Customs, Excise and Gold Tribunal - Mumbai
Dempo Engineering Works Ltd. vs Commissioner Of Central Excise on 21 May, 2004
Equivalent citations: 2004(97)ECC103, 2004(172)ELT415(TRI-MUMBAI)
ORDER S.S. Sekhon, Member (T)
1. After hearing both sides and considering the issue, it is found -
(a) appellant had filed classification declaration No 125/95-96 claiming classification under 89.05 for a product 'Pontoon with Spuds.' The Assistant Commissioner issued a notice seeking an amended declaration under Heading 89.07.00, heard the matter, visited the marine yard of the appellants, and after considering, and on perusal of the drawing plan for construction of the said entity held as in his words -
"the original plan for construction of a pontoon of size 24 x 24 m x 2 m with spuds was sought to be split up into two portions with spuds of size 12 x 24 x 2m." The present portion sought to be delivered as per assesseess' letter dated 9.2.1996 is of size 12 m x 24 m x 2 m. On visual inspection, it seems that the item in dispute is a floating structure of 10 segments formed together with the help of interlocking pins through male and female lugs on the side of the segments. On joining, there remains a gap of about 2 mm. These pins are said to be put manually for joining the segments. Out of the ten segments, 8 each are of size 3 m x 9m x 2m and 2 each are of size 3 x 12 x 2. The segments on the two sides having size of 2m x 12m x 3m are having two holes of 1.7 m diameter at the end on which the jack house of 4 m height are placed, through which the hollow legs (spuds) are to be placed with the help of crane. The spuds, are supposed to be comprising of 5 sections together measuring 43 metres. However, it was told that the assessee was not supplying the entire spuds of full length at the moment. The spuds were not placed in their position at jack house but merely placed on the floating structure with supports for sea fastening. It was told that the work of inserting the spuds and their joining was to be done by the buyers at the site. The floating structure can be dismantled and each segment can be transported separately by toning in water or by road transport by a trailer.
(b) This extensive recording by the Assistant Commissioner does not indicate what was the marketable product? Was it the so called "floating structure" or the "Pontoon with Spuds." The answer lies in, the attention which learned D.R. draws, to the Letter of Intent placed by the Buyer on the assessee for 'two number pontoon with spuds' and the Bill not only showing various charges for fabrication of Locking Plates, jack house, but also charges for assembly/installation of spuds at site. A collective reading of the Letter of Intent and the Bill of quotations for various items and the A.C's recording on facts indicates that the marketable/saleable commodity was 'Pontoon with Spuds' and they by very nature of the sieze of the 'Pontoon and the spuds' had to be fabricated in segments for ease of separate transport and thereafter was to be assembled at site.
(c) On large sized machinery to be assembled at site where earance cannot be effected in one assembled piece, the law is well settled (See Vikas Systems Ltd v. CC 2001 (131) ELT 578 Tri-Kolkata), Mital Engg Works v. CCE, Indore 2001 (136) ELT 311 (Tri-Del), Hindustan Tools & Engg Works Pvt Ltd v. CCE, Jaipur 2002 (149) ELT 1205 (Tri-Del)). Board also has issued directions on the same lines and orders exist under Section 37B to assess boilers normally cleared unassembled as Boiler. (156/9/92CX4 dt 19.5.92). The decision in the case of Flat Products (I) 2000 (115) ELT 629 stipulates the classification to be as full entity, if it is established that parts so cleared would constitute full entity. The reliance of the Ld Advocate on rule 2 (a) of Interpretative Rules & 1997 (109) ELT 856 Maharashtra Elektrosmelt Ltd. v. Collector Of Customs, Bombay is well founded that along with the theory of dismantled/unassembled and removed for ease of transportation and as per facts found by the Assistant Commissioner, induces a conclusion that the classification of 'floating structures' as arrived at for the components of "Pontoon with spuds" is not called for. Facts of the case in A.P. Heavy Machinery and Engg Ltd 2001 (128) ELT 155 were different as in that case it was not clearance of dismantled parts from one factory but clearance of parts from multiple locations/factories and then assembly at site.
(d) While "Pontoon with Spuds" is the marketable commodity, the segments as floating structures are not established to be marketable. If such floating structures, if they have to be levied to duty separately as per Tariff Heading 8907.00, as held in the impugned order, then marketability was essentially to be established. Mere meeting the specifications of the tariff entry would not call for levy under that entry. The Tariff Act does not create any charge. Section 3 of the Central Excise Act, 1944 is the charging provision. Thus Tariff Act has applicability only to classification of goods and not to chargeability. It is well settled that for levy of duty goods have to be marketable. This criterial unassembled components of "Pontoon with Spuds" as in this case. The classification and levy would be only under Heading 89.05 as declared by the appellants.
(e) In this connection reliance is also placed on the observation of the Apex Court in the case of Narne Tulaman Manufacturers Pvt. Ltd. v. Collector Of C.E. 1988 (38) ELT 566 (SC) para 3 wherein it was held by the Supreme Court that since the assessee was not only manufacturing the parts but did the work of assembly of 'weighbridge' he would be manufacturing that product. In the present case not only segments on fabricated but are also to be assembled into 'Pontoon with Spuds' by the assessee. The appellant is therefore a manufacturer of 'Pontoon with Spuds' and that is classified under 85.05.
2. In view of the finding arrived, the orders of the lower authority are required to be set aside and classification arrived at under 8905.
3. Ordered accordingly and appeal allowed.
(Pronounced in Court on 21/05/2004)