Custom, Excise & Service Tax Tribunal
M/S Larsen & Toubro Ltd vs Commissioner, Central Excise & Service ... on 6 May, 2015
In The Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
Appeal No.E/658/2007
[Arising out of OIA-RS/34/SRT-I/07, dt.19.02.2007, passed by Commissioner (Appeals), Central Excise & Service Tax, Surat-I]
M/s Larsen & Toubro Ltd. Appellant
Vs
Commissioner, Central Excise & Service Tax,
Surat-I Respondent
Represented by:
For Appellant: Shri Prakash Shah, Advocate For Respondent: Shri G.P. Thomas, Authorised Representative For approval and signature:
Honble Mr. P.K. Das, Member (Judicial) Honble Mr. H.K. Thakur, Member (Technical)
1. Whether Press Reporters may be allowed to see the No Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen the order?
4. Whether order is to be circulated to the Departmental Yes authorities?
CORAM:
HONBLE MR. P.K. DAS, MEMBER (JUDICIAL) HONBLE MR. H.K. THAKUR, MEMBER (TECHNICAL) Date of Hearing/Decision:06.05.2015 Order No. A/10505 / 2015 dt.06.05.2015 Per: P.K. Das
1. The relevant facts of the case, in brief, are that the Appellants had undertaken the job work of installation, erection and construction of various plants and machineries of M/s Reliance Petrochemicals Ltd (RPL for short) at the site of M/s Reliance Industries Ltd, for which the raw materials have been provided by M/s RPL. The Central Excise officers during their visit at the factory site, it was found that the steel structures were fabricated for construction of jetty for unloading the raw material at Tapti river side. According to the Revenue, the Appellants manufactured the floating structures/pontoons and used as construction aids. A Show Cause Notice dt.21.05.1993 was issued, proposing demand of duty of Rs.20,41,074.37 along with interest and penalty on the fabricated structures for installation of plant and machineries. There is a further demand of Rs.10,26,794.47 along with interest and penalty on floating structures/pontoons. The Adjudicating Authority dropped the demand of duty of Rs.20,41,074.37on fabricated structures and confirmed the demand of Central Excise duty of Rs.10,26,794.47 on floating structures/pontoons along with interest and also imposed a penalty of Rs.1 lakh under Rule 173Q of erstwhile Central Excise Rules, 1944. The Appellants filed an appeal before the Commissioner (Appeals). By the impugned order, the Commissioner (Appeals) rejected the appeal.
2. The learned Advocate appearing on behalf of the Appellant contested the demand of duty on two grounds mainly that the fabricated items cannot be classifiable under sub-heading No.89.01 of the Schedule to the Central Excise Tariff Act, 1985. He strongly argued that the Revenue failed to establish the marketability of the temporary structures, for construction of the jetty. He relied upon the various decisions and filed a compilation of case laws.
3. On the other hand, the learned Authorised Representative for the Revenue submits that there is no dispute that the item is a floating type structure to support the construction of the jetty and squarely covered under sub-heading No.89.07. He further submits that
4. the Honble Supreme Court and the Tribunal has decided the ______________ marketability the goods are not sold,
5. the items in question are capable of being marketed/sold. He further submits that the Appellants failed to discharge the burden of proof that the goods are not marketable. He relied upon the decision of Honble Supreme Court in the case of A.P. Electricity Board Vs Collector of Central Excise, Hyderabad [1994 (70) ELT 3 (SC)]. He further relied upon the decision of Honble Supreme Court in the case of Indian Cable Co. Ltd Vs Collector of Central Excise, Calcutta [1994 (74) ELT 22 (SC)].
6. After hearing both the sides and perusal of the records, we find from the Adjudication order that the Appellants had undertaken the construction of jetty, to meet ___________ NEE___, the construction work, they have fabricated the temporary structures for the said construction activities. It is seen from the Adjudication order that the Appellants temporary structures for construction of jetty was constructed out of the material supplied by M/s RPL, which dismantled after the work is over and the material given back to M/s RPL. According to the Revenue, it is like pontoons. We find that the chapter heading 89.07 of Central Excise Tariff Act, 1985 covers Other floating structures (for example, rafts, tanks, coffer-dams, landing-stages, buoys and beacons). The Note to Heading 89.07 of HSN provides Pontoons of the hollow cylinder type used for the support of temporary bridges, etc. But pontoons having the character of vessels are excluded.
