1987 (3) TMI 127 - HC - Central Excise

Summary

Issues Involved:

1. Whether the crane was assembled and manufactured at Adityapur Unit of TISCO or at the petitioner's factory.
2. Whether the crane was utilized for maintenance of the existing plant or as part of a new plant in the Modernisation Project.
3. Whether the action taken for realizing excise duty on the crane was barred by Section 11A(1) of the Central Excises and Salt Act, 1944.
4. Whether there was any fraud, collusion, or willful misstatement or suppression by the petitioner warranting imposition of penalty.

Summary:

1. Assembly and Manufacture of Crane:
The court found that the cranes were indeed assembled at the Adityapur Unit of TISCO. The work order (Annexure-2) clearly indicated that TISCO intended to buy "complete assembly of the crane" from the Adityapur Machine Shop. The cranes were assembled, had a trial run, and were then transported to the petitioner's plant in knocked down condition. The court rejected the petitioner's claim that only components and assemblies were manufactured at Adityapur.

2. Utilization of Crane:
The court rejected the petitioner's argument that the cranes were part of a program to revamp the old plant. It was established that a new plant had been set up, replacing the old Duplex process with basic oxygen converters and new bar forging machines. The cranes were integral to this new Modernisation Project.

3. Exemption from Excise Duty:
The court examined the Government Notification No. 118/75-C.E., dated 30-4-1975 as amended by Notification No. 105/82-C.E., dated 28-2-1982 (Annexure-4). The petitioner did not comply with the provisions of Chapter X of the Central Excise Rules, 1944, and the cranes were not for maintenance but for production in a new plant. Thus, the petitioner was not entitled to the exemption.

4. Bar of Limitation u/s 11A(1):
The court found that there was misstatement and suppression of facts by the petitioner. The cranes were not declared, and the application in Form L-6 was misleading. Therefore, the department was entitled to the extended period of five years for realizing the duty under the proviso to Section 11A(1).

5. Imposition of Penalty:
The court upheld the imposition of penalty under Rule 173Q(1) of the Central Excise Rules, 1944, as there was clear intent to evade payment of duty. The penalty and the order for confiscation were found to be legal and justified.

Conclusion:
The petition was dismissed with costs, and the court affirmed the findings of the Collector, Central Excise, regarding the assembly and manufacture of cranes, the utilization for a new plant, the denial of exemption from excise duty, the timely action for realizing duty, and the imposition of penalty.