2009 (3) TMI 330 - AT - Central Excise

Excisability Ducts, Hand Operated Dampers, Expansion joints, Chimneys, Heaters, Platforms and ladders formed at site while fabricating an immovable property (primary reformer) - The impugned items in our view arise in the course of the fabrication and erection of the primary reformer which is an immovable property. Therefore, in our view, these items cannot be subjected to Excise Duty appellant have pleaded that longer period in the present case is not applicable and they were under bona fide belief that the activity carried out by them would not amount to manufacture. They have pleaded that mere non-registration or non-payment of duty and consequent, non-compliance of formalities and procedures under Excise laws, is not a sufficient reason for invoking the extended period. It has also been urged by them that every act does not lead to misrepresentation and misstatement. Positive act of concealment or activity of misrepresentation is necessary - we are of the view that the longer period is not applicable and on merits also the demands are not sustainable

Summary

Issues:
1. Classification of items fabricated and supplied by the appellant.
2. Liability for payment of Central Excise duty.
3. Scope of work under the contract between the parties.
4. Whether the fabricated items are excisable goods.
5. Applicability of case laws and legal precedents.
6. Applicability of the longer period for invoking penalties.

Classification of Items Fabricated and Supplied:
The appeal was filed against an Order-in-Original passed by the Commissioner of Customs and Central Excise, Visakhapatnam-II. The issue revolved around the classification of items fabricated and supplied by the appellant to Bharat Heavy Plates and Vessels Limited (BHPV). The Commissioner held that the items, including ducts, dampers, expansion joints, chimneys, heaters, platforms, and ladders, were distinct goods manufactured by the appellant and thus liable for Central Excise duty.

Liability for Central Excise Duty:
The Commissioner determined the value and classification of the items under Chapter 84, holding the appellant liable for Central Excise duty. The appellant argued that the items were fabricated on-site during the erection of an immovable property, the primary reformer package. The Tribunal analyzed the scope of work under the contract and concluded that the items formed part of the primary reformer, constituting an immovable property, and thus not excisable.

Scope of Work Under the Contract:
The Tribunal found that the appellant's work involved the entire erection of the primary reformer package, not just manufacturing and selling items to BHPV. The contract specified the supply of various materials and the erection of the primary reformer, indicating a broader scope of work beyond mere fabrication and supply of items.

Excisability of Fabricated Items:
The Tribunal examined the appellant's argument that the fabricated items were not marketable goods but formed on-site as part of the primary reformer package, an immovable property. Relying on various legal precedents and case laws, the Tribunal concluded that the items were not excisable and could not be subjected to Central Excise duty.

Applicability of Case Laws and Legal Precedents:
The appellant cited numerous case laws to support their argument that the fabricated items were not excisable goods. The Tribunal analyzed these precedents and found them applicable to the facts of the case, ultimately disagreeing with the Commissioner's findings and allowing the appeal with consequential relief.

Applicability of Longer Period for Penalties:
The appellant contended that the longer period for invoking penalties was not applicable as they were under a bona fide belief that their activities did not amount to manufacture. The Tribunal agreed, finding no sustainable demands or grounds for levying penalties, and set aside the impugned order accordingly.

In conclusion, the Tribunal ruled in favor of the appellant, holding that the fabricated items were not excisable goods and thus not liable for Central Excise duty. The appeal was allowed with consequential relief, and no penalties were levied on the appellants.