Customs, Excise and Gold Tribunal - Bangalore
Bevcon Wayors Private Limited vs The Commissioner Of Customs And Central ... on 3 May, 2007
Equivalent citations: 2007(120)ECC277, 2007ECR277(TRI.-BANGALORE), 2007(214)ELT398(TRI-BANG)
ORDER S.L. Peeran, Member (J)
1. This appeal arises from Order-in-Original No. 16/2004 dated 30.9.2004 by which the Commissioner of Central Excise, Hyderabad has confirmed demand of duty and denied the benefit of Notification No. 3/2001 dated 1.3.2001 for the period 2001-02 and the benefit of Notification No. 8/2002 dated 1.3.2002 for the period 2002-2003. He has also imposed penalty and interest for not having paid duty in respect of supply of Material Handling Systems. The appellants were registered under Central Excise for manufacture of Material Handling System/Conveyor Equipment such as belt conveyors, vibrating screen, crushers, screw conveyors, bucket elevator, drag chain conveyors; etc. They were availing the benefit of exemption notifications cited supra. It is submitted that they had manufactured and cleared Material Handling Systems which aid in movement of materials from one point to another and it was considered as goods and ineligible for the benefit of the Notification No. 3/2001 in Sl. No. 16 within the description of 'Agricultural, Forestry, Agro-Industrial, Industrial, Municipal and Urban Waste Conversion Device Producing Energy'. The appellant's contention was that this item when it is cleared and set up in the purchaser's place brings into existence immovable property and therefore, duty is not leviable. They pointed out that all duty paying parts were purchased and the same was erected in the premises of the customer bringing into existence an immovable property i.e., Material Handling System. They have shown documents and the manner in which the good were invoiced. However, the pleas were rejected on the ground that the items are immovable property and the judgments cited by the appellant in their support were also not applied by the Commissioner. It was held by the Commissioner in the impugned order that they are not entitled for the benefit of the said Notification and hence, confirmed demands in terms of Section 11A of the Central Excise Act.
2. We have heard both sides in the matter.
3. The learned Chartered Accountant submits that the issue is covered by the ruling of the following judgments.
(i) McNally Bharat Engg. Co. Ltd. v. CCE, BBSR-II
(ii) Fenner (India) Ltd. v. CCE, Nagpur
(iii) TRF Ltd. v. CCE, Bhopal0
(iv) CCE, Chandigar v. Fenner India Ltd.
The learned Chartered Accountant took us through the allegation made in the show cause notice wherein it had been specifically stated that the appellants had cleared Material Handling System. It is his submission that the Material Handling Systems comes into existence only when they are erected in the premises of the customers and assumes it is an immovable property. He submits that this very issue was subject matter of above noted judgments and therefore, it was not proper on the part of the Commissioner to have disregarded the judgments and held them as not eligible for the benefit of the notification. It is his submission that the Sl. No. of the Notification referred to in the impugned order is independent of the issue of excisablility of the product. When the product itself is not excisable and being an immovable property, then in such a circumstance the question of going into the eligibility of the Notification with regard to non-conventional devices/systems does not arise. Therefore, the Commissioner has erred in proceeding to see the terms of the Notification to deny the benefit without going into the aspect pertaining to the item being immovable property in terms of the judgments.
4. The learned JDR reiterated the departmental view and read out the order in question.
5. On a careful consideration, we notice that the Commissioner has rejected the citations on the ground that the entire conveyor system as a whole is not transportable and what was cleared were part components of conveyor system in disassembled condition. However, this was not the ground taken in the show cause notice.
The show cause notice clearly proceeded on the basis that the appellants had manufactured and cleared the excisable Material Handling System. There was no allegation that they had cleared parts of assembly of this system as held by the Commissioner. The appellant's contention is that they had purchased duty paying parts and these parts were assembled as per the design and plan which has been enclosed in the paper-book. The perusal of the layout of fuel handling system clearly indicates that the entire system comes into existence as an immovable property as civil construction has been done along with the conveyor system. The conveyor system comes into existence along with the civil work as an immovable property as per the various designs and specifications produced by the appellants. Therefore, the stand taken by the appellant that what was manufactured was immovable property and the ratio of the four above noted judgments would apply to the facts of this case, is sustainable.
5.1 In the case of McNally Bharat Engg., the Tribunal held that the Material Handling Equipment comes into existence when formally embedded in earth and the entire system emerges as immovable and formally attached to the foundation. The present case squarely falls under this ratio.
5.2 In the case of Fenner (India) Ltd., the Mumbai Bench also examined the issue and found that the conveyor system was assembled from components stage by stage at the place of assembly and it was also found that system was not capable of transporting as such to another other place without dismantling and latter system being brought into existence along with civil work as immovable property. In the present case, the same situation arises and this judgment cannot be distinguished.
5.3 Likewise the Mumbai Bench in the TRF Ltd. case also deals with the emergence of belt conveyor system erected at the site as permanent immovable property and incapable of being marketed and is not excisable. This ratio will also apply to the facts of the case.
5.4 In view of these judgments which are on the same facts as in the present case and a finding has been recorded that conveyor systems are immovable property and not excisable, therefore, respectfully following the ratio of these judgments, we set aside the impugned order and allow the appeal.
(Operative portion of this Order was pronounced in open court on conclusion of hearing)