Customs, Excise and Gold Tribunal - Tamil Nadu
Ion Exchange (India) Ltd. And Ors. vs Cce on 29 July, 2002
Equivalent citations: 2002(105)ECR390(TRI.-CHENNAI), 2002(150)ELT1235(TRI-CHENNAI)
ORDER S.L. Peeran, Member (J)
1. All these 27 appeals raise a common question of law and facts and hence they are taken up together for disposal as per law.
2. The issue pertaining to the manufacture and excisability of water treatment plant at site was the subject matter of several show cause notices against M/s. Ion Exchange (India) Ltd. with regard to the alleged manufacture and clearance without payment of duty. The show cause notices were issued by several Commissionerates in India and therefore the CBEC issued 3 orders No. 2/2000 dated 12.1.2001, No. 12/2000 dated 17.8.2000 and No. 15/2000 dated 24.10.2001 directing the Commissioner of Central Excise,Chennai-III Commissionerate to investigate and adjudicate the entire 44 cases referred to him. The Commissioner of Central Excise, Chennai-III Commissionerate has disposed of by separate Orders-in-Original No. No. 5/01 dated 31.10.2001; No. 6 to 9/2001 dated 29.11.2001; No. 4/01 dated 28.9.2001; No. 11 to 14/2001 dated 31.12.2001; No. 10/01 dated 20.12.2001; No. 1 & 2/2002 dated 12.1.2002; No. 6/02 dated 28.2.2002. In these Orders-in-Original he has confirmed the demands on M/s. Ion Exchange (India) Ltd. and has also imposed penalty on them besides imposing penalty on other parties who are dealers or buyers of the water treatment plant. In these Orders-in-Original he has taken a common view on the basis of several judgements that the water treatment plant were assembled and erected at different sites and not within the factory premises of M/s. Ion Exchange (India) Ltd. and that M/s. Ion Exchange (India) Ltd. and anyone for that matter had not filed any declaration under Rule 173B claiming exemption under notification No. 67/95 dated 16.3.1995 as amended. After due analysis of the facts and also the citations referred to before him, the Ld. Commissioner in identical words in all the above said Orders-in-Original rejected M/s. Ion Exchange (India) Ltd.'s plea that assembled at site does not bring into existence goods for the purpose of excisability and dutiability. Therefore he proceeded to confirm the duty liability and penalty on M/s. Ion Exchange (India) Ltd. and also on the buyers and the dealers. The Commissioner of Central Excise, Coimbatore had passed an order against the said appellant M/s. Ion Exchange (India) Ltd. by his order No. 51/94 dated 15.6.1994 on identical facts and confirmed the duty amount and had held that M/s. Ion Exchange (India) Ltd. brought into existence water treatment plant and hence were liable for penalty. The said issue came up before this Bench for consideration and this Bench by Final Order No. 790/2002 dated 16.7.2002 upheld the appellant's contention that such assembly did not result in the process of manufacture and water treatment plant are not goods at site but are immovable property. This view was expressed by majority of the members of the Tribunal in terms of the respective orders. Thus the demands confirmed against the appellant was set aside and appeal had been allowed by Final Order No. 790/2002 dated 16.7.2002.
3. Ld. Counsel Shri N. Venkataraman accompanied by Shri Muthu Venkataraman, Adv., and Shri P.N. Awasti, Adv. appeared for M/s. Bee Gee Associates and contended that the issue has been decided by this very Bench conclusively by the majority order holding that assembled at site of the water treatment plant does not bring into existence goods as it results into immovable property in view of the Final Order referred to before. They seek for waiver of pre-deposit of the amount and to allow the appeals. Shri C. Sarabheswararao, Consultant had appeared in the case of M/s. Asian Peroxides Ltd., Nellore when the matter came up for consideration on 22.7.2002. He had also placed the same submission and had requested the Tribunal to take up his written submission and decide the case on merits. The said written submission are placed before us, wherein also it has been contended that the main party who supplied water treatment plant in successively has been brought in a CKD condition from M/s. Ion Exchange (India) Ltd. The said assembled goods carried out at their site by them did not result in goods for dutiability purpose but had brought into existence immovable property. Therefore the imposition of penalty of Rs. 5,31,700/- against M/s. Asian Peroxides Ltd., Nellore is not sustainable and seeks for setting aside the same. Ld. Counsels also pointed out that the same issue came up for consideration before Delhi Bench in the case of CCE, Madras v. Chemtec Water Conditioners P. Ltd. as wherein the Tribunal clearly held that the water treatment plant fabricated and assembled at the factory site of the customer by assessee from the vessels and pipes manufactured by it cannot be said to be cleared in knocked down condition and further held that they are not excisable as it cannot be taken to the market and sold. The Revenue appeal was rejected applying the ratio of the Apex Court Judgment rendered in the case of Triveni Engineering & Indus. Ltd. v. Commissioner as . Further reference with reference to Delhi Bench In the same party as wherein the Tribunal has examined larger number of other judgements also to uphold the assessees's contention.
