Customs, Excise and Gold Tribunal - Bangalore
Craft Interiors Ltd. vs Commissioner Of Central Excise on 10 May, 2005
Equivalent citations: 2005(187)ELT113(TRI-BANG)
ORDER T.K. Jayaraman, Member (T)
1. The following appeals are taken up for disposal as the issue involved is the same in all. Details of the appeals are as follows :
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S. Appeal No. O/O No. & Passed By Duty Penalty No. Date
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1. E/144/04 O/O No. 16/ CCE, Rs. 49,98,655/- Rs. 49,98,655/-
Company 2003 dated Bangalore-I under Section 11AC
24-9-2003 + Rs. 12,00,00/-
u/r 173Q/25 of
CE Rules
1944/2001/2002
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2. E/145/04 -do- -do- NIL Rs. 1,00,000/-
MD u/r 209A and
26 of CE Rules
1944/2001/2002
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3. E/1302/04 -do- CCE, Banga- - -
Deptt. lore II
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4. E/701/04 O/O No. CCE, Hy- Rs. 36,949/- Rs. 36,949/-
Company 06/04 dated derabad II under Section
26-3-2004 11AC + Rs.
4,000/- u/r
173Q/25 of CE
Rules, 1944/
2001/2002
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5. E/702/04 -do- -do- NIL Rs. 2,000/- u/r MD 209A and 26 of CE Rules 1944/ 2001/2002
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6. E/703/04 O/O No. CCE, Hy- Rs. 45,101/- Rs. 45,101/-
Company 05/04 dated derabad II under Section
26-3-04 11AC + Rs.
5,000/- u/r
173Q/25 of CE
Rules 1944/
2001/2002
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7. E/704/04 -do- -do- NIL Rs. 3,000/- u/r MD 209A and 26 of CE Rules 1944/ 2001/2002
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8. E/705/04 O/O No. CCE, Rs. 4,41,386/- Rs. 4,41,386/-
Company 07/04 dated Hyderabad-II under Section
26-3-2004 11AC + Rs.
50,000/- u/r
173Q/25 of CE
Rules 1944/
2001/2002
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9. E/706/04 -do- -do- NIL Rs. 50,000/- u/r MD 209A and 26 of CE Rules 1944 / 2001/2002
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10. E/1295/04 OIA No. CCE, Banga- Rs. 8,01,455/- Rs. 10,000/- u/r Company 89/04 dated lore- III 25 CE Rules 17-8-2004 2002
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2. The appellants manufacture furniture. They also undertake interior decoration. Revenue proceeded against the appellants alleging that they had manufactured and assembled excisable goods namely, furniture and furniture parts at the premises of their various clients and cleared for home consumption without obtaining Central Excise Registration, without assessing and discharging the duty payable on such goods and without following any Central Excise procedure. The Commissioner of Central Excise, Bangalore-I passed O-I-O No. 16/2003 dated 24-9-2003 and O-I-A 89/04 dated 17-8-2004. In respect of the same appellants operating at Hyderabad, Revenue proceeded against them resulting in the passing of Orders-in-Original Nos. 5, 6, 7/04 dated 26-3-2004. The details of duty demanded and penalties imposed have already been given in the tabular column above. In respect of O-I-O passed by the Commissioner, Bangalore, Revenue has come in appeal on the ground that the Commissioner had given the cum-duty benefit to the party when the matter is pending with the Apex Court. The appellants have strongly challenged the findings of the adjudicating authorities.
3. S/Shri G. Shivadas, and Anil Kumar, learned Advocates appeared on behalf of the appellants (Craft Interiors Ltd.) and Shri L. Narasimha Murthy, learned SDR appeared for Revenue.
4. The learned advocates adduced the following arguments.
(i) The show cause notice proposed classification of all the goods in question under Chapter Sub-heading 9403 and demanded consequential duty. The appellant submitted that some of the items like flush doors, wooden doors, glass doors, are classifiable under Chapter 44 and Chapter 70 of the CETA, 1985 and do not fall under Chapter Sub-heading 94.03. Though the adjudicating authority accepted the submissions of the appellants, instead of dropping the demand on these items he has proceeded to classify the items under respective heads as submitted by the appellants and confirmed the duty under those Chapters, which is not sustainable. The revenue cannot make out a new case beyond the proposals in the show cause notice in view of the following case laws :
(a) SACI Allied Products Ltd. v. CCE -
(b) Reckitt and Coleman (I) Ltd. v. CCE -
(c) Aquamall Water Solutions Ltd. v. CCE F. O. No.
