2001 (1) TMI 542 - AT - Central Excise

Summary

Issues:
1. Classification of assembly of Turbo Alternator under Heading 85.02 for excise duty.
2. Applicability of Modvat credit under Rule 57A.
3. Imposition of duty, confiscation, and penalties on the appellants.
4. Interpretation of Supreme Court judgments regarding the assembly of goods on immovable property and excisability.

Issue 1: Classification of assembly of Turbo Alternator under Heading 85.02 for excise duty:
The Commissioner of Central Excise held that the assembly of Turbo Alternator constituted new goods classifiable under Heading 85.02, imposing duty and penalties on the appellants. The appellants argued that no new goods emerged as the assembly was on immovable property, but the Commissioner relied on the Supreme Court's judgment in Narne Tulaman case. The Supreme Court, in a similar case, ruled that such assembly did not create new goods for excisability, emphasizing the test of marketability and permanency. The Court found that the assembly did not satisfy the marketability test and could not be considered excisable goods under Heading 85.02, leading to the setting aside of the impugned order and allowing the appeals.

Issue 2: Applicability of Modvat credit under Rule 57A:
The Commissioner accepted the appellants' plea for Modvat credit under Rule 57A in the original order, directing further examination by the Assistant Commissioner based on duty paid documents. This decision was challenged by the Revenue in the appeals, leading to the consideration of the Modvat credit issue alongside the classification matter. However, the primary focus remained on the classification of the Turbo Alternator assembly under Heading 85.02.

Issue 3: Imposition of duty, confiscation, and penalties on the appellants:
The Commissioner ordered the appellants to pay duty under Rule 9(2) of the C.E. Rules, 1944, along with penalties and confiscation of goods. The penalties were imposed on appellants M/s. Belliss India Ltd. and others for non-compliance with licensing and declaration requirements. The appeals addressed the legality and justification of these duties, penalties, and confiscation orders based on the classification issue of the Turbo Alternator assembly.

Issue 4: Interpretation of Supreme Court judgments regarding the assembly of goods on immovable property and excisability:
The appeals referenced various Supreme Court judgments, including Narne Tulaman, Mittal Engineering Works, Collector v. Woodcraft, and others, to argue against the Commissioner's decision on excisability of the Turbo Alternator assembly. The Supreme Court's detailed analysis in similar cases emphasized the distinction between components and the assembled product, the test of marketability, and the impact of assembly on immovable property. The final ruling in the present case aligned with the Supreme Court's interpretations, rejecting the excisability of the assembly under Heading 85.02 due to lack of new goods creation and marketability, ultimately leading to the allowance of the appeals and rejection of the Revenue's appeal.