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TMI Blog2001 (11) TMI 785X X X X Extracts X X X X X X X X Extracts X X X X ..... s places and they were only doing trading activity and they were not doing any manufacturing activity at the premises. They claimed to have received contracts for supply of goods to the projects and the entire installation in various projects and were done by separate contractors, who had obtained contracts with their purchasers. The appellants case is that they purchased duty paid items from M/s. Kirloskar Electric Company Ltd., Ashok Leyland and M/s. Batliboi Co. and they were supplying the items as second sales and the invoices were endorsed to their purchasers. For the purpose of commercial taxes, the second sales have been approved by tax authorities. They were transported and delivered to the project sites at the expenses of the appellants. The Central Excise officers visited the trading premises of the appellants on 24-11-1992 and recovered all the invoices and records for the purpose of verification from the year 1990 and they proceeded to initiate recovery proceedings holding that they were manufacturing and assembling D.G. sets and were liable to pay Central Excise duty. 3. The ld. Commissioner in the impugned order has not taken into consideration, according to them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. as reported in 1996 (85) E.L.T. 102. On the other hand, the ld. DR, Shri S. Kannan submitted that from the facts of the case it revealed that the appellants were supplying D.G. sets to the buyers itself in an assembled state and it is a manufactured item. Therefore, the Commissioner has rightly held the item to be D.G. Sets classifiable under Chapter sub-heading 8502 of the CETA and hence they were required to pay the duty as they had not taken licence and cleared the same without following the Central Excise Rules. 3. On a careful consideration of the submissions made by both the sides and perusal of the records, we notice that the appellants have made out a strong case in their favour. The appellants were only trading concern and they were purchasing various items from various manufacturers and they were supplying the same to the respective buyers and were getting it installed through separate contractors. The Commissioner has not given any answer to this plea and the findings on the record clearly indicate that the demand has been made out only on the basis of the invoice of the same seller. The Commissioner has taken into consideration the judgment of the Supreme Court re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein the appellants had supplied two Gen. sets of 250KVA and also 150KVA respectively and had offered warranty for a period of 12 months. If the appellants were not engaged in any manufacturing activity, the question of giving any warranty would not arise. The submission of the appellants were that there were only very few instances of supply of Gen. sets as such and all their supplies therefore could not be taken into reckoning to hold as if the appellants had supplied Gen. sets to all the customers in all cases. If the appellants were held to be manufacturers of Gen. Sets, Modvat credit would be available to them and to that extent duty liability would come down considerably. This point is required to be re-considered and re-examined by the lower authority after taking into account all the documentary evidences so produced by the appellants. It is observed from the record that no facts or figures have been furnished by the appellants in regard to how many Gen. sets have been supplied and as to what was done with respect to other supplies made for the installation of the Gen. sets at site. Therefore, taking note of the fact that the appellants had received orders for supply of Ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for my limited purpose, I shall state briefly the relevant facts as brought out by the submissions of the Counsel and the DR today. M/s. Madras Power Suppliers claimed to be dealing in various commodities including Diesel Generating Sets (in short, DG sets). During the period 11/90 to 11/92, they procured various components and parts of DG sets, such as Engines, Alternators, Fuel Tanks, Base Frames, Control Panels etc. from various manufacturers and either supplied the goods as such to their customers or assembled them into DG sets and supplied the same to their customers. The Department held them to be liable to pay duty of excise on the complete DG sets as well as on the components of DG sets treating the latter as DG sets in unassembled (CKD) form. The Department, therefore, demanded duty on the above clearances at the rate applicable to DG sets classifiable under Chapter Heading 85.02 of the Schedule to the CETA. This demand amounted to Rs. 17,01,614/-. The demand was raised by way of show cause notice, dated 30-5-1994, which also proposed to impose penalty on the party for alleged contravention of Central Excise Rules. Allegations in the show-cause notice were contested by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section XVI of the CETA, 1985 (which Note governs classification of machine supplied in the form of its components) and, on the other, it alleges assemblage of components by the appellants at customer s site and supply of the fully assembled DG sets to the customer (in which context, the Section Note is irrelevant). When the matter came to its adjudication stage, the Department s arguments based on the Section Note were apparently given the go-by and its case of assemblage of components into DG sets by the appellants at customer s site received selective approval. The adjudicating authority found to the effect that the appellants brought the components to customer s site and assembled them into, and installed/commissioned, DG sets at such site. It also found that the DG set was attached to the ground on installation. It, however, held the DG set to be excisable goods, after observing that its attachment to the ground did not render it an immovable property. This finding of the ld. Commissioner that the DG set did not become immovable property despite its attachment to the ground is not supported by any evidence or sound reasoning. In this view of the matter, it can be safely co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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