Customs, Excise and Gold Tribunal - Delhi
Mittal Engg. Works vs Cce on 9 August, 2000
Equivalent citations: 2000(71)ECC634, 2001(136)ELT311(TRI-DEL)
ORDER K.K. Bhatia, Member (T)
1. The appellants manufacture Sugar Mill machinery viz., Juice Weighing Scale falling under Chapter heading No. 84,38 of the Central Excise Tariff Act, 1985. They got an order for supply of a 'Juice Weighing Scale' from M/s. Bhopal Sugar Industries, Sehore falling within the jurisdiction of the Commissioner of Central Excise, Indore. Accordingly they cleared the parts of these scale from their factory premises on payment of appropriate duty, transported them to Sehore and fabricated the machine at site of the Bhopal Sugar Industries, This was detected by the Central Excise authorities and accordingly a case was booked against the appellants. A show cause notice was issued to them as well as to M/s Bhopal Sugar Industries in which it was alleged that the appellants had assembled juice weighing scale machinery at site out of the parts manufactured by them alongwith some bought out items resulting in the emergence of a new excisable commodity known as 'Juice weighing scale' classifiable under Chapter Heading No. 84,38, It is alleged that they had manufactured the complete machinery at their works at Ghaziabad, dismantled and removed the same in parts to the premises of M/s. Bhopal Sugar Industries at Sehore where it was erected and commissioned as 'Juice Weighing Scale' machinery. It is alleged that both the noticees have willfully suppressed from the department the fact of assembly of this machinery at site with the intention to evade duty of Rs. 69,300 which is calculated on taking the total face value of the scale at Rs. 4,20,000 (including erection charges). It is stated that this amount is liable to be recovered under Rule 9(2) read with the proviso to Section 11A(1). They are also stated to be liable for penalty. The appellants are therefore called upon to show cause why the Central Excise duty of Rs. 69,300 should not be recovered from them and why a penalty should not be imposed on them under. Rule 173Q(1), M/s. Bhopal Sugar Industries have also been called upon to show cause why a penalty should not be imposed upon them under this rule,
2. On consideration of the replies of the noticee parties, the Commissioner of Central Excise, Indore vide his Order-in-Original dated 28.7.96 confirmed the duty of Rs. 63,900 on the appellants apart from imposing a penalty of Rs. 6,000 on them. He however, imposed no penalty on the other noticee viz., M/s. Bhopal Sugar Industries.
3. The present appeal is against the aforesaid order of the Commissioner. We have heard Shri Rajesh Chhibar, Advocate for the appellants and Shri S.P. Rao, JDR for the respondents. The Id. Advocate for the appellants stated that his clients entered into agreement with Bhopal Sugar Industries, Sehore for supply of Juice Weighing Scale for Rs. 4 lakhs. This was manufactured in their factory at Ghaziabad and since it could not be transported at one instance, It was assembled, disassembled in the factory and cleared on payment of duty in piece meal to the premises of buyer at Sehore. The party also purchased a weigh bridge from outside after discharge of duty and supplied the same direct at site. It is contended that what was supplied to the customer was the complete machinery and not parts. Only erection and commissioning was done at site. It therefore, could not be said that a distinct article was made at site. It is further argued that the value of he weigh bridge purchased from outside after due discharge of duty liability is not liable to be included in the assessable value. The Ld. Advocate also challenged the jurisdiction of the Commissioner of Central Excise, Indore in the matter. It is argued that their factory is at Ghaziabad and when it is alleged that the scale is manufactured within their factory the Commissioner having jurisdiction over their factory should have initiated the action if any, in this matter. It is further pleaded that they are a small scale manufacturers and were paying duty at concessional rate under Notification No. 175/86 dated 1.3.86 at the material time but the Commissioner did not extend this benefit to them in his order. The Ld. Advocate further challenged the confirmation of duty by applying the extended period. He stated that once the department accepts that they manufactured the complete machine at their factory and removed it after dismantling the same, the allegation they sup pressingly manufactured the same at site of Customer does not stand. The Ld. Advocate also pleaded that in the event of upholding the confirmation of duty to them. They would be eligible to avail Modvat credit of the duty already paid on the goods at the time of their clearance from the factory. Shri S.P. Rao, JDR for the respondents, reiterated the findings arrived at in the order of the Commissioner.
