2004 (7) TMI 195 - AT - Central Excise

Summary

Issues Involved:
1. Whether M/s Boving Fouress Ltd. (BFL) cleared turbines in CKD/SKD condition or merely parts and sub-assemblies of turbines.
2. Eligibility for exemption under Notification No. 205/88-CE.
3. Applicability of the extended period of limitation under Section 11A of the Central Excise Act, 1944.
4. Legality of the Commissioner (Appeals)'s decision to allow additional evidence and its impact on the case.

Issue-Wise Detailed Analysis:

1. Whether M/s Boving Fouress Ltd. (BFL) cleared turbines in CKD/SKD condition or merely parts and sub-assemblies of turbines:

The main contention was whether BFL cleared turbines in CKD/SKD condition or merely parts and sub-assemblies. BFL argued that due to the size and complexity, turbines were dispatched in CKD condition, tested at their factory, and then sent to the customer's site for assembly. However, the Commissioner found that although BFL manufactured essential components, they cleared parts and sub-assemblies rather than complete turbines. The turbines came into existence only at the customer's site, not at BFL's factory. Thus, BFL did not qualify for the exemption under Notification No. 205/88-CE.

2. Eligibility for exemption under Notification No. 205/88-CE:

BFL claimed exemption under Notification No. 205/88-CE, arguing that the turbines, although dispatched in parts, should be considered as complete goods. The Commissioner, however, concluded that the goods cleared were parts and sub-assemblies, not complete turbines, and thus did not meet the criteria for exemption. The Tribunal upheld this view, noting that BFL failed to prove that they cleared complete turbines in CKD/SKD form.

3. Applicability of the extended period of limitation under Section 11A of the Central Excise Act, 1944:

The Revenue contended that BFL misdeclared parts as turbines to evade duty, warranting the extended period of limitation. The Tribunal agreed, stating that BFL's act of clearing parts as turbines in CKD/SKD condition, despite knowing that other parts were bought out and directly taken to the site, constituted suppression and misdeclaration. Therefore, the extended period under Section 11A was applicable, and the case was remanded to the Commissioner to determine the duty liability and impose penalties.

4. Legality of the Commissioner (Appeals)'s decision to allow additional evidence:

In the appeal E/1060/2003, the Commissioner (Appeals) allowed additional evidence, which the Revenue argued was in violation of Rule 5 of the Central Excise (Appeals) Rules, 2001. The Tribunal found that the Commissioner (Appeals) did not properly examine the factual position regarding whether parts cleared formed a complete turbine in CKD/SKD condition. The Tribunal set aside the Commissioner (Appeals)'s order and remanded the case for re-examination of the invoices to determine if the parts cleared constituted a complete turbine.

Conclusion:

In summary, the Tribunal concluded that BFL cleared parts and sub-assemblies rather than complete turbines, thus not qualifying for the exemption under Notification No. 205/88-CE. The extended period of limitation under Section 11A was applicable due to suppression and misdeclaration. The Tribunal remanded the cases for re-examination of duty liability and the correctness of the Commissioner (Appeals)'s decision to allow additional evidence. All three appeals were disposed of accordingly.