2002 (2) TMI 429 - AT - Central Excise

Summary

Issues involved:
Whether Belt Conveyor System installed in the factory premises is leviable to Central Excise duty.

Detailed Analysis:

Issue 1: Marketability of the Conveyor System
The Appellate Tribunal analyzed the marketability of the Conveyor System to determine its liability for excise duty. Referring to legal precedents, the Tribunal highlighted that for an article to be considered goods and subject to excise duty, it must be capable of being bought and sold in the market. The Tribunal emphasized that the complete Conveyor System was assembled on-site, brick by brick, and became immovable. The adjudicating authority acknowledged the assembly process akin to the assembling of a paper-making machine. The Tribunal also cited the test of permanency as established by the Supreme Court, emphasizing that if a chattel is movable to another place or can be dismantled and reassembled elsewhere, it is not considered permanently attached to the earth. The Tribunal concluded that the Conveyor System did not meet the test of marketability as it could not be dismantled and sold as a complete system in the market.

Issue 2: Eligibility for Exemption under Notification No. 67/95-C.E.
The Appellants argued that they were eligible for exemption under Notification No. 67/95-C.E. as the Conveyor System was erected after a specified date and used captively for manufacturing final products subject to duty. The Appellate Tribunal referred to a relevant case law where it was held that the benefit of the notification is available even if the capital goods are assembled and erected at the customer's site for use in the manufacturing process. The Tribunal found merit in the Appellants' argument and ruled in their favor, allowing the appeals.

Issue 3: Imposition of Penalty
The Department contended that penalty should be imposed on the Appellants for not paying excise duty on the Conveyor System. The Appellate Tribunal considered the arguments presented by both sides. The Tribunal noted that the Appellants acted in good faith, believing that no duty was applicable to the erection of the Conveyor System. Additionally, the Tribunal found discrepancies in the Department's claims regarding the date of installation and marketability of the system. Consequently, the Tribunal ruled in favor of the Appellants and set aside the penalty.

In conclusion, the Appellate Tribunal ruled in favor of the Appellants, M/s. A.C.C. Ltd. & M/s. Naveen Projects Ltd., determining that the Belt Conveyor System installed in the factory premises was not liable to Central Excise duty due to the lack of marketability and meeting the criteria for exemption under Notification No. 67/95-C.E. The Tribunal also dismissed the imposition of penalties on the Appellants based on their good faith belief and the Department's failure to establish marketability.