1997 (8) TMI 176 - AT - Central Excise

Summary

Issues:
Classification of goods under Central Excise Tariff Act, 1944; Demand of duty for non-declaration of complete description of excisable goods; Imposition of penalty and confiscation of goods; Applicability of time bar under Section 11A of the Act; Interpretation of goods as immovable property.

Analysis:
1. The case involved the classification of NKL Compactor Storage System under the Central Excise Tariff Act, 1944. The Department alleged that the appellants had not declared the complete description of the storage system, leading to a duty demand of Rs. 88,02,357 for the period from 1-7-1989 to 23-11-1993.

2. The Commissioner of Central Excise, Pune, confirmed the duty demand and imposed a penalty of Rs. 8,00,000 under Rule 173Q and Rule 226 of the Central Excise Rules. Additionally, the Commissioner ordered the confiscation of plant, machinery, land, and building used in connection with the manufacture of the goods, levying a fine of Rs. 5,00,000.

3. The appellants argued that the storage system, when installed at the customer's site, became immovable property and was not liable for excise duty. They relied on a Supreme Court decision regarding goods becoming immovable property upon installation at the customer's site.

4. The Senior Counsel for the appellants contended that the storage system, once fixed at the customer's premises, could not be removed and therefore should be considered immovable property. They highlighted the civil works involved in the installation process, supporting their claim.

5. The Departmental Representative argued that the entire storage system, including components manufactured by the appellants and bought-out items, constituted goods that were cleared in Kit form for erection at the customer's site. They contended that the system was not embedded in the earth, only the rails were grouted to the floor.

6. The Tribunal analyzed the contentions and found that the storage system, upon installation at the site, became immovable property and was not marketable as goods. Therefore, the duty demand was deemed unsustainable, and the Commissioner's order was set aside, allowing the appeal.

7. The Tribunal held that the Supreme Court's decision regarding goods becoming immovable property upon installation at the customer's site applied in this case. Since the storage system was not marketable as goods in the condition it was cleared from the factory, the duty demand was not justified.

8. Due to the storage system's transformation into immovable property upon installation, the Tribunal concluded that the duty demand was unsustainable, and the Commissioner's order was overturned, allowing the appeal.

9. The Tribunal did not delve into the aspect of limitation raised by both parties, as the main issue of the storage system being considered immovable property was sufficient to decide the case.