appellate Tribunal CESTAT, Bangalore.