2020 (9) TMI 643 - AT - Central Excise

Recovery of Short paid duty - fabrication of steel tanks for Oil Companies - allegation that the appellants did not obtain Central Excise Registration even after exceeding the SSI exemption limit of turnover ₹ 1.00 Crore - Extended period of limitation - whether the tanks fabricated by the assessee are goods and whether they are liable to Central Excise duty? - Difference of Opinion - Majority decision. HELD THAT - The appellant manufacture tank in their factory, although some parts of the tanks are finally attached at the buyers premises only. I agree with the submission of the learned counsel for the appellant that the impugned goods when left the factory is incomplete and unfinished tanks. But they are still classified as tanks and is liable to excise duty under CETH 73090090 of CETA. The learned Member(Technical) has considered the definition of goods and the definition of attached to earth and has rightly relied upon the decision of the Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD VERSUS SOLID CORRECT ENGINEERING WORKS ORS. 2010 (4) TMI 15 - SUPREME COURT where it was held that the plants in question were not immovable property so as to be immune from the levy of excise duty. Further the issue involved in the present case is squarely covered by the Division Bench decision of the Delhi Tribunal in the case of M/S V.D. ENGINEERING VERSUS CCE, JABALPUR 2018 (6) TMI 863 - CESTAT NEW DELHI relied upon by the learned AR wherein identical goods were involved. Though the decision was rendered prior to the decision of this case, the same was not brought to the notice of the Bench at the time of hearing the matter - It was held in the case that Inasmuch as the storage tanks have arisen in the factory of the appellant, the liability for payment of excise duty gets fastened on the appellant. The impugned goods are liable to excise duty and the opinion expressed by the learned Member(Technical) is in accordance with law - In view of the majority decision, Central Excise demand is legally sustainable on merits for the normal period of limitation and the appeals are disposed of as follows (i) Demands for normal period, is confirmed in both the impugned orders. (ii) Demands for extended period is set aside. (iii) Cenvat credit is available to the assessees. (iv) The prices received by them may be taken as cum-duty prices and duty calculated accordingly. (v) All penalties are set aside. (vi) Appeals are remanded to the original authority for the limited purpose of computation.

Summary

Issues Involved:
1. Whether the tanks fabricated by the assessee are goods and liable to Central Excise duty.
2. Invocation of the extended period of limitation.
3. Entitlement to cum-duty price and CENVAT credit.
4. Imposition of penalties under Section 11AC.

Detailed Analysis:

1. Whether the tanks fabricated by the assessee are goods and liable to Central Excise duty:

The primary issue was whether the steel tanks fabricated by the assessee are considered "goods" under the Central Excise Act and thus liable for Central Excise duty. The assessees argued that the tanks were not complete when they left their premises and only became complete and immovable once installed at the buyers' premises. They contended that since the tanks were attached to the earth, they ceased to be goods and thus were not excisable.

The Tribunal examined the definition of "goods" and "attached to earth" and referred to the Supreme Court's judgment in Solid & Correct Engineering Works, which adopted the definition from the Transfer of Property Act. It concluded that the tanks, even if incomplete, retained their essential character as tanks when they left the factory and were marketable. Thus, they were considered excisable goods.

However, the Member (Judicial) disagreed, citing that the tanks, once installed, became immovable property and thus were not excisable. This view was supported by previous Tribunal decisions in Prodip Engineering Works and Servesham Construction Ltd., which held that tanks permanently attached to the earth could not be considered goods.

The third Member, resolving the difference, agreed with the Member (Technical) that the tanks were excisable goods, aligning with the decision in V.D. Engineering, where similar tanks were deemed liable for excise duty.

2. Invocation of the extended period of limitation:

The assessees argued that the show-cause notices did not specify any allegations of fraud, collusion, willful misstatement, or suppression of facts necessary to invoke the extended period of limitation. The Tribunal found that the notices lacked specific allegations and evidence to justify the extended period, thus invalidating the demand for the extended period.

3. Entitlement to cum-duty price and CENVAT credit:

The Tribunal upheld the assessees' entitlement to have the prices received considered as cum-duty prices, following the Supreme Court's judgment in Commissioner of Central Excise, Delhi Vs. Maruti Udyog Ltd. It also confirmed that CENVAT credit on inputs should be available to the assessees.

4. Imposition of penalties under Section 11AC:

Given the lack of specific allegations and evidence of fraud or suppression in the show-cause notices, the Tribunal found that penalties under Section 11AC could not be sustained and thus set them aside.

Conclusion:

The appeals were disposed of with the following directions:
- Demands for the normal period were confirmed.
- Demands for the extended period were set aside.
- CENVAT credit was allowed to the assessees.
- Prices received were to be taken as cum-duty prices.
- All penalties were set aside.
- Appeals were remanded to the original authority for the limited purpose of computation.

The majority decision confirmed the excisability of the tanks for the normal period, rejecting the extended period and penalties, and ensuring cum-duty price and CENVAT credit benefits.