4. We have carefully considered the submissions made before us. In this case it is an admitted fact that the appellants supplied and installed a juice weighing scale at the premises of M/s. Bhopal Sugar Industries, Sehore. We have seen a copy of the Order dated 5.4.90 placed by the latter on the appellants. From this, it is clear that the order is placed for one no. Maxwell Bolougn Type Juice Weighing Scale of 6.5 Tonnes per Tip Capacity for the stated specifications. Under the heading 'Specifications' in this order, there is mention of 1 No. Vishwakarama Make Weigh Bridge of 10.0 Tonnes capacity equipped with one No. weigh bridge Tank of 7.0 Tonnes gross capacity. This leads us to believe that the weigh bridge which is stated to be a bought out item--is an integral part of the juice weighing scale and its value is liable to be included in assessable value of the scale. It is common ground that the juice weighing scale as such is liable to duty--the difference being restricted only to whether the appellants had already discharged this obligation while clearing the components of the scale from their factory premises or the duty was liable to be paid on the machine which emerged at site after assembly of the components cleared from the factory plus the one bought out from the market and supplied direct at site. Since on examination of the purchase order we have come to the conclusion that the bought out item viz. weigh bridge is an integral part of the scale, we are of the view that the duty is liable to be paid on the full intrinsic value of the scale including the value of the weigh bridge. By not including the value of this bought out item for payment of duty, the appellants have violated the provisions of Rule 9(1) with the intension to evade payment of appropriate duty and consequently the extended period for the purpose of demand of duty is liable to be invoked against them and they are also liable to penalty.
5. This leaves us with the question of jurisdiction raised by the appellants. It is pleaded that their factory is located at Ghaziabad and Commissioner, Indore has no jurisdiction to initiate proceedings against them. We see no merit in this argument. As stated above, the juice weighing scale is ordered to be supplied to M/s. Bhopal Sugar Industries, Sehore which is within the jurisdiction of Commissioner, Indore. The impugned item has been finally assembled there and has come into existence within his jurisdiction. Therefore, we find no infirmity in the exercise of jurisdiction in these proceedings. It is however averred in para 4 of the show cause notice issued in this case that the appellants had manufactured the complete machinery at their works at Ghaziabad dismantled and removed the same in parts to the premises of M/s. Bhopal Sugar Industries where it was erected and commissioned. It is also stated in the notice that the machine was fabricated at site for which erection/ commissioning charges of Rs. 20,000. If these are the admitted averments by the department, then no duty is liable to be paid again on the part of the dismantled machinery cleared from the factory premises on payment of duty. It is also well settled that erection/commissioning charges do not attract duty. As per the papers placed in the paper book of the appellants, they had discharged total duty liability of Rs. 16,800 (Rs. 16,000 BED + Rs. 800 SED) at the time of clearing the dismantled machine from their factory premises. Therefore, in our view the appellants are not required to pay this amount as a part of their duty liability which already stands discharged by them. They are also not liable to pay the duty on Rs. 20,000 erection/ commissioning charges.
6. The plea relating to the Modvat credit is not included in the written memorandum of appeal filed by the party. Therefore we do not admit this point raised by Ld. Advocate during the course of hearing of the appeal. In any case, we have allowed them the abatement of duty already paid on the machine. Another point raised is with regard to the payment of duty at concessional rates in terms of Notification No. 175/86 dated 1.3.86. The Commissioner in his order has observed that the party had not produced any evidence that they had not reached the ceiling limit of Rs. 75 lakhs prescribed under this notification. They have not therefore, established their eligibility for getting the benefit of the concessional rate. This is a finding of fact by the Commissioner which is not controverted in their appeal. Their contention, therefore, in this regard is rejected.
7. Consequently, the appeal succeeds for an amount of Rs. 16,800 plus the amount of duty calculated at appropriate rates for Rs. 29,000. The balance of the duty amount confirmed on the appellants is upheld. The penalty is also reduced to Rs. 5,000. But for these modifications, the appeal otherwise fails and the same is rejected.