2005 (12) TMI 124 - AT - Central Excise

Summary

Issues Involved
1. Classification of goods as office furniture systems/workstations (OFS/WS) under sub-heading 9403.00.
2. Whether the assembly and installation of OFS/WS at the customer's site amounts to manufacture.
3. Whether duty paid on components by the manufacturer can be levied again on the final assembled product.
4. Consideration of alternative pleas such as cum duty price, Modvat credit, and exclusion of installation costs.
5. Time-bar and invocation of extended period of limitation.

Detailed Analysis

1. Classification of Goods as OFS/WS under Sub-heading 9403.00
The authorities confirmed the demand of duty against the appellants by treating them as manufacturers of OFS/WS falling under sub-heading 9403.00 of the Schedule to CETA, 1985. The appellants contended that they only marketed and installed OFS/WS, which were already manufactured and cleared by other manufacturers (such as Kemp & Co.) under the same sub-heading. The Assistant Commissioner had previously classified the goods manufactured by Kemp & Co. under heading 9403.00 as "other furniture," and Kemp & Co. complied with this classification, paying the requisite duty.

2. Assembly and Installation of OFS/WS at Customer's Site
The appellants argued that the assembly and installation of OFS/WS at the customer's site did not amount to manufacture. They contended that the components were merely assembled using nuts, bolts, and other connectors, which did not transform the components into a new product. The Tribunal noted that the process of assembling and dismantling the workstations was simple and quick, akin to assembling a toy set, and could be done repeatedly. Therefore, it was concluded that such assembly did not constitute manufacture.

3. Duty on Components and Final Assembled Product
The appellants argued that the components had already discharged their duty liability as OFS/WS under sub-heading 9403.00, and hence, no further duty should be levied on the assembled product. The Tribunal agreed, stating that the clearance of components in unassembled condition for ease of transportation should be treated as clearance of a complete system. The Tribunal cited several precedents where it was held that the clearance of parts in unassembled condition should be considered as clearance of a complete machine or system.

4. Alternative Pleas
The appellants made several alternative submissions:
- The entire realization from customers should be treated as cum duty price.
- The benefit of Modvat credit on the duty paid components should be allowed.
- The cost of installation and erection should be excluded from the assessable value.
Since the appeals were allowed on the main issue, the Tribunal did not pass orders on these alternative pleas.

5. Time-bar and Extended Period of Limitation
The Commissioner had rejected the appellant's plea of time-bar, invoking the extended period of limitation on the grounds that the appellants ought to have paid duty on their own and had misrepresented facts to evade duty. However, since the Tribunal allowed the appeals on the main issue, it did not address the plea of limitation.

Conclusion
The Tribunal held that the appellants could not be considered as manufacturers of OFS/WS and thus were not liable to pay duty again on the assembled product. The impugned orders were set aside, and all appeals were allowed with consequential relief to the appellants. The Tribunal did not address the alternative pleas or the issue of limitation, as the main issue was resolved in favor of the appellants.