1987 (9) TMI 166 - AT - Central Excise

Summary

Issues Involved:

1. Excise duty evasion.
2. Excisability of Fluid Bed Tea Driers (FBDs).
3. Assessable value for excise duty purposes.
4. Nature of goods (movable or immovable).

Issue-wise Detailed Analysis:

1. Excise Duty Evasion:

The appellants were found to have cleared Fluid Bed Tea Driers (FBD) without payment of duty, valued at Rs. 30 lakhs, resulting in an alleged evasion of Rs. 13,45,486.13. They utilized two trading companies, M/s. B & B Tea Processing Systems Private Limited and M/s. B & B (Agents) Private Limited, as dummies to avail exemption under notification No. 111/78. The Collector confirmed the duty demand and imposed penalties on the appellants and the two concerns.

2. Excisability of Fluid Bed Tea Driers (FBDs):

The primary issue was whether the FBDs were excisable goods. The appellants contended that the FBDs did not come into existence as goods at the factory but were assembled at the customer's site, becoming immovable property. They argued that the FBDs required a plenum chamber recessed into the floor and attachment to a heat source, which could not be tested at the factory. The appellants cited cases like Hyderabad Race Club v. CCE and Government of India v. Otis Elevator Company to support their plea that the FBDs were not goods liable to excise duty.

3. Assessable Value for Excise Duty Purposes:

The appellants argued that only the value of the parts fabricated by them and their fabricators, M/s. Confabs, should be considered for excise duty, excluding the value of bought-out items. They contended that if this approach was adopted, their clearances would fall within the exemption limit under T.I. 68. The respondent, however, maintained that the entire value of the FBDs, including bought-out items, should be considered for assessment.

4. Nature of Goods (Movable or Immovable):

The appellants claimed that the FBDs became immovable property once installed at the customer's site, similar to the installation of a lift. They argued that the FBDs, when dispatched, were not goods but components that only became a complete machine at the site. The respondent countered that the FBDs were inspected and tested at the factory, indicating that they were complete machines before dispatch. The respondent cited various documents and inspection certificates to support their claim that the FBDs were goods subject to excise duty.

Conclusion and Remand:

The Tribunal observed that the lower authority did not properly address the appellants' plea regarding the excisability of the FBDs and the nature of the goods. The Tribunal noted that no assembled machines were found at the appellants' or M/s. Confabs' premises, and the necessary inquiries with buyers or Tea Board officers were not made. The Tribunal held that the standard models of FBDs, as shown in the catalogue, came into existence before clearance from the factory. However, the Tribunal allowed for the possibility that some machines might have been specially designed and required further verification by the Collector. The case was remanded to the lower authority for de-novo adjudication, with directions to consider the Tribunal's findings and allow the appellants to produce evidence. The appeal was allowed by remand on these terms.