2000 (7) TMI 321 - AT - Central Excise

Summary

Issues:
Application for stay of recovery and dispensing with pre-deposit of duty and penalty.

Analysis:
The appellant entered into an agreement for the erection of a boiler and was alleged by the department to be the manufacturer of goods, demanding duty and penalty. The appellant argued that the boiler was not 'goods' due to its size and method of erection, being embedded in the earth. The appellant contended that the boiler, using bagasse for heat energy production, qualified as a conversion device under CBEC clarification, thus falling under exemption Notf. No. 5/98. Additionally, even if considered goods, the boiler was manufactured in the factory and used for sugar production, potentially exempt under Notf. No. 67/95. The appellant cited relevant case laws to support these arguments.

The respondent opposed the waiver, asserting that the boiler qualified as goods as it could be moved by removing nuts and bolts, not solely dependent on bagasse. It was argued that the boiler did not meet the requirements of Notf. No. 67/95 as it was not captively used in sugar manufacturing. The respondent contended that there was no basis for waiver and insisted on the deposit of duty and penalty.

Upon hearing both sides, the Tribunal found that the boiler's size and method of erection did not classify it as goods. It was noted that the boiler's function as a conversion device using agricultural waste aligned with Notf. No. 5/98. Furthermore, since the boiler was manufactured and used in the factory, it prima facie fell under Notf. No. 67/95. The Tribunal agreed that if duty was payable, Modvat credit would make the exercise revenue neutral. Considering the circumstances, the Tribunal granted the waiver of pre-deposit of duty and penalty, staying the recovery during the appeal's pendency. The appeal was scheduled for further hearing on a specified date.