2005 (5) TMI 108 - AT - Central Excise

Manufacture of furniture - Excisability of storage cabinets running counters, large reception/conference table and workstation - benefit of Cum-duty price - Demand of duty - Limitation - HELD THAT - In view of the adjudicating authorities' finding that such workstations cannot be classified under 9304, we hold that the workstations are not excisable. We agree with the finding of the adjudicating authority in para 74 where he has held that partitions are immoveable property permanently fastened to the building and hence not excisable. We agree with the finding the adjudicating authority with regard to partitions. Even though the finding that the flush doors and wooden doors are classifiable under Chapter 44 is correct, the appellant's contention that this finding was beyond the scope of the show cause notice has merits. The show cause notice has classified all the items under Chapter 9304. The adjudicating authority cannot go beyond the scope of the show cause notice. Hence the demand of duty on doors is set aside. The adjudicating authority has rightly held that wall claddir/column cladding, soft board paneling, wall paneling, teak wood shelf, etc. would be immoveable property and do not attract levy of central excise duty. Similarly the following items also would be considered as immoveable property Skirting, Raceway, Beading, Frame work above false ceiling, mirror panellings, window sil, grooves, patta. In view of this fact the items in question would not cease to be furnitures. Even when an immoveable property is sold, the sale value normally would not include the value of furnitures. The Commissioner's decision to treat the values as cum-duty price is correct in view of the dismissal of department's review petition by Apex Court in Maruti Udyog case 2004 (12) TMI 669 - SC ORDER . Therefore there is no merit in the departmental appeal. We remand the matter to the adjudicating authorities to recalculate their duty liability in the light of our findings and observations. However, since the appellants failed to obtain Central Excise Registration the invocation of longer period is justified. Demand of interest under 11AB is also upheld. The de novo order should be issued within a period of 3 months. The penalties u/s 11AC on the appellant-company could be limited to 10% after giving them the benefit of SSI exemption. Imposition of penalties under Rule 25/26 or erstwhile 209A and Rule 173Q is justified. However, the adjudicating authority may decide the quantum of penalty after recalculating the duty.

Issues Involved:
1. Classification of goods under Central Excise Tariff.
2. Excisability of certain items as moveable or immoveable property.
3. Applicability of SSI exemption.
4. Invocation of extended period for demand.
5. Cum-duty benefit.
6. Justification of penalties imposed.

Detailed Analysis:

1. Classification of Goods under Central Excise Tariff:
The show cause notice proposed classification of all goods under Chapter Sub-heading 9403. The appellant contended that items like flush doors, wooden doors, and glass doors should be classified under Chapter 44 and Chapter 70 of the CETA, 1985. The adjudicating authority accepted this but still confirmed the duty, which was challenged by the appellants citing case laws such as SACI Allied Products Ltd. v. CCE and Reckitt and Coleman (I) Ltd. v. CCE. It was held that revenue cannot make out a new case beyond the proposals in the show cause notice.

2. Excisability of Certain Items as Moveable or Immoveable Property:
The adjudicating authority held that certain items like storage units, counters, workstations, etc., are non-moveable but still liable to excise duty under Chapter 9403 based on the HSN Explanatory Notes. The appellants argued that these items are erected and fixed at the site, thus not moveable. The tribunal agreed with the adjudicating authority that items such as corner tables, sofas, desks, and beds are moveable and classifiable under 9403. However, workstations erected at the site were deemed non-excisable. Partitions were also considered immoveable and non-excisable.

3. Applicability of SSI Exemption:
The appellants argued that if non-excisable items are excluded, the value of the remaining items would fall below the SSI exemption threshold, thus exempting them from duty. This point was noted for recalculating duty liability.

4. Invocation of Extended Period for Demand:
The appellants claimed a bona fide belief that the items erected at the site were not excisable, thus not requiring Central Excise Registration. They argued there was no intention to evade duty, supported by case laws like Padmini Products v. CCE. However, the tribunal upheld the invocation of the extended period due to the failure to obtain Central Excise Registration.

5. Cum-duty Benefit:
The departmental appeal argued against the cum-duty benefit granted by the Commissioner, citing a pending review petition before the Supreme Court. The tribunal noted that the review petition was dismissed, thus upholding the benefit of cum-duty price to the appellants.

6. Justification of Penalties Imposed:
Penalties under Section 11AC and Rule 25/26 or erstwhile 209A and Rule 173Q were imposed. The tribunal directed the adjudicating authority to limit the penalty on the appellant-company to 10% after recalculating the duty, considering the SSI exemption.

Conclusion:
The tribunal remanded the matter to the adjudicating authorities to recalculate the duty liability based on the tribunal's findings. The invocation of the extended period and demand of interest under Section 11AB were upheld. The penalties were to be reconsidered after recalculating the duty, with specific directions to limit the penalty on the appellant-company to 10% of the recalculated duty. The departmental appeal regarding cum-duty benefit was dismissed.

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