Customs, Excise and Gold Tribunal - Tamil Nadu
Rajeswari Enterprises ... vs C.C.E. on 13 September, 2004
Equivalent citations: 2005(180)ELT66(TRI-CHENNAI)
ORDER Jeet Ram Kait, Member (T)
1. Both these appeals, one filed by the assesee and the other filed by the Revenue arise from the order in Appeal No. 45/99 (MDU) dated 12-01-1999 passed by the Commissioner of Central Excise (Appeals), Trichy, by which the Commissioner has partially allowed the appeal of the assessee holding that the demand of duty is required to be recalculated and he has also reduced the penalty from Rs. 25,000/- to Rs. 10,000/- imposed under Rule 9(2) and 173Q of the CE Rules, 1944.
2. The brief facts of the case are that M/s. Rajeswari Enterprises (Construction) Pvt. Ltd., the assessee-appellants herein are engaged in the construction work and in the manufacture of articles of cement. They have manufactured and supplied PSC boxes and cement concrete slabs at the yard belonging to the Railways in terms of a contract entered into by them with the Railways. It was alleged that both the above products were chargeable to duty under heading No. 68.07 but the assessee cleared the goods without payment of duty. In the circumstances, show cause notice was issued to the assessee which culminated in the order of adjudication passed by the original authority whereby he has confirmed a duty of Rs. 6,58,899/- being the duty on the articles of cement manufactured and cleared during 8/92 to 5/93 under Rule 9(2) of the CE Rules, 1944 read with proviso to Section 11A(1) of the CE Act, 1944. He has also imposed a penalty of Rs. 25,000/- on the assessee under Rule 9(2) & Rule 173Q of the Rules ibid, against which the assessee filed appeal before the Commissioner (Appeals), who by the impugned order partially allowed the appeal, as noted above. Both the assessee and the Revenue are aggrieved by the impugned order in appeal and filed these appeals.
3. Smt Komala Choudhury, learned Consultant appeared for the assessee-appellants referred to the grounds of appeal and submitted that the lower appellate authority has proceeded to hold that the appellants have to be held as the manufacturer as the condition of marketability is satisfied. She has pleaded that test of marketability is satisfied only where the goods are known as such in common parlance or the commercial community for the purpose of buying and selling as held by the Hon'ble Apex Court in the case of Moti Laminates Pvt Ltd. v. CCE, Ahmedabad reported in 1995 (76) E.L.T. 241 (S.C.) and Bhor Industries Ltd. v. CCE reported in 1989 (40) E.L.T. 280 (S.C.) and not merely because an article is covered by any of the items in the schedule to the tariff. She has further pleaded that the RCC box segments and RCC slabs fabricated by her clients are not known to the market as goods and are not bought and sold in the market. These goods are fabricated as per the specific designs of the Railways for casting of minor bridges at site of the Railways and they are laid side by side fixed to the earth and glued together when they lose their identity. These box segments and slabs are fabricated for specific minor bridges and is not useful for any other bridge or purpose. Therefore, the test of marketability is not satisfied. She has also invited our attention to the judgement of the Hon'ble Karnataka High Court in the case of Thungabadra Steel Products Ltd v. UOI reported in 1998 (98) E.L.T. 334 wherein it was held that materials fabricated according to specific requirements which are welded and embedded in concrete civil works at site so as to become fixtures, are not excisable goods since they are not capable of being bought and sold in the market. In the said judgement, the Division Bench followed the judgement of the Hon'ble Apex Court in the case of Bhor Industries (supra). She has further submitted that no evidence has been let in by the department that the goods involved are marketable. She has further submitted that even assuming that the goods are excisable, the items would be eligible for exemption under Notification No. 197/87 dated 28-8-87 according to which the goods manufactured in a factory belonging to the Central Govt. and intended for use by a department of the Govt. were exempt. Therefore, the condition of the Notification No. 197/87 dated 28-8-87 is also satisfied in their case. She has also relied upon the judgement of the Tribunal in the case of KS & Company v. CCE reported in 2001 (130) E.L.T. 894 and TECCO v. CCE reported 2002 (149) E.L.T. 133 wherein it was held that such pre-cast boxes and slabs are eligible for the benefit of exemption under Notification No. 59/90, dated 20-3-90 taking note of Board's circular No. 456/22/99 dated 8-5-99 wherein it was clarified that expression 'site' used in the said Notification No. 59/90, dated 20-3-90 should not be given a restrictive meaning and shall include any premises made available to the manufacturer by way of specific mention in the contract. As regards demand of duty for the longer period, she has submitted that it is settled law by the Hon'ble Apex Court as in the case of CCE v.. Chemphar Drugs and Liniments reported in 1989 (40) E.L.T. 276 (S.C.) and in the case of TNHB v. CCE, Madras reported in [1994 (74) E.L.T. 9 (S.C.) = 1994 (55) ECR 7 (S.C.)] that unless it is shown that the assessees have deliberately withheld any information, from the department, the longer period of limitation in terms of the proviso to Section 11A(1) cannot be applied. She in the circumstances prayed for allowing their appeal and rejection of the Revenue appeal.
