2005 (3) TMI 143 - HC - Central Excise

Res judicata - Applicability of - Tax proceedings - Excisable goods - Strictures against department

Issues Involved:
1. Challenge to the issuance of seven show cause notices.
2. Liability to pay excise duty on bought-out items.
3. Liability to pay excise duty on the process of erection, fabrication, and commissioning of Turn Key Projects.
4. Applicability of previous adjudications and orders on the current case.
5. Marketability and movability of the Coal Handling Plant.

Detailed Analysis:

1. Challenge to the Issuance of Seven Show Cause Notices:
The petitioner challenged seven show cause notices issued by Respondent Nos. 2 and 3, arguing that the issues raised were identical to those previously decided in favor of the petitioner in various proceedings. The petitioner contended that there was no change in facts, circumstances, or legal provisions to justify the issuance of new show cause notices on the same grounds.

2. Liability to Pay Excise Duty on Bought-Out Items:
The petitioner argued that bought-out items on which duty had already been paid were not liable for additional excise duty. This position was supported by various orders-in-original and orders-in-appeal, which had consistently held that the petitioner was not liable to pay any duty on such bought-out items.

3. Liability to Pay Excise Duty on the Process of Erection, Fabrication, and Commissioning of Turn Key Projects:
The petitioner maintained that the activity of erection, fabrication, and commissioning of Turn Key Projects resulted in the creation of immovable property, which was not subject to excise duty under the Central Excise Act, 1944. This argument was supported by previous adjudications and orders, including a decision by the Tribunal, which found that such activities did not result in the manufacture of excisable goods.

4. Applicability of Previous Adjudications and Orders on the Current Case:
The court noted that various orders had been issued in the past, from 7th May 1981 to 8th August 1995, in favor of the petitioner, dropping the demand for excise duty on bought-out items and activities related to erection, fabrication, and commissioning. The court emphasized that in the absence of any material change in facts, circumstances, or legal provisions, the issue once decided between the parties should be binding, and it was not open to the respondent authorities to issue new show cause notices on the same grounds.

5. Marketability and Movability of the Coal Handling Plant:
The court examined the concept of "goods" under the Central Excise Act and the tests for marketability and movability. The Tribunal had previously found that the Coal Handling Plant, consisting of large civil structures and machinery spread over several hectares, was immovable property and not marketable. The court held that the plant could not be considered "goods" within the meaning of the Act, as it could not be sold as it is or shifted without dismantling. The court also distinguished the case from the decision in Sirpur Paper Mills Ltd., noting that the findings in the petitioner's case were different.

Conclusion:
The court quashed and set aside the seven show cause notices, holding that no excise duty was exigible on bought-out items, erection and fabrication charges, and commissioning charges on the Turn Key Project. The court applied the principle that in the absence of any material change, the issue once decided between the parties should be binding. The court also emphasized that the Coal Handling Plant was immovable property and not subject to excise duty. The respondents were ordered to pay costs quantified at Rs. 10,000.

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