Customs, Excise and Gold Tribunal - Mumbai
U.P. State Bridge Corporation Ltd. vs Commissioner Of Customs And Central ... on 7 November, 2000
Equivalent citations: 2000(72)ECC809, 2001(135)ELT263(TRI-MUMBAI)
ORDER G.N. Srinivasan, Member (J)
1. These two appeals have been filed against the decision made in Order-in-Original numbers 18 & 19/Collr./Goa/Cex/94 dated 31.11.94 and 27.10.94 by the Collector of Customs and Central Excise Goa, whereunder he confirmed the show cause notices dated 28.11.1989 and 13.9.1990, confirming the duty of Rs. 12,88,331 and penalty of Rs. 60,000.
2. The appellants are a Public Sector Undertaking of the UP. Government engaged in the construction of Bridges and other civil construction all over India. The appellants undertook to construct a bridge across Mandovi River of about 1 kilometre length overlooking the Collector of Customs and Central Excise Goa. The department sought to levy duty on the following items and the contention of the appellants are also indicated as below:
Items/Goods Findings in the Appellants Contention involved impugned Order--Item-wise
_____________________________________________________________________________ Pile Liner These are. hollow profiles of 1. Duty was demanded in the uniform diameters used for SCN on Pile Liners and not the purpose of lining the on segments thereof. It is not concrete to provide additional denied that Pile Liners, as a protection to it. Pile Liners whole, came into existence consist of one or more while it is embedded in the segments and each segment earth. Hence, the Pile Liners is a hollow profile of specified are immovable goods. The length and diameter. Their reasons given on page 8 of the hollow profiles are nothing order while dropping the but tubes and pipes of steel. demand on well liners will also Relied on HSN page 1016 apply to Pile Liners.
and 1017. Before they are
embedded into the earth, 2. The individual segments of
they have already acquired hollow profiles are not tubes
status of a distinct identifiable or pipes of heading 7305.90.
product. 3. In any case, no evidence
has been produced to prove
that such individual segments
which are fabricated for the
specific requirement of a
particular rate,
are marketable. The burden of
proof which lies upon the
department in this regard has
not been discharged.
4. Demand in this regard
is completely time barred in the
absence of any allegation or
finding that there was an
intent to evade payment of
duty.
Cutting Edge Manufactured from mild steel 1. Not marketable product--
(7308.90) plates angles & had no distinct identity
channels by cutting to size, in market--burden of proving
bending and welding marketability not discharged
according to specification. by department.
They are attached to Pile 2.Tariff Entry 7308 was
Liner/well liners to facilitate introduced w.e. f. 1.3.1988
their entry into the earth till whereas duty has been
they reach solid ground or demanded under their
rock. As they are prepared heading from February 1987.
specifically for structures,
they are classifiable under 3.Demand is time barred
7308.90 of CETA.After entirely for the first SCN and
fabrication they are partly for second SCN (for
embedded into the earth February 1989). No
not immovable property allegation or intent to evade
when they come into payment of duty.
existence. Since they are
distinct from plates, angles
and channels from which
they are made. This
process is manufacture.
Shuttering These were made of MS 1. No manufacture as the
plates, angles and flats for original steel plates do not
giving desired shape to the lose their identity and no
concrete mixture which is new product emerges
laid on them. They in effect, 2.Not marketable--burden
act as a mould in the of proof not discharged.
process of concreting. The
process include rivetting, 3.Tariff Entry 7308 was
bolting or welding; introduced w.e. f. 1.3.1988,
assembling is done through whereas duty has been
bolting and once concrete demanded under their
is set, these are removed heading from February
and used in further 1987.
concreting. 4.Demand is time barred
entirely for the first SCN and
Classifiable U/7308-40/ partly for the second (month
7308-90. of February 1989) No
allegation or finding that
there was an intention to
evade payment of duty.
5.Duty demanded after
20.3.1990 is any way not
sustainable in view of
Exemption Notification No.
61/90 dated 20.3.1990.
Centering No decision in the order. 1. It is an immovable
This has been assumed to structure which is fabricated
be similar to shuttering. at site after embedding the
vertical members into
concrete foundation in the
river bed.