4. The Revenue has come in appeal against the decision of the lower appellate authority whereby the lower appellate authority has found that in terms of the show cause notice, duty liability has been worked out taking into account a quantity of 155.231 MTs of steel whereas the Railways had supplied only a quantity of 119.831 MT and therefore, only the quantity supplied by the Railways should have been taken into account and not the quantity of 155.231, and while holding so, the lower appellate authority has held that the demand is required to be re-calculated. He has also reduced the penalty from Rs 25,000/- to Rs. 10,000/-.
5. Shri C. Mani, learned JDR appearing on behalf of the Revenue defended the impugned order except in so far as it relates to the direction for recalculation of the duty demand and also reduction in the quantum of penalty.
6. We have carefully considered the rival submissions. The main issue that arises for determination in the present appeal is whether the pre-cast box segments and the pre-cast slabs manufactured by the assessee-appellants are marketable commodity or not. We observe that in terms of the contract entered into by them with the Railways, the assessee-appellants were given a free hand to cast the slab in a casting yard or at the work site of the Railways. Accordingly, they under-took the fabrication work belonging to the yard of the Railways. The contention of the assessee-appellants is that the items manufactured by them viz. pre-cast RCC box segments and RCC slabs, are not goods for the purpose of excise duty, inasmuch as these are not capable of being bought and sold in the market. In support of their plea they have relied upon various judgements of the Tribunal, Hon'ble Karnataka High Court and the Hon'ble Supreme Court. We have perused the various judgements relied upon. We have also gone through the Exemption Notification No. 59/90-C.E. dated 20-3-1990. We note that terms of Exemption Notification No. 59/90-C.E. dated 20-3-90, vide serial No. 7 of the table annexed to the said Notification, goods manufactured at the site of construction of the building for use at such site has been exempted from payment of duty. Similarly, in response to representation from trade, the Central Board of Excise & Customs has issued clarification vide Circular No. 456/22/99-CX dated 18-5-99 to the effect that the expression "site" occuring in Notification No. 5/98-C.E. dated 2-6-1998 may not be given restrictive meaning and shall include any premises made available to the manufacturer of goods falling under heading 68.07 of the Schedule to the CETA, 1985 by way of specific mention in the contract for such construction work, provided that the goods manufactured at such premises are solely used in the said construction work only. In the present case the condition stipulated in the Notification No. 59/90 is satisfied, inasmuch as the goods are manufactured at the site of the Railways in terms of the contract and are solely used in terms of the contract. We find that the Commissioner (Appeals), has proceeded to hold against the appellants on the ground that the goods are marketable. This finding cannot be countenanced, firstly for the reason that the goods have been manufactured according to the specific designs and specifications provided by the Railways to meet their own requirement for construction of minor bridges. Neither can it be used for others, nor are they capable of being sold elsewhere. These segments were placed side by side fixed to the earth and fused with each other by epoxy glue to form the bridge. It is seen from the records that the size of the segments and slabs were not uniform and varied according to the span of the bridge and in the present case the span of the bridge for which the items were manufactured ranged from 3 to 16 ft. Secondly, with the construction of the bridge, these goods became immovable property and on that count also duty cannot be demanded as these are not goods for the purpose of excise duty as they became immovable property. It is not as if, the concrete bridge constructed with the use of these segments and slabs can dismantled, transported and re-constructed elsewhere, unlike bailey bridges, or that these are capable of being bought and sold. Further, we also cannot just ignore another factor involved in this case, that is the Department has proceeded to calculate duty demand on the total value of the steel and cement used for casting of these two types of goods as if these goods are uniform in all respects and it appears that no norms have been adopted while calculating the duty demand.
