1988 (3) TMI 80 - HC - Central Excise

Summary

Issues Involved:
1. Whether the unfinished components removed from the petitioner's factory are "goods" subject to excise duty.
2. Whether the turn-key projects erected at the customer sites are "goods" liable to excise duty.
3. Whether the writ petitions are barred by limitation.
4. Whether refunding the duty would result in unjust enrichment of the petitioner.
5. Whether the decision of CEGAT in J.K. Export Industries is relevant to the present case.
6. Whether further factual investigation is necessary to determine the nature of the goods and the validity of the duty levied.

Issue-wise Detailed Analysis:

1. Unfinished Components as "Goods":
The petitioner argued that the unfinished components removed from its factory are not "goods" as they have no market and are not marketable. They are merely prepared for transportation to the customer site where they are welded, fabricated, and erected. The court found that the duty was levied on the value of the component parts when they were removed from the petitioner's factory premises. The court concluded that the unfinished components are indeed "goods" subject to excise duty as they were removed from the factory premises and duty was not levied on the value of the turn-key project or the machinery/plant as fabricated and erected at the customer sites.

2. Turn-key Projects as "Goods":
The petitioner contended that the turn-key projects erected at the customer sites are not "goods" as they become immovable property once implanted into the earth. The court held that duty was not levied on the value of the machinery fabricated and erected at the customer sites but on the component parts removed from the factory premises. Therefore, the turn-key projects themselves were not subject to excise duty.

3. Limitation:
The petitioner claimed that the writ petitions were within limitation as they were filed soon after discovering the illegality of the duty from the CEGAT decision in J.K. Export Industries. The court held that the decision in J.K. Export Industries had no relevance to the present case and could not be treated as the starting point for limitation. The petitioner paid the duty without protest during 1978-1980 and did not challenge it in the prescribed manner. The writ petitions filed more than four years after the payment of duty were deemed barred by limitation.

4. Unjust Enrichment:
The court found that granting the refund would result in unjust enrichment of the petitioner as it must have passed on the burden of the duty to its customers. The petitioner did not state that it had not passed on the duty to its customers, nor did the customers claim a refund. Therefore, refunding the duty would confer an uncalled-for benefit upon the petitioner.

5. Relevance of CEGAT Decision in J.K. Export Industries:
The court concluded that the decision in J.K. Export Industries had no relevance to the present case. In J.K. Export Industries, the duty was levied on the value of a Dal Plant fabricated and installed at the factory premises, which was held to be immovable property. In the present case, duty was levied on the component parts removed from the petitioner's factory, and there was no similarity between the facts of the two cases.

6. Need for Further Factual Investigation:
The court noted that determining whether the articles upon which duty was levied were really unfinished goods and whether they were marketable required further factual investigation. The court could not express an opinion on these matters without such an investigation.

Conclusion:
The writ petitions were dismissed on the grounds of limitation and potential unjust enrichment. The court found no relevance in the CEGAT decision in J.K. Export Industries to the present case and noted the necessity for further factual investigation to determine the nature of the goods and the validity of the duty levied.