1978 (5) TMI 40 - CGOVT - Central Excise

Licensing - Refrigerating Machinery - Cooling coil - Limitation - Section 40(2) - Applicability

Summary

Issues:
1. Classification of goods under Central Excise Tariff Item 29(3)
2. Applicability of Central Excise duty on goods assembled at site
3. Time limitation under Section 40(2) of the Central Excises and Salt Act, 1944
4. Correctness of the value determined by the department

Analysis:

1. The petitioners argued that the goods they assembled do not fall under Central Excise Tariff Item 29(3) as they were part of a refrigeration unit and not meant for sale in the market. They cited a judgment of the Gujarat High Court to support their claim. However, the Government of India noted that only specified parts of refrigerating machinery are liable for duty, and the petitioners' goods were not exempted. The government found that the arrangement of pipes by the petitioners constituted a cooling coil, as per refrigeration technology terminology. The plea that the goods were not removed from the place of manufacture was dismissed, as they were taken out for the manufacture of the complete unit, amounting to constructive removal.

2. The petitioners contended that as the goods were assembled at the site, a component part should not be liable to duty. However, the government clarified that the tariff advice cited by the petitioners did not apply to the case. It was noted that the petitioners' manufacturing of the goods was part of their business venture, and it was not necessary for them to be in the profession of manufacturing component parts of refrigerating machinery. The government also highlighted that the price of pipes was determined based on bill/vouchers provided by the petitioners themselves or similar purchases, reinforcing the liability for duty.

3. Regarding the time limitation under Section 40(2) of the Central Excises and Salt Act, 1944, the petitioners argued that the show cause notice was issued after six months from the accrual of the cause of action, making it time-barred. However, the government clarified that the limitation under this section does not apply to departmental proceedings, rendering the plea legally invalid.

4. Lastly, the petitioners disputed the correctness of the value determined by the department. The government did not find merit in this argument, as the value determination was based on bill/vouchers provided by the petitioners or similar purchases, indicating the accuracy of the valuation. Ultimately, the government rejected the revision application based on the above analysis and upheld the duty liability on the petitioners' goods.