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TMI Blog2008 (6) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... fresh consideration in the light of the judgment in Virdi Brothers' case (supra) and Cethar Vessels' case (supra) and Circular referred to above. In view of the above observations, we are taking up the matter for fresh consideration. 2. Shri G. Shiva Dass, Advocate appeared for the appellants and Shri P.R.V. Ramanan, learned Special Counsel appeared for the Revenue. 3. We heard both sides. The issue involved is the excisability of Electric power Fencing System by use of solar power manufactured by the appellants. The Original Authority in the impugned order classified the item under 8543.90 of the Central Excise Tariff and demanded appropriate duty invoking the larger period under Section 11A. Penalties were also imposed. The appellants approached this Tribunal which passed the Final Order No. 1312-1313/2005 dated 8-8-2005 [2005 (190) E.L.T. 343 (Tri.)] upholding the impugned order. However, the penalty on the Managing Director was reduced to Rs. 50,000/- from Rs. 5,00,000/-. It was also decided that the benefit of modvat credit should be extended. The appellant approached the Hon'ble Apex Court against the above mentioned Final Order. The Apex Court remanded the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. Note 4 to Section XVI is reproduced herein below. 4. Where a machine (including a combination of machines) consists of individual components (whether separate or interconnected by piping, by transmission on devices, by electric cables or by other devise) intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or Chapter 85, then the whole falls to be classified in the heading appropriate to that function. It was argued that in terms of Note 4 to classify the impugned item under this Chapter, its function should have been covered by any one of the headings in Chapter 84 or Chapter 85. As far as the impugned item is concerned, its function can be taken as "deterring intrusion". The note requires that the clearly defined function should be one that is covered by one of the headings in Chapter 84 and Chapter 85 and only if such a function is so specifically covered, the entire ma chine consisting of individual components that are interconnected would be classified under the Heading appropriate to that function. In this case, Chapter heading 8543.90 does not refer to "deterring intrusion" as function at all. Once such a function ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue. The Show Cause Notice relies on statements recorded from dealers, Accounts Manager as well as the Managing Director. Shri Manjunath, a dealer, in his statement dated 20-6-2003 has stated that in Indian conditions it is not practicable to reuse the fence system though it is possible to do so. Shri Rajesh, Accounts Manager in his statement dated 30-6-2003 has stated that the fence cannot be removed from the site and reinstalled since it is permanently grouted to the ground. Shri Vishnu Narayan, Managing Director in his statement dated 7-7-2003 has specifically stated that it is not possible to take out the power fence system once installed. Shri Vishnu Narayan, Managing Director in his letter dated 8-7-2003 has stated that the parts are indeed firmly grouted to the soil with cement concrete at site. Shri Harish Bhimaiah of M/s. Powertech India, a dealer of the company in his statement dated 30-9-2003 has stated that if the fence that is installed is removed, minor modifications are required requiring extra material that is to be utilized. From the above it comes out that there is indeed an erection of power fence system at site and it is not possible to remove the fence from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or as a stand alone fence. (iii) An electric fence consists of several horizontal arrays of conductors of bare wire (GI Wires) supported on insulators and connected to a fence energizer which in turn is connected to a power source and earth rods. (iv) The GI wires are generally mounted behind an existing perimeter fence. (v) The existing posts can be made use of provided the corner/end posts are strong. (vi) Electric fence can be modified and shifted without loss of materials. It is portable. (vii) Following are the components of a typical fence. Component Temporary Fence a Permanent fence Energiser (mains powered) Energiser (battery powered) Battery charging system (wind solar) Battery charging from mains Non-rechargeable battery Straining post -wood Contour post -wood Turning post -wood Strut-wood Stake-wood, plastic, metal or fiberglass Insulators integral wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce cited in the headings of Chapter 84 or 85. The power fence answers the description of an equipment/appliance. The current Customs Tariff classifies Equipment/Gadgets run on solar energy under Heading 85.43. (xi) The power fence answers the description as in Section Note 4 which has already been extracted in Para 4.4. The words 'covered by one of the headings in Chapter 84 or 85 qualifies the components and not function' as contended by the learned advocate. In other words, it cannot be argued that the function should be specified in Chapter 84 or 85 for Section Note 4 to apply (xii) The power fence performs the function of 'deterring intrusion' and is not specifically mentioned in any of the headings upto heading 85.43 of Chapter 85. Since Heading 85.43 is a residuary heading, power fence would appropriately be classifiable under Heading 85.43. (xiii) In the context of CBEC circular dated 15-1-2002, provisions of clause (e) of Para 4 describes when goods would not be considered as movable. Power fence which is capable of being dismantled without damaging the components and can be reassembled answers the description of movable goods. Thus, testing with the criteria laid do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0) E.LT. T9] regarding the excisability of plant and machinery assembled at site. 3. A number of Apex Court judgments have been