7. We find that there is no dispute on the fact that the Appellant constructed the temporary structures for the purpose of construction of jetty. They have opposed the demand that the goods are not marketable and hence not excisable. The Adjudicating Authority observed that the marketability is to be seen from the product is capable of being marketed/sold. The Adjudicating Authority relied on the decision of the Tribunal in the case of Gujarat Narmada Valley Fertilizer Co. Ltd Vs Commissioner of Central Excise, Vadodara [1999 (114) ELT 909 (Tribunal)], where it has been held that actual sale is not necessary for the purpose of marketability. The learned Advocate submits that the Honble Supreme Court has over-ruled the decision of the Tribunal in the case of Gujarat Narmada Valley Fertilizer Co. Ltd Vs Commissioner of Central Excise, Vadodara [2005 (184) ELT 128 (SC)], wherein it has been held as under:-
5. This view as has been recently reiterated in the decision of Union of India & Ors. v. Sonic Electrochem (P) Ltd. 2002 (7) SCC 435 where this Court was to consider whether the plastic body of an Electro Mosquito Repellent (EMR) was liable to excise duty. In negativing the question it was held :
It may be noticed that in the cases referred to in the passage, quoted above, the reasons for holding the articles not marketable are different, however, they are not exhaustive. It is difficult to lay down a precise test to determine marketability of articles. Marketability of goods has certain attributes. The essence of marketability is neither in the form nor in the shape or condition in which the manufactured articles are to be found, it is the commercial identity of the articles known to the market for being bought and sold. The fact that the product in question is generally not being bought and sold or has no demand in the market would be irrelevant. The plastic body of EMR does not satisfy the aforementioned criteria. There are some competing manufacturers of EMR. Each is having a different plastic body to suit its design and requirement. If one goes to the market to purchase the plastic body of EMR of the respondents either for replacement or otherwise one cannot get it in the market because at present it is not a commercially known product. For these reasons, the plastic body, which is a part of EMR of the respondents, is not goods so as to be liable to duty as parts of EMR under para 5(f) of the said exemption notification.
6. This passage would clearly show the level at which the marketability has to be established.
7. The onus was on the Revenue. The only piece of evidence which has been produced by the Revenue was a test report which merely stated that the sample showed that the items were organic chemicals. It does not in any way establish marketability. Nor can marketability be established on the basis of mere stability. Something more would have to be shown to establish that DECA AND CMBE were known in the market as commercial products.
8. The Tribunal has ignored the evidence given by the employees of the appellant. In fact the wrong test was applied to determine the issue. The issue was not whether there was a hypothetical possibility of a purchase and sale of the commodity but whether there was sufficient proof that the product is commercially known.
8. In the case of M/s Cipla Ltd Vs Commissioner of Central Excise, Bangalore [2008 (225) ELT 403 (SC), the Honble Supreme Court held as under:-
11.?Since marketability is an essential ingredient to hold that a product is dutiable or exigible, it was for the Revenue to prove that the product was marketable or was capable of being marketed. Manufacturing activity, by itself, does not prove the marketability. The product produced must be a distinct commodity known in the common parlance to the commercial community for the purpose of buying and selling. Since there is no evidence of either buying or selling in the present case, it cannot be held that the product in question was marketable or was capable of being marketed. Mere transfer of BMS by the appellant from its factory at Bangalore to its own unit at Patalganga for manufacture of final product does not show that the product was either marketed or was marketable.
12.?Since the Revenue has failed to lead any evidence to show that the product in question was marketable or was capable of being marketed and that the product in question was a distinct product for being sold in the market, it has to be held that the product in question was not marketable. Accordingly, the appeal is accepted. The order of the Tribunal is set aside with consequential effect. No costs.
9. On perusal of the aforesaid decision, we find that the Honble Supreme Court consistently viewed that the onus lies with the Revenue in respect of the marketability of the product. It has also observed that the marketability cannot be established on the basis of mere salebility. It requires sufficiently proved that the product is commercially known. The learned Authorised Representative relied the decision of Honble Supreme Court in the case of A.P. Electricity Board (supra). In that case, the Honble Supreme Court held that the marketability of the article does not depend upon the number of purchasers nor is the market confined to territorial limits of the country. He ________________ facts of each case. In the present case, we do no find any material that the structures constructed by the Appellant for the purpose of construction of the jetty is commercially known as Pontoons in the market.
10. In view of the above discussion, we find that the demand of duty along with interest and penalty cannot be set aside. Accordingly, the impugned order in so far as the demand of Rs.10,26,794.37 along with interest and penalty are set aside. The appeal filed by the Appellant is allowed.
Add:
The learned Advocate also contested the marketability on limitation.
(Dictated & Pronounced in Court)
(H.K. Thakur) (P.K. Das)
Member (Technical) Member (Judicial)
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