Customs, Excise and Gold Tribunal - Mumbai
M/S. Bharat Geans Ltd. vs Commissioner Of Central Excise, ... on 2 April, 2001
ORDER J.H. Joglekar, Member (T)
1. The appellants make industrial furnaces. The furnaces are tailor-made according to the requirements of the buyers. The size of the furnaces varies ranging between 230 sq.ft. to 3000 sq.ft. with an average height of 11-12 feet. All the parts required to erect such furnaces are purchased by the appellants from the market. These are taken to the customers' premises and erected/installed there. Show cause notice dated 1.2.1994 was issued alleging that such furnaces attracted duty under chapter heading 84.17, that the notices had cleared such furnaces without payment of duty quantified at Rs.41,36,306/-. Another show cause notice dated 4.2.1992 issued on the same lines demanded duty of Rs.32,62,110/-. The total period covered under these two show cause notices was January 1987 to January 1993. The assessees were heard by the Commissioner. The claim advanced was that the furnaces were attached to earth and were not "goods" on which excise duty could be levied. A circular of the department was cited as also case law. Plea on limitation was also advanced citing an earlier order passed by the Additional Collector dated 12.7.1985 holding that the furnaces were not "goods". The Commissioner passed orders confirming the duties demanded in both notices and taking a lenient view, imposed a penalty of Rs.10 lakhs. The two appeals are directed against this common order.
2. The case for the appellants was argued by Shri Rohan Shah appearing along with Shri K. Merchant, advocates. The Revenue was represented by Smt. R. Arya, SDR.
3. There is considerable law on the dutiability of the goods which are attached to earth and are immovable property. One of the earliest judgments is that of the Tribunal in the case of Tata Robins Fraser Ltd. vs. CCE 1990 (46) ELT 562. In this judgment the Tribunal examined the definition of "goods" under the Sale of Goods Act, 1930. The ruling in this case was that an immovable property could not become dutiable goods. A number of judgments were delivered by the Supreme Court on this issue. The Supreme Court in the case of Narne Tulaman Manufacturers Pvt Ltd. vs. CCE 1988 (38) ELT 566 held that the assembly of weight bridge amounted to manufacture. In the case Mittal Engineering Works (P) Ltd. vs. CCE 1996 (88) ELT 622 component parts of mono vertical crystallisers were cleared on payment of duty from which the crystalliser was erected in the sugar factory. The Supreme Court observed that since the crystalliser was attached to the earth by a foundation, it was not capable of being sold. It was held that the creation at site did not become goods. The Court distinguished the judgments in the case of Narne Tulaman Manufacturers Pvt Ltd. vs. CCE 1988 (38) ELT 566 and in the case of Hyderabad Race Club vs. CCE 1986 (23) ELT 274. In the case of Sirpur Paper Mills Ltd. vs. CCE 1998 (97) ELT 3 the Supreme Court held that a very huge machine fixed to the earth did not become immovable. It was observed that merely because something is affixed to the earth it did not become immovable property. A machine which is fixed to the earth for better functioning continues to be movable property and excisable goods.
4. The next landmark judgment is in the case of Triveni Engineering & Indus. Ltd. vs. CCE 2000 (120) ELT 273. In this judgment the Supreme Court held that bringing together a steam turbine and alternator by coupling and aligning resulted in the creation of new commodity. At the same time the Court held that the manner in which the creation was affixed to the earth rendered it an immovable product and there fore not excisable.
5. The Tribunal in their judgment in the case of Silical Metallurgic Ltd vs. CCE 1999 (106) ELT 439 went into the dutiability of similar goods, namely electric are furnace. The Tribunal observed that the furnaces were created on the foundation of pillars which were embedded in the earth at the depth of 15 feet. It was observed that the furnace was constructed brick by brick and any attempt to move it, might result in destruction of the furnace. It was held that the construction of the furnace was simultaneous with the civil work and the foundation was not merely a base for laying the machinery. The machinery and the civil work came into existence together and on that ground it was held that the goods were immovable property.
6. We have examined the process given by the appellants. The first step is the creation of a pit/tank. The foundations are laid, civil work is done when chit tank is fitted in the foundation. Furnace casings were permanently welded, pipes carrying fuel gases, other gases and cooling oil were attached . After the foundation was laid, the furnace was created brick by brick on the steel structure which was permanently welded. On examination of the process we find it to be akin to the furnaces covered by the Tribunal judgment in the case of Silical Metallurgic Ltd. vs. CCE 1999 (106) ELT 439 (supra). Applying the ratio of the judgment, we hold that the furnaces manufactured by the appellants were not "goods" and therefore did not attract levy of duty.
7. On the aspect of limitation also we find that the Additional Collector as early as in July, 1985 had examined the same issue and had held that the furnace did not attract duty. In the face of this judgment, there is no substance in the claim of suppression etc. levelled in the show cause notices.
8. Thus, on merits as well as on limitation, the appeals succeed and are allowed with consequential relief, if any.
(Dictated in Court)