2. It is not marketable as it
has no commercial identity
and is incapable of being
bought to the market for
sale.
3. Tariff Entry--7308 was
introduced w.e. f. 1.3.1988,
whereas duty has been
demanded under their
heading from February
1987.
4. Demand is time barred
entirely for the first SCN and
partly for the second (month
of February 1989) No
allegation or finding that
there was an intention to
evade payment of duty.
5. Duty demanded after
20.3.1990 is any way not
sustainable in view of
Exemption Notification No.
61/90 dated 20.3.1990.
Working Is a steel structure put up 1. It is admittedly an
platform in the middle of the river to immovable structure--hence
facilitate stationing of men not excisable--their
& materials.It comprises of platforms are not capable of
girders, plates & angles. of being disassembled/
The girders are first driven reassembled.
into the river beds. Angles
& plates are then fitted on 2. It is not marketable.
the top of the girders to 3. Tariff Entry-7308 was
obtain the platform It is true introduced w.e. f. 1.3.1988,
that it comes into existence whereas duty has been
in the shape of the demanded under their
structure attached to the heading from February 1987.
earth. An article can be
treated as immovable 4. Demand is time barred
attaced to the earth only entirely for the first SCN and
if the attachment was partly for the second (month
sought to be above on a of February 1989). No
permanent basis. This is allegation or finding that there
capable of being was an intention to evade
disassembled & being payment of duty.
given shape again.
Classifiable U/7308.90. 5.Duty demanded after
20.3.1990 is any way not
sustainable in view of
Exemption Notification No.
61/90 dated 20.3.1990.
Water They are used for storage 1. It is immovable--comes
Tank and supply of water during into existence in an
construction at site. They immovable state.
are obtained by the 2.It is also not marketable
process of fabrication, as they are incapable of
involving cutting to size, being brought to the market.
bending if necessary and
welding of plates, channels 3.Demand is time barred
and angles. They are entirely for the first SCN and
capable of being shifted partly for the second (month
from one site to another. of February 1989) No
Relied on HSN page No. allegation or finding that there
1021. They are mounted on was an intention to evade
steel girders and fixed with payment of duty.
nuts & bolts classified
U/ 7310.00.
The above exercise was undertaken by the department by means of two show cause notices dated 28.11.89 and 13.9.90. The replies were filed by the appellants denying the liability of the duty on the above items. Personal hearing was made and after hearing the parties, impugned order was made confirming the demand penalty imposing of Rs. 60,000 as mentioned above. It must be relevant it mention that as far as the well liners are concerned the Collector has held that it was not liable for levy of excise duty. Hence these two appeals.
3. Shri V.K. Jain the Ld. C.A. appeared for the appellants and Shri B.K. Choubey Ld. DR appeared for the department.
4. Shri V.K. Jain argued that the duty demand on the various items which are described, alone the same could not be demanded at all in law. He stressed the point that all these items are only immovable properties. He stated that for levy of excise duty the primary ingredient is that the item should be a movable property. Another important ingredient stressed is that it should be manufactured out of the raw materials. Here Shri V.K. Jain states that all these items under consideration could only be treated as immovable properties. He described to us as to how the department has proceeded on wrong line of approach. He stage e.g. in respect of Pile Liner which consist of various segments of hollow profiles of uniform diameters. The show cause notice does not propose to levy duty on each segment manufactured, but it proceeds to levy duty on the final product namely Pile Liner which is nothing but an immovable property. He states the adjudicating authority has failed to give a finding as to how longer period of limitation could be invoked in these cases. He elaborately described with the help of photograph, the nature of the items and try to demonstrate as to how these items are immovable properties. He relied on various judgments to prove his clients case.
5. As against this the Ld. DR would invite our attention to the findings given by the adjudicating authority especially inter alia in page 8 of the order dated 27.4.94. He also stated that in page 9 of the order the adjudicating authority has found as to how he could not agree with the party's contention. The goods are in the object of the contract itself proves the marketability. As far as the larger period is concerned the adjudicating authority has found in page 11 of the Order-in-Original No. 19/Collr.Goa/ CEX/94 dated 31.11.94 (Appeal No. E/4284/95) that the same can be invoked.
