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TMI Blog2002 (3) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 4(4)(d)(ii) of the Act to M/s. TRF Ltd. while quantifying the duty to be paid by them. The order challenged in these eight appeals is the Commissioner's Order-in-Original No. 32-33/99, dated 14-6-99 which was passed in adjudication of two show-cause notices (SCNs), one issued on 19-3-98 to M/s. Associated Cement Co. Limited, Kymore and M/s. TRF Limited, Jamshedpur and the other issued on 21-12-98 to five sub-contractors of M/s. TRF Limited. The SCN proceedings have been dropped as against M/s. ACC Limited and the five sub-contractors, and the Revenue has no grievance against this. 2.The brief facts of the case are as follows :- M/s. ACC Limited [in short, ACC], who were engaged in the manufacture of cement, wanted to have in their factory site at Kymore a belt conveyor system for conveyance of lime stone, coal, clinker etc. and, for this purpose, entered into a contract with M/s. TRF Limited [in short, TRF]. As part of this contract, five purchase orders were placed with TRF by ACC. The scope of works to be executed by TRF under the purchase orders has been noted in para (4) of the Commissioner's order and the same is reproduced below for easy reference :- S. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TRF to be its manufacturer under Section 2(f) of the Act. He also upheld the charge of "suppression with intent to evade payment of duty" against them. After extending the benefit of Exemption Notifications and that of the provisions of Section 4(4)(d)(ii) of the Act, the Commissioner confirmed duty demand to the extent of Rs. 44,61,122/- against TRF and imposed penalties on them under Section 11AC and Rule 173Q. He accepted the objections of all other parties and dropped proceedings against them. 3.Heard both sides. Ld. Advocate, Sh. S. Sarkar, submitted on behalf of TRF, that the entire activity of fabrication and erection of the conveyor system at customer's site had been carried out bit by bit with various duty-paid materials and that the conveyor system had emerged as an immovable structure which was not excisable goods within the meaning of Section 3 of the Central Excise Act. He pointed out that, in their own case, it was so held by this Tribunal by order reported in 1990 (46) E.L.T. 562 [Tata Robins Fraser Ltd. v. CCE] and that the department's appeal against that order was dismissed by the Supreme Court as reported in 1996 (84) E.L.T. A-108. He also relied on the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Sarkar submitted that there was no proposal in the SCN to deny the benefits to his client. 5.Ld. Advocate, Sh. S.K. Bansal, who appeared on behalf of ACC and Sh. Sabir Khan (one of the sub-contractors), submitted that, the demand of duty raised on ACC and all sub-contractors having been vacated by the Commissioner and there being no challenge against such decision, no penalty could be imposed on ACC or any of the sub-contractors. The Revenue's prayer for imposition of penalty had no legal basis, he argued. 6.We have carefully examined the submissions. The principal issue before us is whether the belt conveyor system was excisable goods chargeable to duty under CH 84.28. In view of settled law, a decision on this issue will depend on how the system came into existence, i.e., whether "manufacture" within the meaning of this term under Section 2(f) of the Central Excise Act was involved in the process as also on whether the item was marketable. TRF, in their reply to SCN dated 19-3-98, gave an account of how the complete conveyor system had been brought into existence, which appears to have been accepted by the adjudicating authority and has not been disputed by the Revenue in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt sizes for belt cleaning. (f) Take up units for keeping the belting under constant tension. (g) Gear box, couplings, motors, drive base frames, all of various sizes for rotating the pulleys for movement of belting for transportation of material were fitted as per requirements. (h) Safety switches and control switches for the safety operation as well as to control the conveyors from the master control room were fitted. (i) Insertable bag filters were installed to keep the working area free from dust. (j) The entire conveyor structures were covered with asbestos sheets galvanized corrugated steel sheets." It is clear from the above process that the entire conveyor system was 'built' like a building and not 'manufactured' like goods. Beginning with the laying of civil foundation in the earth, the system was erected bit by bit and step by step till it became complete with a covering of asbestos and steel sheets. At no stage during the process did any commercially distinct and marketable conveyor emerge to be excised under CH 84.28. What emerged was only as an immovable property embedded through a massive civil foundation to the eart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating authority. We have to reject this finding of the lower authority as perverse. 8.We note that, after considering its decision on the aspect of movability of the machine in Sirpur Paper Mills (supra), the Hon'ble Supreme Court has held in the case of Duncans Industries Limited v. State of UP [2000 (88) ECR 19 (SC)] that the question whether any machinery embedded in the earth is movable or immovable property depends upon the facts and circumstances of the particular case. In deciding such question in the Duncans case, the Court took into account the fact that the party had permanently fixed the plant and machinery to the ground with the intention of running the factory and not with the intention of removing such fixtures for sale. In the instant case too, we see an element of permanency in the fixation of the belt conveyor system to the ground and this, in our view, has a decisive bearing on the question whether the system is movable or immovable. 9.The adjudicating authority, apparently, has not applied its mind to the Apex Court's decision on marketability issue in Quality Steel Tubes (P) Ltd. v. CCE [1995 (75) E.L.T. 17 (S.C.)] and in Mittal Engineering Works (P) Ltd. v. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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