2002 (1) TMI 186 - AT - Central Excise

Issues Involved:

1. Classification of boilers and their components under the Central Excise Tariff.
2. Determination of whether the erected boilers are movable or immovable property.
3. Applicability of excise duty on the boilers assembled at the customer's site.
4. Consideration of suppression of information and extended period of limitation.
5. Eligibility for Modvat credit and cum duty benefits.

Detailed Analysis:

1. Classification of Boilers and Their Components:

The Commissioner of Central Excise, Indore, determined that Cethar Vessels Ltd. manufactured and supplied boiler components, which were then assembled at the customer's site into a complete boiler. The Commissioner classified the assembled boiler under Heading 8402.10 of the Central Excise Tariff Act. The appellants argued that they had cleared the components in CKD/SKD condition under the same heading and had paid the required duty. They contended that the classification should not change post-assembly as the parts were already assessed as boilers under Heading 8402.10.

2. Determination of Whether the Erected Boilers are Movable or Immovable Property:

The Commissioner concluded that the boiler, once assembled at the customer's site, remained movable and marketable, thus subject to excise duty. The appellants countered this by citing the statement of their Site Engineer, who claimed that the boiler, once erected, became an immovable property as it was fixed to the foundation and could not be moved without dismantling it into scrap. The appellants referenced the Supreme Court's decision in Triveni Engineering & Industries Ltd., which emphasized that for an item to be excisable, it must be both movable and marketable.

3. Applicability of Excise Duty on the Boilers Assembled at the Customer's Site:

The Commissioner argued that the assembly of components into a boiler at the customer's site constituted manufacture, making the final product excisable. The appellants maintained that since the components were cleared on payment of duty and the final product became immovable upon assembly, it should not attract additional excise duty. They cited the Board's Circular No. 4/92, which clarified that boilers supplied in CKD/SKD condition should be assessed as boilers, and the Supreme Court's ruling in Triveni Engineering & Industries Ltd. to support their stance.

4. Consideration of Suppression of Information and Extended Period of Limitation:

The Commissioner invoked the extended period of limitation under Section 11A(a) of the Central Excise Act, 1944, citing suppression of information by the appellants regarding the assembly of boilers at the customer's site. The appellants argued that there was no suppression as the entire process was conducted with the knowledge of the excise authorities, and the duty was paid on the components. They also contended that the demands were time-barred since the show cause notice was issued on 16-6-2000 for the period between March 1997 and February 1998.

5. Eligibility for Modvat Credit and Cum Duty Benefits:

The appellants claimed eligibility for Modvat credit on the duty paid components and argued that the clearances should be treated as cum duty, referencing the Larger Bench judgment in Srichakra Tyres Ltd. The Commissioner had not addressed these points in the original order, leading the appellants to assert that these considerations would negate any additional duty liability.

Judgment Summary:

The Tribunal noted that the Commissioner failed to provide rebuttal evidence to the appellants' claim that the erected boiler became immovable. The Tribunal referenced multiple Supreme Court judgments, including Triveni Engineering & Industries Ltd. and Quality Steel Tubes (P) Ltd., which established that items becoming immovable upon erection are not excisable. The Tribunal also cited the Board's Circular specific to Cethar Vessels Ltd., which supported the appellants' classification and duty payment on components.

The Tribunal concluded that the boiler, once erected at the site, became an immovable property and thus non-excisable. Consequently, the Tribunal allowed the appeals, setting aside the impugned order without delving into issues of time bar, valuation, or Modvat credit, as the primary determination of immovability rendered these points moot.

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