delivered on this issue in the recent past. Some of the important ones are mentioned below: (i) Quality Steel Tubes Pvt. Ltd. v. CCE [1995 (75) E.L.T. 17 (S.C.)] (ii) Mittal Engineering Works Pvt. Ltd. v. CCE, Meerut [1996 (88) E.L.T. 622 (S.C.)] (iii) Sirpur Paper Mills Limited v. CCE, Hyderabad [1998 (97) E.L.T. 3 (S.C.)] (iv) Silica Metallurgical Ltd. v. CCE, Cochin [1999 (106) E.L.T. 439 (Tribunal)] (v) as confirmed by the Supreme Court vide their order dated 22-2-99 [1999 (108) E.L.T. A58 (S.C.)] (vi) Duncan Industries Ltd. v. CCE, Mumbai [2000 (88) ECR 19 (S.C.)] (vii) Triveni Engineering Industries Ltd. v. CCE [2000 (120) E.L.T. 273 (S.C.)] (viii) CCE, Jaipur v. Man Structurals Ltd. [2001 (130) E.L.T. 401 (S.C.)] 4. The plethora of such judgments appear to have created some confusion with the assessing officers. The matter has been examined by the Board in consultation with the Solicitor General of India and the matter is clarified as under :- (i) For goods manufactured at site to be dutiable they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merely because they are transported in dismantled condition. Rule 2(a) of the Rules for the Interpretation of Central Excise Tariff will be attracted as the guiding factor is capability of being marketed in the original form and not whether it is actually dismantled or not, into its components. Each case will therefore have to be decided keeping in view the facts and circumstances, particularly whether it is practically possible (considering the size and nature of the goods, the existence of appropriate transport by air, water, land for such size, capability of goods to move on self propulsion-ships- etc.) to remove and sell the goods as they are, without dismantling into their components. If the goods are incapable of being sold, shifted and marketed without first being dismantled into component parts, the goods would be considered as immovable and therefore not excisable to duty. (vii) When the final product is considered as immovable and hence hot excisable goods, the same product in CKD or unassembled form will also not be dutiable as a whole by applying Rule 2(a) of the Rules of Interpretation of the Central Excise Tariff. However, components, inputs and parts which are spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be considered to be excisable goods. Such lifts and escalators have also been held to be non-excisable by the Govt. of India in the case of Otis Elevators India Co. Ltd. reported in 1981 (8) E.L.T. 720 (GOI). Further, this aspect was also a subject matter of C AG's Audit Para No. 7.1(b)/98- 99 [DAP No. 186] which has since been settled by the C AG accepting the Board's view that such lifts and escalators are not excisable goods. Also refer CCE v. Kane Elevators India Ltd. reported in 2001 (138) E.L.T. 635 (Tri.-Chen.) = 2001 (45) RLT 676 (CEGAT-Chen.). (b) There may, however, be instances of fabrication of complete lifts and escalators which are movable in nature as a whole and can be temporarily installed at construction sites or exhibitions for carrying men or material. Such cases alone would be liable to duty under sub-heading 8428.10 of the Central Excise Tariff. 6. Based on the above clarifications pending cases may be disposed of. Past Instructions, Circulars and Orders of the Board on this issue may be considered as suitably modified. 7. Suitable Trade Notice may be issued for the information and guidance of the trade. 8. Receipt of this order may please ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... electric fence cannot be called either as a machine or equipment or appliance. We can only call it as a system containing various components which are connected with each other for a specific purpose. It is only a system. The individual component like energizer, battery, insulators, wires, steel rod, etc., may fall under different Chapters of the Central Excise Tariff but together they form only a fence. In any case, a fence is specific to a particular area. The way a fence is erected depends upon the geometry of the said area. If a fence is formed in a particular area, the same thing cannot be shifted and used in another area without dismantling and also without adding some more components or diminishing the original components. That is so, because the geometries of two areas may not be identical. At this stage, we have to refer to Para 4 (vi) of the Board's Circular dated 15-1-2002. We reproduce the last sentence "if the goods are incapable of being sold, shifted and marketed without first being dismantled into component parts, the goods would be considered as immovable and therefore not excisable to duty". If an electric fence has to be shifted, then the entire thing cannot be j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and various sub-systems forming a network. Actually the entire mobile telecommunication service is a system containing various sub-systems. The Tribunal held that the sub-systems are not excisable in the light of Para 4 (vi) of Board's order dated 15-1-2002. In fact the Commissioner held that the base station consisting of so many sub-systems of movable as excisable but the Tribunal held that various equipments are required to be dismantled into various components and then they are to be moved from existing site and reassemble at new site. This could involve damage to certain parts like cable trays, etc., which are embedded/fixed to the civil structure. With the above reasoning and also relying on the Apex Court decision in Triveni Engineering Industries and Board's circular, the Tribunal held that no manufacture of new commercial goods took place by installation of base station. The above decision of the Tribunal was confirmed by Bombay High Court. Even though, the item involved is different, the ratio of the above decision is applicable. The individual components of the electric power fencing system are excisable but together when they form the fence system, they cease to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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