2019 (5) TMI 127 - AT - Central Excise

Excisability/marketability - kolas which are used for Breakwater's while constructing Krishnapatnam Port - HELD THAT - It is undisputed that the respondent herein was awarded a EPC contract for construction of port at Krishnapatnam Port and the entire EPC contract included construction of Breakwaters in order to make the water still and come in the port area for which they produced the said kolos. It is also undisputed that this kolas were manufactured keeping in mind the specific requirements of Krishnapatnam Port. Also, Revenue has not produced any evidence to even indicate that this kolas are be used at some other port. Demand cannot sustain - appeal dismissed - decided against Revenue.

Summary

Issues:
Interpretation of marketability of goods under Central Excise duty laws in the context of EPC contract for construction of port and manufacturing of specific Armoured Cement Blocks known as "Kolos" for Breakwaters.

Detailed Analysis:

Issue 1: Marketability of Armoured Cement Blocks ("Kolos")
The case involved a dispute regarding the marketability of Armoured Cement Blocks known as "Kolos" manufactured by the respondent for the construction of Breakwaters in a port under an EPC contract. The Revenue contended that the Kolos were marketable as they were used in Breakwaters and could be used elsewhere based on local conditions. However, the Adjudicating Authority and the First Appellate Authority held that the Kolos were port-specific and not suitable for sale elsewhere, relying on technical specifications and the purpose-specific nature of the goods. The authorities emphasized that the Kolos were designed based on specific requirements of the port, including factors like weather conditions, water density, and tidal levels, making them unsuitable for general marketability. The judgment cited precedents and technical details to support the conclusion that the Kolos were not marketable goods under Central Excise duty laws.

Issue 2: Application of Precedents and Technical Specifications
The judgment extensively analyzed the technical specifications and design considerations of the Breakwaters in the port construction project to determine the marketability of the Kolos. It compared the specific nature of the Kolos with other structural components like girders used in different contexts, emphasizing the unique characteristics and purpose-driven design of the Kolos. The judgment referred to case laws and technical details to establish that the Kolos were tailored for the specific needs of the port and could not be considered as general marketable goods. The authorities' findings were based on a detailed examination of the technical aspects of the construction project and the specific requirements of the Breakwaters, reinforcing the conclusion that the Kolos were not suitable for sale outside the port context.

Conclusion:
The appellate tribunal upheld the impugned order, dismissing the Revenue's appeal on the grounds that the Kolos manufactured by the respondent were not marketable goods under Central Excise duty laws. The judgment highlighted the port-specific nature of the Kolos, their design based on unique parameters, and the absence of evidence supporting their marketability beyond the specific project for which they were created. By analyzing technical specifications, precedents, and the purpose-driven design of the Kolos, the tribunal concluded that the goods did not meet the criteria for marketability, as established in relevant case laws and the specific requirements of the construction project.