Customs, Excise and Gold Tribunal - Tamil Nadu
Belliss India Ltd. vs Commissioner Of Central Excise on 4 January, 2001
Equivalent citations: 2001(132)ELT364(TRI-CHENNAI)
ORDER S.L. Peeran, Member (J)
1. These three appeals arise out of the common Order-in-original No. 20.96, dated 5-3-1996 passed by the Commissioner of Central Excise, Chennai by which he has held that the assembly of Turbo Alternator brings into existence new goods classifiable under Heading 85.02 and as a consequence appellants M/s. Belliss India Ltd are liable to pay duty of Rs. 9,53,829/- under Rule 9(2) of the C.E. Rules, 1944 read with Section 11A of the C.E. Act, 1944. He ordered confiscation of the goods with an option to redeem the same on payment of fine of Rs. 20,00,000/- by appellants M/s. Cheyyar Co-op Sugar Mills Ltd. as the goods were in the possession of appellants M/s. Cheyyar Co-op Sugar Mills Ltd., who are also imposed a penalty of Rs. 10,00,000/-. There is also penalty of Rs. 10,00,000/- on the other appellants. However, in the impugned order, the Commissioner accepted the plea of the appellants for allowing Modvat credit under Rule 57A and directed the jurisdictional Assistant Commissioner to examine their claim in terms of the duty paid documents. Against this portion of the Order-in- Original, the Revenue is aggrieved and that is how we are dealing with three appeals. Before the Commissioner the appellants had also taken a plea that this assembly of two items does not bring into existence of any new goods as the assembly was done on an immovable property and there was no new goods emerged for excise purpose. However, this plea was negatived by the Commissioner in the light of the Supreme Court's judgment rendered in the case of Name Tulaman as reported in 1988 (38) E.L.T. 566 wherein it was held that assembly of these two items would bring into existence co-generating plant, and the independent goods have been classified under Heading 85.02. He noted that the appellants did not take licence nor filed declaration and hence longer period of limitation is invokable as the goods had been installed in the premises of the Cheyyar Co-op. Sugar Mills Ltd. He ordered for confiscation of the goods and release on payment of fine and imposed penalty on appellants M/s. Belliss India Ltd., and the other appellants.
2. Shri N. Venkataraman, Advocate submits that in their competitors case the Commissioner had decided in the like manner and the issue had been agitated before the Tribunal where their competitors i.e. M/s. Triveni Engineering & Indus. Ltd., had lost their case as the Tribunal had held that such assembly would bring into existence new goods and it was classifiable under heading 85.02. The issue was agitated before the Hon'ble Apex Court with a specific plea that such assembly on a immovable property would not bring into existence new goods for the purpose of excisability. The Supreme Court examined the issue in the light of larger number of their earlier judgments and also examined their judgment in the case of Name Tuleman (supra) as well as the judgment in the case of Mittal Engineering Works - 1996 (88) E.L.T. 622 (S.C.), Collector v. Woodcraft - reported in 1995 (77) E.L.T. 23(S.C.), Municipal Corporation of Bombay v. IOC Ltd. reported in 1991 Suppl. (2) SCC 18, Quality Steel Tubes (P) Ltd. v. CCE as reported in 1995 (75) E.L.T. 17 (S.C.) and Sirpur Paper Mitts v. CCE as reported in 1998 (97) E.L.T. 3 (S.C.), State of Maharashtra v. Central Provinces Manganese Ore as reported in 1977 (1) SCC 6432 and U.O.I. v. Delhi Cloth & General Mills as reported in 1977 (1) E.L.T. (J 199) (S.C.) and after so examining the entire issue in the context of the excisability, manufacture and bringing into existence of new goods and also tariff description 85.02 along with explanatory notes under the HSN, the Supreme Court gave a categorical finding that no new goods emerged for the purpose of excisability and it did not satisfy the test of marketability. The Supreme Court held that combination of both the items was on an immovable property and hence the item was not excisable. The learned Counsel submits that since the issue has reached finality, the ratio of these judgments, squarely applies to their case and it is not distinguishable. He, therefore, prayed that both the appeals are required to be allowed and the Revenue appeal is required to be rejected.