6. We have considered the rival submissions when we take to the various items the each has been described below as to how they are brought forth each as follows: (This is more less repetiting (sic) [repeating] para 2 above).
PILE LINER : It is a cylindrical shell made of M.S. Plate
having hollow profile fabricated and placed
in pile hole for the purpose of first
protecting the hole from collapsing and
later providing lining the concrete
to provide additional protection. It is
embedded.
SHUTTERING: Is made of 3.15 mm M.S. Plates
strengthen(ed) by angle and flats, of
desired sizes to be jointed together at the
place where concreting is to be done in
specified shape. Two layers of shuttering
is erected and the concreting is poused
in between. After a few days when
concrete is hardened, the inner and outer
layer of shuttering is removed which have
been erected in pieces by using Nuts. &
Bolts.
CENTERING: Centering is an arrangement used to
provide a support and base to shuttering
at desired height for any box section and
deck slab to be casted for a bridge. It is
made of loose structural steel such as
support, Girder (R.S.J.), channels, and
angles, which got fixed by nut bolting
and welding to make a staging for placing of
shutterjng, safe and stake.
CUTTING EDGE: Is the bottom most part of well fixed with
inside well liner or pile linerwhich facilitate
the entry of well or structure easier and
gives a protective layer to the concrete
which is embedded in earth.
WORKING PLATFORM: It is an immovable structure, temporarily
erected to be used as approach for working
inside river. It is made of girders driven inside
bottom of the river erection, angles used for
tracings and plates or wooden sleepers
placed on top for movement of machines and
material up to the desired point of
construction. After completion of the work it
is dismantled into original form of H-Piles,
girders, angles and plate etc. the structural
steel items.
WATER TANKER: Are fabricated at the storage spot to store
water which is used for the construction
purpose. The height of these storage tanks
are kept higher than the bridges height to
ensure the regular delivery of water of (sic)
[to] every point of bridge by gravity and after
completion of project completely dismantled,
into plates and transferred to other projects
as and when required.
The each of the item when we look into the same one common thread seems to run namely the items are embedded to earth. The show cause notice does not proceed on the basis of charging to duty when individual segments which make either PILE LINER or SHUTTERING. In fact show cause notice dated 13.9.90 states that the items manufactured by the corporation for the period from February 1989 to May 1990 are given below and the same are liable to Central Excise duty as under:
Whereas it appears that in the construction of the said bridge they are required to fabricate/manufacture certain items of Iron & Steel of bridge section which is liable to Central Excise duty under Central Excise and Salt Act, 1944 (hereinafter called the Act) and Central Excise Tariff Act, 1985 (hereinafter called the Tariff Act).
The items manufactured by the Corporation for the period from February 1989 to February, 1990 to May 1990 are given below and the same are liable to Central Excise duty as under:
___________________________________________________________________________________ S. Description Chapter No. Type of Rate of duty No. of Item & Heading Duty ___________________________________________________________________________________
1. 2. 3. 4. 5.
___________________________________________________________________________________
1. Cutting Edge 7308.90 BED 15% Ad valorem SED 5% on BED
2. Well Liner 7308.90 -do- -do-
3. Pile Liner 7305.90 BED Rs. 700 PMT SED 5% on BED
4. Shutterings 7308.40 -do- 15% Ad valorem 5% on BED ____________________________________________________________________________________ The said corporation vide their letter No. 249/Camp.1 -(PJ)/90-91 dated 20.6.90 has furnished the information regarding manufacture of aforesaid products and quantity and value thereof.
Whereas it appears that on the basis of the above information the total duty liability on the said goods works out to Rs. 6,84,251.19 details of which are given in the enclosed Annexure 'A'. Which is a part of S.C.N. It therefore appears that the corporation is liable to pay a total duty of Rs. 6,84,251.19 as no duty was paid on above goods manufactured and cleared by them.