(d) Chimque Industries v. CCE - Final Order Nos. 129-130 19-1-2005
The Commissioner of Central Excise, Hyderabad confirmed the entire demand for the items mentioned above under 9403 which is ex facie not sustainable.
(ii) The adjudicating authority having held that certain items like storage units, counters, work stations, etc. are non-moveable held that in view of the explanation of furniture in HSN it is not necessary that the goods should be moveable in order to the liable to excise duty. The items mentioned as non-moveable are erected and fixed at the site. It cannot be sold/shifted as such without dismantling. The term 'furniture' as explained in the HSN Explanatory Notes covers only those items which are moveable in the first place and are complete before being placed either on the floor or on the ground or in the case of cupboards before being fixed to the wall. The chapter would not cover items, which emerge either as part of the moveable property or are erected stage by stage for completion. The following case laws were relied on :
(a) Triveni Engineering & Industries Ltd. and Anr. v. CCE and Anr. - 2000 (120) E.L.T. 273 (S.C.)
(b) C.B.E. & C. Circular No. 58/1/2002-CX., dated 15-1-2002 -2002 (139) E.L.T. T38
(c) TTG Industries Ltd. v. CCE - 2004 (167) E.L.T. 501 (S.C.)
(d) Mahavir Aluminium Ltd. v. CCE -
(e) CCE v. Architecture Incorporated -
(f) Lokhandawala Hotels P. Ltd. v. CCE -
(g) GVK Industries Ltd. v. CCE -
(iii) If the above items are excluded in the value of clearances, value, etc. of remaining item could be less than the value specified in the SSI Notification and there by exempted from payment of duty.
(iv) The appellants were under bona fide belief that the items erected by them at site were not excisable and hence no Central Excise Registration was taken. There was no intention to evade payment of duty. This is evident as substantial part of the demand of duty of Rs. 1,99,60,809/- has been set aside and that too after site inspection by the adjudicating authority only an amount of Rs. 49,98,655/- has been confirmed. Therefore the question of suppression with an intent to evade payment of duty does not arise and longer period is not invocable. He relied on the following case laws :
(a) Padmini Products v. CCE - 1989 (43) E.L.T. 195 (S.C.) (b) Tecumseh Products India Ltd. v. CCE - 2004 (167) E.L.T. 498 (S.C.)
(v) The only ground raised in the departmental appeal is that since they had filed a review petition before the Supreme Court in the CCE v. Maruti Udyog Ltd. - , the Commissioner had erred in giving the benefit of Cum-duty price to the appellants since the matter had not attained finality. The review petition filed by the department has been dismissed as reported in 2005 (179) E.L.T. A102 (S.C.). Therefore the departmental appeal is liable to be set aside.
5. Shri L. Narasima Murthy, ld. SDR urged that the adjudicating authorities have given a well reasoned order in the light of HSN Notes and therefore their orders have to be upheld by the Tribunal.
6. We have gone through the rival submissions. The Commissioner of Central Excise, Bangalore has given detailed findings with regard to different items whereas the Commissioner, Hyderabad has held that all the items merit classification under Chapter 9304 as 'furniture'. We shall examine the findings in respect of the disputed items and our findings will be applicable to the appeals against both the orders of the Commissioner, Hyderabad and Commissioner, Bangalore. The Commissioner, Bangalore in para 68 of his order has stated that the following items are moveable furniture classifiable under 9304 and liable to excise duty. He has also stated that there is no disagreement on this point.
(a) Corner Table
(b) Centre/Round table
(c) Sofa Chairs/Sofas
(d) Benches
(e) Pedestral Units
(f) Desks
(g) Child-crib
(h) Stools
(i) Bed (Cot).
7. In para 72, O-I-O 16/2003 dated 24-9-2003 the Commissioner, Bangalore has negatived the appellant's contention that the Storage Cabinet, Running Counters, Large Reception/Conference Table, Desks, Rear unit/Side units/Over head unit/Corner unit/Pantry Unit/Kitchen Unit/Dressing unit/Drawer unit/T.V. Unit/Ward Robe, Louvered, Credenza, Desk, work surface, Ledge, Planter Box, Key Board Tray, Coat Hanger, Mail Box, Mail slot are huge in size and once erected cannot be moved. He has stated that the size of the item is immaterial for the purpose of classification but what is relevant is whether they answer the description of furniture under Chapter Heading 9304. We agree with the adjudicating authority that the above-mentioned items can be rightly classified under chapter 9304 as furniture. Even if some of these items form in situ they can definitely be removed without any damage to them. Moreover, by no stretch of imagination these items can be called as immoveable property.
