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TMI Blog1987 (9) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... te Limited, situated in the same premises as the appellants unit. These two concerns did not own any factory and obviously all the manufacturing activity was being done in the factory of the appellants. These companies were only found to be dummies of the appellants set up for the purpose of availing the exemption notification in respect of the goods manufactured by them. The Collector held that all the clearances of the goods manufactured in the appellants factory as having been made on account of the appellants and confirmed duty demand and also levied a penalty of Rs. one lakh on the appellants and Rs. 1000/- on the other two concerns. 3. In the proceedings before us, the learned advocate for the appellants accepted that all the clearances of machines covered by the impugned order made by the appellants were on their account and gave up the plea that any clearances of these goods had been made by the other two concerns. The item in dispute for the purpose of reckoning the total value of the clearances made by the appellants, are FBDs and some other machines. The issue before us is the excisability of the FBDs to duty. Briefly stated, the appellants manufactured some of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he first company weights vary from 6 tons to 10.5 tons. (viii) At site the clients' erection personnel are deputed who erect the unit and attach the fan to the heat source available there by means of suitable ducting. It is relevant and significant to point out that under no circumstances can the equipment be classified as a drier until such time as it is attached to a heat source. Furthermore, the equipment cannot possibly be assembled and tried other than in its located area wherein the pit has to be provided and the equipment is fastened to the earth, when the project automatically becomes a Turnkey Project as immovable property, losing its character as "goods" liable to Excise Duty. This aspect is well settled in law by various judicial pronouncements." He stated that this point raised by him before the Collector goes to the root of the matter. In the background of the plea made before the Collector, he stressed the following points : (i) All the components and sub-assembly required to make a complete FBD were sent from the factory of M/s. Confabs and that there was no further components required to make a complete FBD at the site of the customer. (ii) The FBDs, as such, di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y particular machines installed by the appellants. He, however, offered that the Department could conduct on-the-spot study at the factories to verify the correctness of the pleas made by him. He stated that in as much as the appellants did not manufacture FBDs as such the Revenue could take into reckoning only the value of the parts fabricated by the appellants and their Fabricators, M/s. Confabs and charge duty thereon if leviable otherwise and the value of the bought out items could not be therefore, added for the purpose of assessment. He stated that if this was done, the appellants clearances would fail within the exemption limit in respect of the goods falling under T. I. 68. 6. The learned SDR stated that from the records it would be seen that what the appellants had sold were only FBDs and the same were inspected and tested before despatch from the factory of M/s. Confabs and, therefore, it should be considered that they had cleared FBD machines only. He pleaded that Collector's order notwithstanding the fact that the appellants plea regarding FBDs being not goods was not dealt with in his order, was maintainable in law. He drew our attention to the contracts of appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation the complete drier will be run on trial run. Sometimes the customer may inspect the working of the drier. Thereafter the fabricated machine will be dismantled and packed for despatch to customer's site and it will be erected at the site." He drew our attention to the appellants quotations for supply of various machines. He stated that these quotations in respect of FBDs are more or less uniform so far as the form is concerned and stated in all these cases while a separate charge has been raised for erection/installation/commissioning (supervision only), the buyers are supposed to provide at their own cost following items : 1. Plenum chamber floor civil works 2. Heater civil works 3. All electrical wiring 4. Labour for erection/installation 5. Board/lodging/transport for our installation personnel 6. Ducting from Heater Nose Bag to Drier Hot Air Blower He pointed out that quotations in the case of Kadamane Estates Company, an element of excise duty chargeable has been shown. He further pointed out that most of the machines sold by the appellants were through the Tea Board and one of the conditions for delivery was the inspection of the machines before their despatch. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fixed to some .structure on site, civil works or otherwise, the FBDs were still chargeable to duty and cited the case of Madan Cold Storage, Kanpur v. Collector of Customs (para 7) : 1984 E.C.R. 1889 (Cegat). He stated that the value of the bought out items which were utilised for manufacture of FBD were required to be added for the purpose of assessment and cited the case of Daya Ram Metal Works v. Collector of Central Excise, Baroda 1985 E.C.R. 1383 (Cegat). He also pointed out that as per terms of contract between M/s. Bedi & Bedi and their contractors, M/s. Confabs, the despatch of the goods was not to be done by M/s. Confabs to the various buyers till the same had been inspected by them. 7. Shri Haksar in his reply stated that there was no evidence that in any case the appellants had charged excise duty. He fairly conceded that for the purpose of assembly at site nothing further was added to what was despatched from the factory of M/s. Confabs. He stated that no doubt the invoice was for FBD complete but this did not determine the character of the goods at the time of despatch. He pleaded that the goods were to be assessed in the form in which these were despatched and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of testing the machines, therefore, testing and inspection whatever was carried out would have been in relation to the functioning of the machines for the purpose of drying the tea leaves. 10. The points that we have therefore, to take into consideration for arriving at our conclusions are : (i) How the machine was bought and sold, (ii) the conditions of sale; (iii) whether the machine came into existence as a unit for the purpose of testing. We find from the documents filed before us that the appellants offered for sale specified models of FBDs. The catalogue produced by the appellants also shows that they manufacture different models of these goods. What is offered for sale is described as Fluid Bed Tea Drier. The models referred in the catalogue produced are 20:L:3B 20L:4B. There may be some other models also that the appellants may have been manufacturing but there is not plea before us that the general configuration of machinery offered is in any way different in design from what has been shown in the catalogue produced. The drier shown in the catalogue is a single unit with various parts indicated. 11. It is seen from the documents on record that M/s. Tamilnadu T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,786.00 Freight octroi and estate delivery 5) 5,400.00 Erection 6) 6,000.00 Total for one complete FBD. 4,94,814.00 Rs. Heater SHOLA (Super) indirect fired cellular Multitubular Solid Fuel Air Heater Rs. 2,24,850.00 heater flue gas disposal System (Ad Fan) Comprising of the following : (a) 25" Dia impeller with 16" wide casing with heat slinger Rs. 19,911.00 (b) Inletbox, damper, outlet duct to ground level Rs. 7,39,575.00 (c) Drive arrangement consisting of motor stand, pulleys, V. Belts etc. d) Suitable T.E.F.C. Motor & Starter. Total : 2. A firm order is placed with you for the supply and erection of One Fluid Bed Drier combined with Heater and flue gas disposal system according to the above specifications and as per the following terms. Delivery : - Delivery of the machines should be completed before 31.3.1983 and erection of the same before 30. 4. 1983. Payment : 90% payment will be made on completion of erection and the balance 10% after satisfactory commissioning and trial runs. Insurance : Insurance of the machines should be arranged by you as per the terms of your tender. Installation :- Erection of the machines should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e this that before the unit is installed the necessary parameters required for drying unit is installed the necessary parameters required for drying tea are all checked up, in a whole. The inspection of the goods being a pre-requisite before their sale and even in terms of the agreement between confabs and B&B the machine are required to be inspected before these are sent at the cost of M/s. B&B. It has to be held that the machines as inspected as per the requirements would have to be in a form that all the equipment which functionally participates in the drying of the leaves right from the first stage to the last are tested in an integrated term. It is only then that any defect in the operation of the machine would come to light. It is, therefore, to be held that FBD machines in the form in which it is shown in the catalogue do come into existence before it is sent in CKD form to the buyers' site. 14. The appellants have pleaded that notwithstanding the fact that they offered complete machines, these came into, existence as machines only at site as immovable goods as plenum chamber had to be recessed underground for the purpose of installation of one machinery. Their plea is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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