1998 (4) TMI 328 - AT - Central Excise

Summary

Issues:
1. Limitation regarding the show cause notice.
2. Classification of steel storage tanks under Chapter sub-heading 7309.00 and whether their construction amounts to manufacture.

Analysis:

Issue 1 - Limitation regarding the show cause notice:
The appellants contended that the show cause notice (SCN) was time-barred as it was issued more than a year after the visit of Central Excise Officers to their factory. They argued that there was no suppression of facts, and the Central Excise Authorities were aware of their activities. The appellants relied on legal precedents to support their argument that the extended period of limitation cannot be invoked when the department had full knowledge of the facts. They also cited cases where the extended period was not applicable in the absence of suppression of facts or materials. Ultimately, the Tribunal found in favor of the appellants, holding that the impugned order could not be sustained on grounds of limitation.

Issue 2 - Classification of steel storage tanks and manufacturing activity:
The main contention revolved around whether the construction of steel storage tanks on a concrete foundation amounted to manufacturing activity and if such tanks were classifiable as storage tanks or reservoirs under Chapter sub-heading 7309.00. The Collector had held that the steel storage tanks were liable to Central Excise Duty as they were considered movable items until permanently fixed to the earth. However, the appellants argued that the tanks were immovable property and not goods, thus not subject to Central Excise Duty. They highlighted that the tanks were assembled on an immovable foundation and were never intended for transportation. The Tribunal analyzed previous cases where erection and commissioning of structures did not amount to the manufacture of excisable goods. Ultimately, the Tribunal ruled in favor of the appellants, stating that the steel storage tanks were not goods and the impugned order could not be sustained on the question of the item being classified as goods.

In conclusion, the appeal was allowed in favor of the appellants, with consequential benefits granted to them.