8. The adjudicating authority differentiates between two types of workstations. He has held that the workstations, which are erected at site, do not answer the description of furniture under Chapter 9304 and has held that they are not furniture. He has stated that there are other types of workstation which are called modular furniture which are made in a factory and are readily available in the market. They can be bought and ready to fix. Such workstations are classifiable under 9304. In his findings he has not stated whether the workstation in respect of the appellants is of the first or second kind which he has mentioned. The appellants' contention is that he had included the value of the workstations which in their opinion are formed at site. In view of the adjudicating authorities' finding that such workstations cannot be classified under 9304, we hold that the workstations are not excisable. We agree with the finding of the adjudicating authority in para 74 where he has held that partitions are immoveable property permanently fastened to the building and hence not excisable. We agree with the finding the adjudicating authority with regard to partitions. Even though the finding that the flush doors and wooden doors are classifiable under Chapter 44 is correct, the appellant's contention that this finding was beyond the scope of the show cause notice has merits. The show cause notice has classified all the items under Chapter 9304. The adjudicating authority cannot go beyond the scope of the show cause notice. Hence the demand of duty on doors is set aside. The adjudicating authority has rightly held that wall claddir/column cladding, soft board paneling, wall paneling, teak wood shelf, etc. would be immoveable property and do not attract levy of central excise duty. Similarly the following items also would be considered as immoveable property : Skirting, Raceway, Beading, Frame work above false ceiling, minor panellings, window sil, grooves, patta.
9. The Commissioner has classified the following items under Chapter 4410 as article of wood not elsewhere specified. Since the finding of the Commissioner goes beyond the scope of show cause notice we hold that the duty demand on these items is not sustainable: Pelmet, MDF Box, Pin Up Board, Boxing, White Board of White Board Panel or White Marker, Boards, Black Board, Sign Board, Writing Board, Techno Vision, Tracable Board, Board, Meter Board, A.C. Box/Covering, electric Cover Box, Exhaust Fan Box, Dummey Box, D.B. Box, Wire Cable Box, Data Cable Box, Power Poll Box, Fire Hydrent Unit, Cloth Hanger, Foot Rest.
10. While giving a finding on the excisability of storage cabinets running counters, large reception/conference table and workstation the Commissioner in para 82 has observed "it may be a fact that these items are unique to a building and or designed to suit the specification of the buildings and it may emerge as a piece by piece fabrication at the site and my understanding is that it is only for the sake of convenience it is fabricated at site to avoid the difficulty in transporting and handling if done elsewhere. What ultimately emerges on a piece by piece fabrication is a commodity known in the market by the name of table, counters, storage cabinets, book shelf, racks". We are in full agreement with the reasoning of the adjudicating authority on this point. The learned Advocates relied on Board's clarification dated 15-1-2002 which was issued in the context of the excisability of plant/machinery installed at site. In our view, that Circular has limited application in respect of the items under dispute. Even though the items in question are normally moveable for convenience they are fixed to the ground or wall in these cases. In view of this fact the items in question would not cease to be furnitures. Even when an immoveable property is sold, the sale value normally would not include the value of furnitures. The Commissioner's decision to treat the values as cum-duty price is correct in view of the dismissal of department's review petition by Apex Court in Maruti Udyog case. Therefore there is no merit in the departmental appeal.
11. In view of the above observations, we remand the matter to the adjudicating authorities to recalculate their duty liability in the light of our findings and observations. However, since the appellants failed to obtain Central Excise Registration the invocation of longer period is justified. Demand of interest under 11AB is also upheld. The de novo order should be issued within a period of 3 months. The penalties under Section 11AC on the appellant-company could be limited to 10% after giving them the benefit of SSI exemption. Imposition of penalties under Rule 25/26 or erstwhile 209A and Rule 173Q is justified. However, the adjudicating authority may decide the quantum of penalty after recalculating the duty.
(Pronounced in open Court on 10-5-2005)