Whereas it also appears that the Corporation has contravened the provisions of Section 6 of the Act read with Rule 174 of Central Excise Rules, 1944 (hereinafter called the Rules) inasmuch as they manufactured the goods without a proper Central Excise Licence, provision of Rules 9 and 49 of the Rules as they utilised the goods without payment of duty and Rule 173-B and Rule 173-C read with Rule 173-G of the Rules inasmuch as they failed to file the classification List as well as Price List and RT12 returns prescribed under the Rules.
It mentions that Cutting Edge, Well Liner, Pile Liner and Shuttering. But it does not, as rightly contended by Shri V.K. Jain for the appellants, the demand of duty is being made on making the individual segments of those items.
7. In this connection with marked ability Shri B.K. Choubey invited our attention to the findings of the adjudicating authority at page 8 are as follows : A perusal of the description of the products mentioned above will reveal that all their items except well liners are separately identifiable and specifically classifiable, they possess identity quite independent of the M.S. Plates, sheets, angles and channels and have their own nomenclatures. Even though they are used in or in relation to the construction of the bridge, they can never be treated as part of the bridge itself. The lingering doubt about the dutiability of immovable structures, need not cast their shadow on the excisability of these items, in view of the fact that these items cannot be treated as immovable. Various judicial pronouncements cited by the party in support of their argument that immovable property cannot be charged to duty, have no relevance in the circumstances discussed above. It is observed that considerable emphasis has been placed by the party on the argument that the goods which they have manufactured, cannot be called goods within the meaning of Central Excise and Salt Act, 1944. However, this argument is not acceptable in view of the detailed findings given above in respect of each of these items".
The argument of Shri B.K. Choubey is considered, it is relevant to mention the finding given by the same adjudicating authority in respect of well liners : WELL LINERS: Well liners are constructed at the site of construction inside the river with the M.S. Plates, part by part. In this case, I find myself in agreement with the party when they claim that the original well liner comes into existence only in the form of a structure embedded into the earth. It is also to be noted that this item is never removed from the river bed and becomes part and parcel of the bridge itself. As this item satisfies the criterion for the immovable property, it has to be treated as falling outside the purview of Central Excise.
If we go through the finding given by the lower authority on Well Liners the same has been treated as an immovable property as it comes into existence only in the form of a structure embedded into the earth.
8. When we go through the nature of the structures under consideration it is clear that they are embedded to the earth. For instance when we look into Pile Liners they could never be removed at all. In fact the adjudicating authority has held as follows:
Pile Liners: These are hollow profiles of uniform internal and external diameters which are used for the purpose of lining the concrete to provide additional protection to it. In the case of the party, these profiles were of 1.2 metres diameter and usually of one metre in length. These hollow profiles of 1 metre length and 1.2 metres diameter are fabricated as independent segments either at the site or outside. Subsequently, these segments are sunk into the earth. One or more of these segments may be joined together veritically by welding to obtain the required length of the pile liner. The first segment of this liner from below. Will be attached to a cutting edge.
From the description given above, it can be seen that pile liners consist of one or more segments and each segment is a hollow profile of specified length and diameter. It is obvious that these hollow profiles are nothing but tubes and pipes of steel classifiable under sub-heading 7305.90 of Central Excise Tariff Act, 1985.
The Cutting Edge for instance it is the first material on which the concrete is placed and over the cutting edges Pile Liners forms. Assistant Commissioner (sic) when it is the fact that these two materials are never removed or removable. We cannot comprehend as to how the adjudicating authority treated these two items as immovable property, when he holds Well Liners as an immovable property. In fact in internal page 5 of the order dated 27.10.94 (Appeal No. E/4285/95), the adjudicating authority held as under:
The arguments of the party that these pile liners become immovable property once they are embedded to the earth, is no doubt, acceptable.
Having held so, he finds as follows:
But the fact remains that before these hollow profiles are embedded into the earth, they have already acquired the status of a distinct identifiable product consequent to the processes of cutting to size, bending and welding of steel plates. It is apparent that the processes of cutting to size, bending and welding of steel plates, bring into existence a different hollow profiles which become chargeable to duty. The moment the hollow profiles are obtained, such profiles are chargeable to duty and are a different commodity from the steel plates, which were used as a raw material.
