2002 (2) TMI 183 - AT - Central Excise

Summary

Issues involved:
1. Confirmation of central excise duty demand against two companies.
2. Classification of Pot Shells as excisable goods.
3. Contention regarding the excisability of tailor-made Pot Shells.
4. Allegations of evasion of central excise duty and violation of excise rules.
5. Proper consideration of excisability and movability of Pot Shells.
6. Treatment of M/s. NALCO as a manufacturer of Pot Shells.

Analysis:

1. The appeals arose from an order confirming central excise duty demand against two companies and imposing penalties under Section 173Q of the Central Excises & Salt Act, 1944. The Collector held that Pot Shells were distinct excisable goods, making both companies liable for duty payment.

2. The main issue was whether Pot Shells, fabricated as part of an Aluminium Smelter Plant, constituted excisable goods. M/s. Punjab Project & Construction Co. Ltd. argued that these tailor-made parts were not marketable and thus not excisable. The Collector's view was based on the distinct nature of Pot Shells.

3. The show cause notice alleged evasion of central excise duty and violations of various excise rules. The appellants contended that the fabricated Pot Shells were not excisable goods, emphasizing the lack of consideration on this aspect in the impugned order.

4. The Tribunal noted the absence of a proper examination of whether the Pot Shells were excisable goods or movable property. Referring to instructions from the Central Board of Excise & Customs, the matter was remanded for a thorough consideration of the excisability of the Pot Shells.

5. M/s. NALCO challenged being treated as a manufacturer of Pot Shells, arguing that even if the shells were excisable, they should not be liable for duty. The Collector's decision was based on Section 2(f)(ii) of the Act, considering NALCO as the principal manufacturer due to the contract with Punjab Project & Construction Co. Ltd.

6. The Tribunal disagreed with the Collector's interpretation, stating that NALCO could not be considered a manufacturer under Section 2(f)(ii) as the contract terms indicated more than just hired labor. The order was set aside, clarifying NALCO's liability and remanding the matter for further consideration on the excisability of the Pot Shells.

This detailed analysis covers the issues raised in the legal judgment, addressing the arguments, interpretations, and decisions made by the authorities involved.