2001 (7) TMI 163 - AT - Central Excise

Summary

Issues Involved:
1. Whether the tanks and pipes fabricated at the site are chargeable to excise duty.
2. Whether the appellants or the subcontractor, M/s. Rainbow Engineering Works, is the manufacturer.
3. Applicability of the extended period of limitation for demanding duty.
4. Correct classification and rate of duty for the fabricated tanks and pipes.
5. Correct quantification of the duty demand.

Detailed Analysis:

1. Excisability of Tanks and Pipes:
The primary issue was whether the tanks and pipes fabricated at the site are excisable goods. The appellants argued that the tanks were fabricated as permanent fixtures and attached to the earth, making them immovable and non-marketable. They cited the Supreme Court's decision in Municipal Corporation of Greater Bombay v. Indian Oil Corporation, which held that a petroleum storage tank resting on its own without nuts or bolts is immovable property. The Tribunal agreed, stating that the tanks, once fabricated, were attached to the earth and thus were immovable goods, not liable to excise duty.

Conversely, the pipes were found to be excisable. The Tribunal noted that the pipes came into existence before being placed in trenches and were only welded inside afterward for convenience. Applying the test of marketability from the Supreme Court's decisions, the Tribunal concluded that the steel pipes were marketable and thus leviable to excise duty.

2. Manufacturer Identification:
The appellants contended that M/s. Rainbow Engineering Works, the subcontractor, was the actual manufacturer of the tanks and pipes. They argued that Rainbow carried out the fabrication and erection work and that the supplier of raw materials does not become the manufacturer. The Tribunal agreed, noting that Rainbow was responsible for providing tools, tackles, and labor, and was subject to penalties for delays. The Tribunal held that Rainbow, not the appellants, was the manufacturer, as established by the Supreme Court in cases like Ujagar Prints and Khambhatawala.

3. Extended Period of Limitation:
The appellants argued that the demand was beyond the statutory period of five years, as the show cause notice was issued on 21-6-1991, and no duty could be demanded for the period before 20-6-1986. The Tribunal did not delve deeply into this issue, as it had already concluded that the appellants were not the manufacturers.

4. Classification and Rate of Duty:
The Tribunal noted the appellants' contention that the pipes should be classified under sub-heading 7303.27 and not 7303.29 for the period up to 20-2-1988, and under Heading 73.05 with effect from 1-3-1988. The Tribunal did not make a specific ruling on this issue, as it was rendered moot by the finding that the appellants were not the manufacturers.

5. Quantification of Duty Demand:
The appellants argued that the duty demand was incorrectly quantified, using rates applicable in 1991 instead of those prevailing during 1983-86. They also contended that the classification of tanks under Heading 7309 was incorrect. The Tribunal did not address these issues in detail, as the primary finding that the appellants were not the manufacturers negated the need for further discussion on quantification.

Conclusion:
The Tribunal concluded that the tanks were immovable and not liable to excise duty, while the pipes were excisable. However, it held that M/s. Rainbow Engineering Works, not the appellants, was the manufacturer of the pipes. Consequently, the appeal filed by the appellants was allowed.