1985 (8) TMI 182 - AT - Central Excise

Summary

Issues Involved:
1. Liability of the Totalizer system to central excise duty.
2. Quantum and period of central excise duty.
3. Legality of the show cause notice dated 3-1-1978.

Detailed Analysis:

1. Liability of the Totalizer System to Central Excise Duty:
The primary issue was whether the Totalizer system installed by the appellants was liable to central excise duty under Tariff Item 33-D of the Central Excise Tariff. The Superintendent's visit on 21-7-1977 led to the seizure of various control panel boards and other components, which were considered parts of the Totalizer system and deemed dutiable. The appellants argued that the panel boards were fabricated on-site and permanently fixed to the earth, thus not qualifying as "goods" under the Central Excises and Salt Act, 1944. The Tribunal agreed, citing the Supreme Court's definition of "goods" as movable items that can be bought and sold in the market. Since the Totalizer system was permanently fixed and not movable, it could not be classified as "goods" and thus was not liable for central excise duty.

2. Quantum and Period of Central Excise Duty:
The Tribunal examined whether the components of the Totalizer system, specifically the panel boards, were subject to excise duty. The appellants admitted to fabricating the panel boards, which were excisable. The Tribunal found no reason why duty should not be levied on these panel boards. The argument that the demand was time-barred was dismissed, as the appellants had not declared the manufacture of the panel boards to the excise authorities, constituting suppression of facts. The Tribunal directed the Collector of Central Excise, Hyderabad, to determine the proper classification and quantification of duty on the panel boards.

3. Legality of the Show Cause Notice Dated 3-1-1978:
The appellants challenged the legality of the show cause notice, arguing it did not allege fraud, collusion, or misstatement, which are necessary for invoking the extended time limit of five years. The Tribunal noted that the appellants had not been prejudiced by these omissions, as they had admitted to the fabrication of the panel boards and were willing to pay the duty. The Tribunal found that the appellants' failure to declare the manufacture of the panel boards constituted suppression of facts, justifying the extended time limit.

Conclusion:
The Tribunal set aside the demand for duty on the Totalizer system, as it was not "goods" under the Central Excises and Salt Act, 1944. However, it upheld the demand for duty on the panel boards fabricated by the appellants. The classification and quantification of duty on the panel boards were remanded to the Collector of Central Excise, Hyderabad, for determination. The redemption fine on the system was reduced to Rs. 1,000 for the panel boards. The appeal was thus partly allowed.