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Respondent/s Appearance :

Dr. Nitish Birdi, SDR
1)Shri M.N.Bharathi, Advocate
2) None For the Appellant/s For the Respondent/s CORAM:
Mr. P.G. Chacko, Member (Judicial) Mr. P. Karthikeyan, Member (Technical) Date of hearing : 25.2.2008 Date of decision : 25.2.2008 Final Order No.____________ Per P.G.CHACKO These appeals are by the Revenue against an order passed by learned Commissioner (Appeals), wherein an adverse order passed by the original authority against the respondents herein was set aside. M/s.Godrej Boyce Manufacturing Co.Ltd., (Godrej, for short), one of the respondents, were engaged in the manufacture of Heavy Duty System Components during the material period. These components (panels, cladding sheets, slotted angles etc.) were manufactured and removed (by classifying them under Chapters 72 & 73 of the First Schedule to the Central Excise Tariff Act) on payment of duty to the premises of the other respondents namely M/s.Rane Luke Clutch Ltd. (Rane, for short) and the same were assembled at the site into what is called Heavy Duty Rack System. This was during the period June-July 1995. The department issued a show-cause notice dated 18.5.98 to M/s.Godrej for recovery of duty of Rs.2,12,315/- from them in respect of Rack System by invoking the extended period of limitation under Section 11A of the Central Excise Act and for imposing penalties on them under Section 11AC of the Act and Rules 173Q etc. of the Central Excise Rules, 1944. In the same SCN, the department proposed to impose a penalty on M/s.Rane also under Rule 209A of the said Rules. Both the noticees contested the proposals. In adjudication, the jurisdictional Dy.Commissioner confirmed the demand of duty against M/s.Godrej, imposed on them penalties of Rs.2,12,315/- and Rs.1 lakh under Section 11AC and Rule 173Q respectively and imposed a penalty of Rs.1 lakh on M/s.Rane under Rule 209A. The aggrieved parties preferred appeals to the Commissioner (appeals) and the latter decided in their favour. Hence the present appeals of the Revenue.

2. Ld.SDR reiterates the grounds of these appeals. The main grievance of the Revenue is that the lower appellate authority did not address the question whether the Rack System which emerged at Ranes premises through assembly of the components cleared from the factory of Godrej could held to have been manufactured for the purpose of levy of duty of excise. It is also pointed out that the technical service charges collected by Godrej from Rane were nothing but erection and commissioning charges and these charges were incurred to transform the duty-paid components into a new commodity viz. Heavy Duty Rack System. In this connection, ld.SDR relies on the apex courts judgment in Sirpur Paper Mills Ltd. Vs Collector, 1998 (97) ELT 3 (SC), wherein a paper making machine assembled and erected at site out of bought-out components was held to be marketable and dutiable. On the other hand, ld.counsel appearing for one of the respondents (Godrej) submits that the excisability issue is covered by the Tribunals decision in Godrejs own case reported in 2005 (188) ELT 86 (Tri.-Mumbai). Ld.counsel further submits that, in any case, the assessee has a strong case against the demand of duty on the ground of limitation. It is submitted that the lower appellate authority categorically held that the assessee could not be regarded as having suppressed anything before the department and, accordingly, that authority set aside the penalties also.