4. Ld. DR Shri A. Jayachandran and Shri C. Mani reiterated the departmental contention and sought for confirmation of the demands.
5. On a careful consideration, we notice that the issue is no longer res integra. This Bench had considered the appellant's own case with regard to same issue on the same facts and by majority final order No. 790/2002 dated 16.7.2002 upheld the assessees contention and set aside the demands and penalty against the appellants and other parties. The findings recorded by the third Member in paragraphs 25 to 32 is reproduced herein below:
25. I have perused the records and orders proposed by my Ld. Brothers. I have also heard both sides.
26. The dispute is whether the appellant is manufacturing Industrial Water Treatment Plants. The appellants submission is that the Industrial water treatment plants comes into existence only upon erection at site. The appellants have developed designs for such plants of varied capacity. They also get the various parts and equipment required for the assembly of such water treatment plants manufactured to specifications by job works. Upon receipt of orders from industrial plants, they pack various parts required for the assembly and erection and send them to the buyers who gets the water treatment plant assembled and erected at site. At times, some parts are also directly despatched from the place of manufacture to the place of assembly without being received in the appellant's premises. The appellants submission is that mere packing of the parts is not a process of manufacture attracting the levy of CE duty.
27. As against this, the revenue's contention is that the appellant has designed the plant, has got all the parts standardised and produced and is selling the goods against specific orders for plants. Further, the unit is easily assembled and does not require any foundation. Revenue therefore, holds that the product which is packed and sold by the appellant is a water treatment plant and the appellant can rightly be held as a manufacturer of such plants.
28. The appellant placed much reliance on the decision of the Supreme Court in the case of Hawkins Cookers 1997 (96) ELT 507 (SC), specific reference has been made to the following observations of the court:
When the matter came to the Tribunal, the Tribunal proceeded on the assumption that the PCA only packed the different equipments/pieces and items that they bought from different people at their depot at Nangal Shama and that they do not manufacture the components. Dealing with PCA's submission is that they do nothing more than packing the equipments/items bought from different people in cartons and boxes was taken to be true. Yet it was held that this process amounted to manufacturing. The Tribunal observed that "even the collector's findings that they had manufactured the twink simmermatic by affixing the heat control panel is unimportant and need not lead us away from the path". In fact, the Tribunal did not examine the correctness of the facts found and the conclusion reached by the Collector. The Tribunal held that the path taken by the Collector was not the path that should have been taken. The Tribunal disposed of the case proceeding on the assumption that nothing was done by the PCA except to gather the various tax paid articles and put them in a box themselves and in the facts and circumstances of the case that would constitute manufacture.
The Tribunal's order is clearly erroneous. The Tribunal has not found whether a new product came into existence because of some activity under taken by the appellant. Without this finding, it could not be held that a manufacturing process had been undertaken by the appellant and unless there is a finding of manufacture, excise duty is not attracted. Unfortunately, the Tribunal has not examined the correctness of the Collector's order at all. We are of the view that the order of the Tribunal is erroneous and must be set aside.
29. The appellant's contention is that unless some manufacturing process brings into existence a new product, the dutiable event does not take place. As against this, the revenue has contended that if some process is carried out which brings into existence a new product, duty is attracted. According to them it is not relevant whether the process is a manufacturing process or not.
30. It is well settled that Excise being a duty on manufacture or production, the levy is dependent on the manufacture of new goods. In the present case, the evidence in the SCN only reveals that the appellant gets the parts manufactured, they pack and send those parts either fully from their factory or send some of the parts directly from the manufacturer's premises to the buyers premises and other parts from the factory. However, other than designing and packing, appellant is not carrying out any manufacturing activity. These activities are not in the nature of manufacturing process, which brings into existence the Industrial plant in the appellant's factory.
31. I am in agreement with the view of the Ld. M(J) that the appellant was not manufacturing Industrial water treatment plants and that the demand are not sustainable. I am also in agreement with the view of the Ld. M(J) that the demand is time-barred inasmuch as the facts about the manufacture of the industrial water treatment plants was fully in the knowledge of the C.E. authorities. The assessee had written to the C.E. authorities on 27.10.1986 about the dutiability of Industrial water treatment plants. This letter explained the full facts about the appellant's activity. The Asst. Collector of C.E. had also clarified to the appellant vide his letter dt. 3.3.1987, that Industrial water treatment plants need not suffer excise duty. Thus, when the facts of the case were known to both sides, there is no substance in the allegation that relevant facts were willfully suppressed by the appellant with the intention to evade payment of duty.
32. In view of what has been stated above, I am of the view that the appeal is required to be allowed.
6. In view of this Bench having decided in the appellants own case by majority order holding that the process of assembly at site does not bring into existence excisable goods and are not liable to duty, therefore, the impugned orders in Orders-in-Original in these 27 appeals are required to be set aside by allowing the appeals. The COD application in Appeal No. E/177/02 is taken up and allowed in view of the main appeal already pending before the Tribunal and which is already listed for today for consideration. The stay applications are also allowed in the same term, with consequential relief, if any.
(Dictated and pronounced in open Court)