Customs, Excise and Gold Tribunal - Delhi
Progressive Extraction & Exports Ltd. vs Commr. Of C. Ex. on 11 April, 2002
Equivalent citations: 2002(144)ELT693(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
The issue involved in this Appeal filed by M/s. Progressive Extraction & Exports Ltd. is whether the Hexane Storage Tanks, crude oil storage tanks and water storage tanks are liable to excise duty.
2. Shri Ravi Holani, learned Chartered Accountant, submitted that Hexane being inflammable, is required to be stored in underground tanks with connected pipe lines, motors etc.; that for underground storage, RCC base with steel plates of 10 mm thickness is required which have been welded and placed by nuts on the RCC base and thereafter tank has been fabricated piece by piece assembled to iron/steel sheet; that water storage system is created by motors, pipe lines etc.; that crude oil tanks has been constructed on RCC base; that steel sheets have been welded and grouted to the base by nuts and bolts; that all the three systems are not having their own separate identity but a part of the whole system of the solvent extraction and refining plant; that therefore, these tanks cannot be treated as storage tanks as classifiable under Heading 73.09 of the Schedule to the Central Excise Tariff Act; that they are classifiable as plant under Heading 84.19 of the Tariff; that further being immovable property and not capable of being brought to the market, the excise duty cannot be levied. He relied upon the following decisions :
1. Palmtech Engineers Pvt. Ltd. v. CCE, 2001, (132) E.L.T. 492 (T)
2. Commissioner of Central Excise, Chandigarh v. Bhagwanpura Sugar Mills, 2001 (134) E.L.T. 673 (T), 2001 (47) RLT 409 (CEGAT)
3. CCE, Chandigarh v. Budhewal Co-op Sugar Mills, 2001 (133) E.L.T. 337 (T), 2001 (46) RLT 17 (CEGAT)
4. JST Engineering Services v. CCE, Jamshedpur, 2001 (133) E.L.T. 350 (T), 2001 (46) RLT 1 (CEGAT) He also placed reliance on Section 37B Order No. 58/1/2002 CX., dated 15-1-2002 wherein it has been clarified by the Central Board of Excise and Customs that welded tanks made by metal for storage of petroleum products are not movable and cannot be considered as excisable goods. Learned Chartered Accountant also mentioned that the operation of the plant was commenced on 22-11-93 and therefore in terms of Rule 9A of the Central Excise Rules, the relevant date for all purposes is 22-11-93; that the total value of all the tanks as computed by the Department is less than Rs. 30 lakhs and accordingly the Appellants are eligible for benefit of small scale exemption provided under Notification No. 1/93-CE., dated 28-2-93; that claim for SSI exemption can be raised at any stage as held by the Appellate Tribunal in the case of Gujarat State Fertilizers Company Ltd. v. Collector of Central Excise, Vadodara - 1996 (83) E.L.T. 159. Finally, he submitted that the demand of Excise duty is time barred since the Appellants had sufficient reasons to assume at the material time that the tanks were not excisable commodity; that it was clarified by the Indore Collec-torate under Trade Notice No. 51/89-C.E., dated 5-5-89; that if the piece by piece erection or installation results into a immovable property, no duty would be required to be levied on such property. Reliance was also placed on the decision in the case of Padmini Products v. CCE - 1989 (43) E.L.T. 195 (S.C.) and Agarwal Pesticides and Chemical Industries v. U.O.I - 1988 (33) E.L.T. 681 (All.). Finally, he submitted that no penalty is imposable as they held the bona fide belief about the non-excisability of the tanks in question. Reliance has been placed on the decision in the case of Wellknit Apparels Pvt. Ltd. v. Commissioner of Customs, Madras -1999 (106) E.L.T. 431 (Tribunal) that penalty under Section 11AC of the Central Excise Act cannot be imposed as the period pertains to 1993-94, that is, before the provisions of Section 11AC came into effect.
3. Countering the arguments Shri V.K. Verma, learned DR reiterate the findings as contained in the impugned order. He emphasized that the tanks in question are not immovable; that this is apparent from the statement of Shri Anil Khabiya, Director, who had deposed that they had placed the orders for overhead tanks and Hexane Storage Tanks with M/s. New Protech Engineers, Bombay; that as they could not supply the same the Appellants themselves got the tanks fabricated; that further, 'Shri Avinash Mankar, Project Engineer in his statement dated 6-6-94 mentioned that overhead water tanks were placed at height of steel columns with the help of nuts and bolts and Hexane tanks were placed underground on RCC base; that moulded tanks can be shifted to one place from another after removing the bolts. Learned DR also mentioned that the Commissioner has given specific finding that tanks after manufacturer were shifted to specially prepared pits which clearly shows the movable nature of the tanks; that in respect of crude oil storage tanks also the holes were made in extra base plate for placing nuts and bolts. He further mentioned that the extended period of time limit is invocable in the present matter as the Appellants had not disclosed the activity of fabricating the tanks to the Department and they have not maintained statutory records and utilized them without payment of duty. Learned DR also stated that the tanks by themselves cannot be treated as plants so as to be classifiable under Heading 84.19; that the tanks are rightly classifiable under Heading 73.09; that as they had not claimed the SSI Exemption before the Adjudicating Authority, the same has not been examined.
4. We have considered the submissions of both the sides. For being treating the goods as excisable under the Central Excise Act, it is required that the goods should be capable of being marketed. The Central Excise duty can be levied only if the goods are movable and can be brought to the market for being bought and sold. The Appellants have contended that all the tanks in question are not movable as these have been fabricated piece by piece whereas the Revenue has contended that these were fabricated and then placed on the foundations and fastened with the help of nuts and bolts. We find that the factual position has not come out clearly from the documents brought on record. Before the question of movability of the impugned goods can be tested various aspects such as method of fabrication, the size of the various tanks and the fact that whether these were first fabricated and shifted to the place where they were to be used, are to be ascertained. As these facts are not coming clearly from the record we are of the view that the matter should be sent back to the Adjudicating Authority to ascertain these facts and then adjudicate the matter. However, we agree with the learned DR that the extended time limit for demanding the duty is invocable in view of the fact that the fact of fabrication was never disclosed to the Department. We also do not find any substance in the submissions of the Appellants that the tanks would be classifiable under Heading 84.19 as plants. Something which is placed in a plant cannot by itself be called plant. Tanks are specifically covered under Heading 73.09 of the Tariff and as such will be classifiable therein only. As far as penalty under Section 11AC of the Central Excise Act is concerned, we hold that it cannot be imposed as the period involved is prior to the Section coming into force. We therefore, set aside the penalty as well as interest imposed under Sections 11AC and 11AB of the Act. The Adjudicating Authority will also examine on the basis of the evidence which may be submitted by the Appellants whether benefit of small scale exemption under Notification No. 1/93 is available to them. The Adjudicating Authority will be at liberty to impose penalty under Rule 173Q of the Central Excise Rules if deemed fit. The matter is thus remanded to the Adjudicating Authority for re adjudication with the above directions.