We cannot understand how he could treat this especially pile liner as movable. This in our view is contradicting himself when we see the nature of the items under consideration. It is possible for us to find here that these items are immovable property only not movable properties.
9. Moreover one more point needs to be mentioned for consideration. These items are Customs made in the sense this item has to be for execution of a particular contract. It is not easily bought sold as standard items. The show cause notices do not proceed on the basis that they are marketable. Therefore even if these items may find a place in the tariff, yet it is on the part of the department to prove that they are marketable. Several decisions were cited by the Ld. C.A. on behalf of the appellant one such judgment is Collector of Central Excise v. United Phosphorus Ltd. . As far as immovable property is concerned the test has been laid down by the Supreme Court in the Judgment in the case of Municipal Corporation of Greater Bombay v. The Indian Oil Corporation Ltd. where the Court held as follows :
The tanks, though, are resting on earth on their own weight without being fixed with nuts and bolts, they have permanently been erected without being shifted from place to place. Permanency is the test. The chattel whether is movable to another place of use in the same position or liable to be dismantled and re-erected at the later place? If the answer is yes to the former it must be a movable property and thereby it must be held that it is not attached to the earth. If the answer is yes to the latter it is attached to the earth. For instance a shop for sale of merchandise or eatables is a structure. The same could be sold by keeping in a push cart which has its mobility from place to place. Merely it is stationed at a particular place and business was carried on, it cannot be said that push cart is a shop. The fact that no nuts and bolts was used to inbed the tank to the earth by itself is not conclusive. Though the witness stated that the tank is capable of being shifted as a fact the tanks were never shifted from the places own weight on the earth at the place of erection as a permanent structure.
The above judgment has been quoted by the Tribunal in its Judgment ICB (P) Ltd. v. Collector of Central Excise, Baroda . Thus, we are citing the above case for the preposition that the test propounded by the Supreme Court in the above cited case.
The fact whether the goods are movable or immovable has to be decided in each and every case. This is what the Supreme Court said to the case of Duncans Industries Ltd. v. State of UP and Ors. 2000 (88) ECR 19 (SC) at page 25 where the Supreme Court held that:
The question whether a machinery which is embedded in the earth is movable property or an immovable property, depends upon the facts and circumstances of each case. Primarily, the court will have to take into consideration the intention of the parties when it decided to embed the machinery whether such embedment was intended to be temporary or permanent.
Here for all the items before us the individual segment of the finished product are fixed to earth in a permanent way. Each finished product has to be made for that particular contract. It is another matter that if the appellant has requested a job worker to met (sic) these items and whether the action of the job worker in creating said structures would amount to manufacture or not. Because the show cause notice and the facts do not proceed on that basis. As far as the invocation of larger period of limitation is concerned the structures were made just opposite to office of the Collector of Central Excise. It may not be stated that he did not know it, which is a very peculiar feature in this case. In fact in the case cited by the party in respect of Dempo Engineering Services also same thing happened and we have held that on facts that duty cannot be levied. There also the structures in those case were built the opposite to the Collector (Appeals).
10. It is no doubt true the Supreme Court in the case of Sirpur Paper Mills Ltd. v. CCE 1998 (74) ECR 1 (SC) had held that machinery embedded to judgment in Duncans Industries Ltd. case the Supreme Court has highlighted as to why Sirpur Paper Mills Ltd. case decided by the same Court will not be applicable.
11. While deciding the case of Dempo Engineering Services (Appeal No. E/ 4345/95). We have considered the judgment of the TELCO v. Union of India thereof. We are therefore of the view that the products in question are only immovable property and not a movable property.
12. Even if it is assumption these are immovable property can the longer period of limitation be invoked. Show cause notices are silent regarding how suppression has taken place and how the intention to evade payment has been established in this case. We are therefore of the view even on limitation the appellant has strong case because no material has been brought forth by the department as evidence. Appeals are allowed setting aside the impugned orders with consequential relief if any according to law.