2005 (8) TMI 198 - AT - Central Excise

Summary

Issues: Classification of electric power fencing system under tariff heading 8543.90, Invocation of larger period for duty demand confirmation and penalty imposition, Movable vs. immovable property classification, Availability of abatement under Section 4(4)(d)(ii), Granting of Modvat credit, Time-barred demands, Penalty imposition on Managing Director

Classification Issue:
The appeals arose from an Order-in-Original confirming demands on the classification of an electric power fencing system under sub-heading 8543.90 as "other electrical machinery and apparatus having individual functions." The Commissioner invoked a larger period to confirm duty demand and impose a penalty. The Revenue argued that the item, powered by solar power, was movable and excisable under the said tariff heading. The Commissioner held that the process of erecting the fence at the site created a distinct new product. The appellants contended that the item was not classifiable as electrical machinery and apparatus under Heading 8543.90, citing various judgments and circulars. The Tribunal examined the evidence and concluded that the item satisfied the tariff description and was liable for duty under the relevant chapter heading.

Time-barred Demands Issue:
The appellants argued that the demands were partly time-barred as the department was aware of all details collected in 1998, making the demands time-barred. They relied on judgments to support their plea. The Tribunal agreed with the appellants, citing relevant case law, and accepted that the demands were partly time-barred. The matter was remanded to the Commissioner for re-working out after granting benefits of Modvat and treating clearances as cum-duty.

Penalty Imposition Issue:
The penalty of Rs. 5 lakhs imposed on the Managing Director was deemed excessive and reduced to Rs. 50,000. The Tribunal allowed the appeals by remand only for the recomputation of duty, ordering accordingly.

Abatement and Modvat Credit Issues:
The appellants argued for the availability of abatement under Section 4(4)(d)(ii) and the granting of Modvat credit for duty paid inputs, citing various judgments to support their claims. The Tribunal agreed with the appellants and directed the extension of Modvat credit and cum-duty benefits in line with the cited judgments.

Movable vs. Immovable Property Issue:
The parties debated whether the item was movable or immovable property. The Revenue contended that the item, acting as an electric fence energizer, was classifiable under sub-heading 8543.90 as electrical appliances with individual functions. The Tribunal examined the evidence and concluded that the item, an electric power fencing system, satisfied the test of movable property and was not immovable property as contended by the appellants.

Judicial Precedents and Legal References:
Throughout the judgment, the Tribunal referred to various judicial precedents and circulars to support its analysis and conclusions on issues such as classification, time-barred demands, penalty imposition, availability of abatement, granting of Modvat credit, and the movable vs. immovable property classification. The Tribunal's decision was based on a thorough examination of the evidence and legal principles, leading to the remand for recomputation of duty and adjustments in penalty imposition.