2009 (9) TMI 326 - AT - Central Excise

Excisability- Circular No. 58/1/2002-CX., dated 15.1.2002- In adjudication of a show-cause notice dated 16-4-2008, the ld. Commissioner confirmed a demand of duty of Rs.88,15,196/- against the main appellant (hereinafter referred to as the assessee) for the period 2002/2007 by invoking the extended period of limitation on the ground of suppression of facts. He also demanded interest on duty under Section 11AB of the Central Excise Act. The manufactured items were cleared under SSI Exemption Notifications, without payment of duty. Held that- the adjudicating authority chose to hold the commodity to be excisable goods without examining the manner in which it had taken shape and come into existence, regardless of the guidelines laid down and illustrations given by the Board in its circular dated 15-1-2002, we are of the considered view that the case should be adjudicated afresh. We allow these appeals by way of remand directing the ld. Commissioner to pass fresh orders of adjudication, in accordance with law, after giving the appellants a reasonable opportunity of being heard on all issues.

Summary

Issues:
Adjudication of demand of duty invoking extended period of limitation, imposition of penalty under Section 11AC, contestation of demand and penalties, determination of excisable goods versus immovable property, reliance on Board's Circular, challenge against demand of duty on the ground of limitation.

Analysis:

Adjudication of Demand of Duty:
The Commissioner confirmed a demand of duty against the main appellant for the period 2002/2007, invoking the extended period of limitation due to alleged suppression of facts. The demand was related to "Chlorination equipment, Evaporators, Chlorinator System, and parts thereof." The appellant contended that no manufacture was involved, and what emerged was an immovable structure not subject to excise duty. The Commissioner quantified the duty demand based on sales turnovers noted in the books of account, alleging suppression of facts by the appellant.

Imposition of Penalty and Contestation:
Penalties under Section 11AC of the Act and Rule 26 of the Central Excise Rules were imposed on the appellant. The appellant contested the demand and penalties, arguing that the commodity in question was assembled into an immovable structure and eligible for SSI exemption for manufactured goods. The Revenue claimed support from the Board's Circular, which clarified the distinction between excisable goods and immovable property not chargeable to excise duty.

Excisable Goods vs. Immovable Property:
The dispute revolved around whether the chlorination plants/equipments were considered excisable goods or immovable property. The appellant relied on the Board's Circular, emphasizing that the commodity was erected into an immovable structure. The Commissioner held that the items were not immovable property as they were assembled and erected at customer sites, not qualifying for exemption.

Fresh Adjudication and Remand:
The Tribunal found that the adjudicating authority failed to examine the manner in which the commodity had taken shape and come into existence, disregarding the guidelines in the Board's Circular. The case was remanded for fresh adjudication, directing the Commissioner to consider the nature of activities undertaken by the appellant and to inspect the sites in question. The Tribunal emphasized the need for a detailed examination to determine whether the commodity qualified as excisable goods or immovable property.

This detailed analysis of the legal judgment highlights the key issues involved, the arguments presented by the parties, and the Tribunal's decision to remand the case for a fresh adjudication in accordance with the law.