Customs, Excise and Gold Tribunal - Mumbai
C.C.E. And C. vs Gujarat Narmada Valley Fertilizers ... on 12 December, 2000
Equivalent citations: 2001(130)ELT710(TRI-MUMBAI)
ORDER Gowri Shankar, Member (T)
1. The question for consideration in each of these appeals is the same. It is whether fabrication of parts which were used to construct structures of metal which were immovable amounts to manufacture requiring payment of duty.
2. In Appeal E/1033/96 notice was issued to M/s. Gujarat Narmada Valley Fertilizers Corporation Limited (hereinafter GNFC) and to M/s. Vijay Tanks & Vessels Limited (hereinafter Vijay Tanks) demanding duty from each of them on structural elements which ultimately form part of ammonia storage tank.
3. In Appeal E/1034/96 duty has been demanded from M/s. Petrofils Co-operative Limited (hereinafter Petrofils) and M/s. Nila Construction Company (hereinafter Nila) on various structural elements, which were to be used in the factory of Petrofils. The Commissioner has held that duty was not payable in either case. The appeals challenge his finding.
4. We will first take up the case of Petrofils and Nila. The Commissioner has noted that of the elements were fabricated to be fitted to other structures permanently attached to the earth, and therefore immovable. This finding is challenged in the appeal on the ground that the Collector should have held the fabrication of the elements to be manufactured.
5. While the Departmental Representative explains the contentions in the appeal, after hearing counsel for the respondents, we have no room for doubt about the correctness of the Collector's conclusion. The structural elements were fabricated by subjecting sheets, angles, channels and other steel shapes and sections to such simple operations as cutting, drilling and grinding. These operations do not result in the emergence of a new and distinct commodity and therefore are not manufacture. The judgment of the Bombay High Court in Tata Engineering & Locomotive Company Ltd. v. Union of India, 1997 (89) E.L.T. 463 is clear, that such activities does not amount to manufacture. The Collector finds that the structural elements emerged by attaching the angles, channels and other metal shapes to a structure that was already immovable. In other words, the elements did not emerge as such before being fitted to the immovable structure. We therefore find no reason to interfere with the Collector's order and accordingly dismiss the appeal.
6. In the other Appeal E/1033/96, however, a different position emerges. Unlike in the earlier case where the elements were assembled at site to create immovable structure, the structure was assembled into a specific sub-assemblies to this. The statement of M.L. Mandalia, the resident engineer of M/s. Nila Constructions, who was the contractor for M/s. Petrofils confirms this. These sub-assemblies were taken to the site where an immovable structure had already been erected, and fitted to it. Putting together these assemblies, which did not become immovable before they were fitted to the existing structure, may result in the emergence of new commodity that is liable to duty.
7. The reply of the representative of the respondent is that these goods are not marketable. They are ultimately intended to be used to form part of the immovable structure and therefore should not be considered to be excisable goods. Although interconnected, these are separate arguments. We have no hesitation in rejecting the argument that an article is not goods because it is immovable, since it is intended to form part of immovable property. We quoted to the representative the example of floor tiles which are intended to be fitted to the floor of a structure. On the other aspect, the respondent might perhaps have a case. It appears from the fact that the goods were obviously tailor-made to suit the particular requirement of Petrofils. Can it be said that they are marketable? We are unable to accept the contention because they were intended for one person they are not useful to anybody else. It is possible, though perhaps not very likely, that these might find use by someone else in which case they would be marketable.
8. While emphasising upon the need for marketability as a prerequisite for excisable commodity, the Commissioner has not gone on to find that the goods are not marketable. Whether they are marketable or not has to be clearly determined by the Commissioner before whom the full facts are available. We therefore remand this aspect to the Commissioner for decision, reminding him that the onus of proving marketability rests upon the department.
9. The matter also has to be gone to the Commissioner for another purpose, of deciding on limitation. The Collector has not dealt with the contention that the factory was under the 'physical control' of the department and therefore the extended period contained in the proviso to Section 11A(1) could not be validly invoked in the notice. This aspect doubtless because he has dropped the demand on merit. Since that is now open to question this aspect may also be required to be considered by him.
10. The appeal is therefore allowed, the impugned order set aside and the matter remanded the Commissioner for decision afresh. He may decide the issue of marketability and on limitation after consideration of evidence that either side is at liberty to produce.