3. Heard Shri G. Sreekumar Menon, learned SDR reiterates the departmental view.
4. On consideration of the submissions and on perusal of the records, we notice that the issue before the Supreme Court in the Triveni Engineering Works and in the present case is identical. Before the Supreme Court in the case of Triveni Engineering & Inds. Ltd. v. Collector - 2000 (126) E.L.T. 273 (S.C.) the dispute was as to whether Turbine Alternator which had two components i.e. steam turbine and (ii) complete alternator on assembly would bring into existence new goods. The situation is similar in the present case. The Supreme Court after examining the nature of the assembly and in the light of various judgments held that such assembly did not bring into existence any new goods although there may be process of manufacture. The relevant findings arrived at by the Supreme Court pertinent for the purpose of this case can be drawn from the paras 19 to 23 of their judgment which are reproduced herein below:
"19. It appears that the aforementioned two cases - Mittal Engineering Works (P) Ltd. and Quality Steel Tubes (P) Ltd. (supra), were not referred to in Sirpur Paper Mills Ltd. 's case.
Further, in the instant case it is a common ground that a turbo alternator comes into existence only when a steam turbine and alternator with all their accessories are fixed at the site and only then it is known by a name different from the names of its components in the market. The Tribunal recorded the finding that fixing of steam turbine and the alternator is necessitated by the need to make them functionally effective to reduce vibration and to minimise disturbance to the coupling arrangements and other connections with the related equipments. It also noted that removal of the machinery does not involve any dismantling of the turbine and alternator in the sense of pulling them down or taking them to pieces but only undoing the foundation bolts arrangement by which they are fixed to the platform and uncoupling of the two units and, therefore, the turbo alternator did not answer the test of permanency laid down by this Court in the case of Municipal Corporation of Greater Bombay (supra). In our view, the findings recorded do not justify the conclusion of the Tribunal inasmuch as on removal a turbo alternator gets dismantled into its components - steam turbine and alternator. It appears that the Tribunal did not keep in mind the distinction between a turbo alternator and its components. Thus, in our view, the test of permanency fails.
20. The marketability test requires that the goods as such should be in a position to be taken to the market and sold and from the above findings it follows that to take it to the market the turbo alternator has to be separated into its components - turbine and the other alternator - but then it would not remain turbo alternator, therefore, the test is incorrectly applied. Though, there is no finding that without fixing to the platform such turbo alternator would not be functional, it is obvious that when without fixing, it does not come into being, it can hardly be functional.
21. It will be useful to refer to the Explanatory Note issued by the Harmonized System of Nomenclature (HSN) to which Mr. Sridharan invited out attention. We also note that HSN received the approval of this Court in CCE v. Woodcraft 1995 (3) SCC 454, which explained the scope of Heading 85.02 as under :
"...Generating sets consisting of the generator and its prime mover which are mounted (or designed to be mounted) together as one unit or on a common base (see the General Explanatory Note to Section XVI), are classified here provided they are presented together (even if packed separately for convenience of transport)."
The Explanatory Note further contained :
"Floors, concrete bases, walls, partitions, ceilings, etc., even if specially fitted out to accommodate machines or appliances, should not be regarded as a common base joining such machines or appliances to form a whole."
22. From a perusal of the above Explanatory Notes, it is clear that when generating sets consisting of the generator and its prime base mover are mounted together as one unit on a common base they are classified under the Heading 85.02; in this connection floors, concrete bases, walls, partitions, ceilings etc., even if specially fitted out to accommodate machines or appliances, cannot be regarded as a common base joining such machines or appliances to form a whole. On a combined reading of the Explanatory Notes, extracted above, there can be no difficulty in inferring that installation or erection of turbo alternator on the concrete base specially constructed on the land cannot be treated as a common base and, therefore, it follows that installation or erection of turbo alternator on the platform constructed on the land would be immovable property, as such it cannot be 'excisable goods' falling within the meaning of Heading 85.02.
23. For these reasons, we are of the view that the Tribunal is not correct in coming to the conclusion that the turbo alternator is excisable goods. We, therefore, set aside the order under appeal and allow these appeals with costs."
5. On a reading of the above paras we are of the considered opinion that the ratio of the above judgments clearly applies to the facts of the present case. Applying the said ratio the impugned order is set aside and the appeals of the assessees are allowed and as a consequence the Revenue appeal is rejected.