2019 (2) TMI 1486 - AT - Central Excise

Excisability/movability - DG sets - immovable property or not - demand of short paid duty alongwith interest and penalty - Held that - The duty has been demanded on the clearance of goods from the premises of the appellants and not on the act of erection of the D G Set in their premises. It is thus evident that demand of duty is not in respect of D G Set erected at the site, which becomes immovable property - Since no duty has been demanded on the D G Set which was immovable property the decision relied upon by the Appellants are not applicable in the present case. In the present case appellants have themselves effected the clearance of the said goods as is evident from the invoice No 137 dated 1.03.2000, Items of 6 MW DG Set and not the DG Set as such. They have also shown the value of goods cleared as ₹ 5,30,00,000/-. And the classification of the goods as per the appellants themselves is under heading 8502 of the First Schedule to Central Excise Tariff Act, 1985. When the appellants have themselves declared the goods as classifiable under Heading No. 8502, and excisable as they have paid certain excise duty on the same, they should not have any grievance with the order of Commissioner up-holding everything as declared in their invoice and clearance documents. Demand of interest made under Section 11A - Held that - Since the differential duty in the present case became payable on determination made by Commissioner under Section 11A (2) the demand of interest is justified. Time limitation - Held that - In this case the demand for payment of differential duty has been made within period of one year from the date of filing the returns i.e. 06.04.2000 for the clearance made vide invoice dated 1.3.2000 - the demand is not barred by limitation. Appeal dismissed - decided against appellant.

Issues Involved:
1. Excisability and dutiability of the DG Set.
2. Classification and valuation of the DG Set.
3. Applicability of Rule 57S(2)(b) of the Central Excise Rules, 1944.
4. Demand of interest under Section 11AB of the Central Excise Act.
5. Limitation period for issuing the demand notice.

Issue-wise Detailed Analysis:

1. Excisability and Dutiability of the DG Set:
The appellants contended that the 6 MW DG set installed in their factory as a captive power plant was not "goods" attracting excise duty, and that the power plant was an immovable property. The Tribunal, however, observed that the Central Excise Tariff specifies "Electric generating sets and Rotary converters" under Chapter Heading No. 85.02, making them excisable goods. The sale of the DG set to M/s Jindal Strips Ltd was evidenced by an invoice indicating the classification under Heading No. 85.02 and payment of excise duty. The Tribunal concluded that the DG set was sold as "items of 6 MW DG Set" and not as immovable property, thus making it dutiable.

2. Classification and Valuation of the DG Set:
The appellants classified the DG set under Heading 8502 and paid duty at 8% on a depreciated value. The Tribunal noted that the goods were cleared by classifying them under heading 8502 and on payment of duty as indicated on the invoice. The Commissioner determined the duty payable by applying the correct rate of 16% on the declared value of ?5.30 crores, resulting in a short levy of ?50,56,538/-. The Tribunal upheld this classification and valuation, rejecting the appellants' argument that the duty should be based on the capitalized value of ?7.54 crores.

3. Applicability of Rule 57S(2)(b) of the Central Excise Rules, 1944:
The appellants argued that they cleared the components of the DG set after reversing the MODVAT Credit on the depreciated value as per Rule 57S(2)(b). The Tribunal found that the rule applies to situations where capital goods are removed as such, either without being used or after being used in the factory. However, in this case, the DG set was assembled from various components and parts, which were cleared as a complete set under Heading No. 85.02. Therefore, Rule 57S(2)(b) was not applicable, and the duty liability should be based on the assembled DG set.

4. Demand of Interest under Section 11AB of the Central Excise Act:
The appellants challenged the demand of interest, arguing that it was beyond the scope of the show cause notice. The Tribunal referred to Section 11AB, which mandates the payment of interest on any duty that has not been levied or paid. Since the differential duty became payable on determination by the Commissioner, the demand for interest was justified.

5. Limitation Period for Issuing the Demand Notice:
The appellants contended that the demand was time-barred. The Tribunal noted that the liability to pay excise duty arose when the DG set was cleared for home consumption. The show cause notice was issued within one year from the date of filing the returns, which was within the limitation period specified under Section 11A of the Central Excise Act. Therefore, the demand was not barred by limitation.

Conclusion:
The Tribunal dismissed the appeal, upholding the Commissioner's order that confirmed the demand for central excise duty of ?50,56,538/-, along with interest, on the clearance of the DG set. The Tribunal found no merit in the appellants' arguments and confirmed that the demand was justified and within the limitation period.

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