6.1 We note that the Hon'ble Supreme Court in the case of Moti Laminates Pvt. Ltd. v. CCE, Ahmedabad reported in 1995 (76) E.L.T. 241 (S.C.) has held that the obvious rationale for levying excise duty linking it with production or manufacture is that the goods so produced must be a distinct commodity known as such in common parlance or to the commercial community for the purpose of buying and selling. The said judgement had followed their earlier judgements in the case of Bhor Industries v. Collector [1989 (40) E.L.T. 280 (S.C.)] and also in the case of Hindustan Polymers v. Collector reported in 1989 (43) E.L.T. 165, wherein also similar view was taken. The Hon'ble High Court of Karnataka in the case of Thungabhadra Steel Products Ltd. v. UOI reported in 1998 (98) E.L.T. 334 (Kar.) has also taken similar view while following the ratio of the judgements of the Hon'ble Apex Court in the case of Thungabhadra Steel Products v. UOI in Appeal Nos. 4961 to 4964 of 1989 decided on 12-12-97, Bhor Engineering Works Pvt. Ltd. v. Collector (supra) and Moti Laminates Pvt. Ltd. v. Collector (supra). The Hon'ble High Court of Judicature at Bombay in the case of Tata Engineering & Locomotive Co. Ltd. v. UOI reported in 1997 (89) E.L.T. 463 (Bombay) has held that columns, beams, trusses and Purlins being sections or portions of a structure coming into existence when affixed or fabricated into structure and becoming immovable in character and not capable of being marketed, cannot be treated as goods for the purpose of excise duty. Tribunal in the case of National Asphalt Prod & Construction Co .v. CCE, Trichy reported in 1999 (105) E.L.T. 87 has held that sand blocks used to construct ash bunds, do not conform to any standard shape or size like normal bricks or concrete cement blocks, the said blocks are used in a works contract and thereby not sold, hence they are not called goods and the burden to prove its marketability is on the department and since the burden has not been discharged, the goods are not dutiable under heading 68.07. Further, the Tribunal in the case of Delhi Tourism & Transportation Development Corpn. v. CCE, New Delhi reported in 1999 (114) E.L.T. 421 has held that benefit of Notification No. 59/90-C.E., dated 20-3-1990 vide Serial No. 7 of the table thereto, is admissible to cast beam/girders. This decision has been followed by the West Regional bench of the Tribunal in the case of Raghunath Ramchandra Shanbhag Asia Foundations & Constructions Ltd. v. CCE, Mumbai-VII reported in 2004 (178) E.L.T. 488 (T) = 2004-TIOL-455-CESTAT-MUM. We further note that the Tribunal in the case of TECCO v. CCE, Madurai reported in 2002 (149) E.L.T. 133 (Tri. - Chennai) has held that cement articles supplied to railways at construction site are eligible for exemption in terms of Notification No. 59/90-C.E. Similar view was taken by Tribunal in the case of KS & Company v. CCE, Madurai reported in 2001 (130) E.L.T. 894 (Tri. - Chennai) wherein it was held that articles of cement manufactured by assessee at site allotted by Railways in connection with gauge conversion project, are entitled for exemption in terms of Notification No. 59/90-C.E., dated 20-3-1990. We are, therefore, of the considered opinion that the issue is no longer res integra as the issue has been decided in favour of the assessee-appellants by various decisions of the Tribunal, the Hon'ble High Courts and the Hon'ble Apex Court as noted above.
7. Appellants have also filed photographs of the RCC box segments and the RCC slab. These are reproduced below :
On perusal of these photographs, it is seen that there is no room for any doubt whatsoever that these goods have become part of immovable property as these cannot be dismantled and fitted anywhere else or are capable of being bought and sold. Therefore, we are of the considered opinion that by no stretch of imagination it can be held that the goods involved in the present case are goods for the purpose of levying Central Excise duty.
7. In view of the above, since we have held that the goods are not excisable and that the appellants are also eligible for exemption in terms of Notification No. 59/90, the appellants succeed in their appeal by either way and we order accordingly.
8. Inasmuch as, we have allowed the appeal of the assessee-appellants on merits, as noted above, the other subsidiary questions involved such as, re-quantification of demand and also the invocation of longer period of limitation does not survive for consideration. In the result, the appeal filed by the assessee-appellants is allowed with the consequential relief, if any, and the appeal of the Revenue is dismissed.