1995 (10) TMI 100 - AT - Central Excise

Summary

Issues Involved:
1. Whether the powder compacting press model ME-40 II is considered "goods" under the Central Excises and Salt Act, 1944.
2. Whether the machinery fixed to the ground is subject to central excise duty.
3. Whether the imposition of redemption fine was justified.

Detailed Analysis:

1. Whether the powder compacting press model ME-40 II is considered "goods" under the Central Excises and Salt Act, 1944:

The appellants, M/s. Mahindra Sintered Products Ltd. (MSP), manufactured a powder compacting press model ME-40 II and installed it in their premises without paying central excise duty. The machine was used for producing sintered bushes and parts. The Additional Collector of Central Excise, Pune, adjudicated that the machinery manufactured by MSP was dutiable under the Central Excises and Salt Act, 1944, as it was a movable commodity and thus considered "goods." The adjudicating authority relied on the Gujarat High Court's decision in the case of Anil Ice Factory and Others v. Union of India, which held that assembling various components to create a new product amounts to manufacture. The Tribunal upheld this view, stating that the powder compacting press, even though fixed to the ground with bolts and nuts, retained its identity as "goods" and was marketable and functional before being secured to the ground.

2. Whether the machinery fixed to the ground is subject to central excise duty:

The appellants contended that the machinery, being fixed to the ground, was immovable property and not subject to central excise duty. However, the Tribunal noted that the machine was merely fixed to the floor with bolts and nuts and could be dismantled and reassembled on a different foundation. The Tribunal referenced several cases, including the Supreme Court's decision in A.P. State Electricity Board v. Collector of Central Excise, which held that marketability is a question of fact and that goods usable only when affixed to the ground are still considered "goods" if they are marketable. The Tribunal concluded that the powder compacting press was "goods" and subject to central excise duty before being fixed to the ground.

3. Whether the imposition of redemption fine was justified:

The Additional Collector had imposed a redemption fine of Rs. 30,000/- on MSP. The Tribunal, considering the circumstances of the case, vacated the imposition of the redemption fine. The Tribunal acknowledged that MSP had been paying central excise duty on similar machines in the past and had filed a classification list for the present machine, which was under consideration when it was installed. The Tribunal found that the imposition of the redemption fine was not warranted in this case.

Conclusion:

The Tribunal confirmed the demand for central excise duty of Rs. 32,393.41 on the powder compacting press model ME-40 II, as it was deemed "goods" and marketable before being fixed to the ground. However, the Tribunal vacated the imposition of the redemption fine of Rs. 30,000/-, partly allowing the appeal.