1999 (10) TMI 307 - AT - Central Excise

Summary

Issues:
- Duty demand on machines manufactured and cleared without payment
- Applicability of duty on machines assembled at customer's site
- Claim for set-off/credit on duty paid on inputs
- Interpretation of machines being embedded to earth as immovable property

Analysis:
The appeal was filed against an order-in-original confirming a duty demand of Rs. 1,86,638 on 13 machines manufactured and cleared without payment of duty. The Collector of Central Excise imposed a penalty of Rs. 20,000 on the appellant under Rule 173Q of the Central Excise Rules, 1944. The appellant argued that the machines were assembled at the customer's site, making them non-marketable and not liable for duty, citing a Tribunal decision. Additionally, they claimed entitlement to set-off/credit based on Supreme Court judgments allowing Modvat credit even if the procedure was not followed.

The Departmental Representative contended that the Director of the company admitted to manufacturing and selling the machines, contradicting the appellant's claim of on-site assembly. Referring to a Supreme Court decision, it was argued that embedding machines on a concrete base for stability does not render them immovable property. After hearing both sides, it was established that the machines were indeed manufactured by the appellants, as admitted by the Director in his statement under the Central Excise Act. The argument that the machines were not produced in their factory was deemed invalid.

Regarding the claim that the machines, when embedded to earth, become immovable property and are not subject to duty, the Tribunal referred to a Supreme Court decision to dismiss this argument. The Supreme Court precedent clarified that embedding machines for operational stability does not change their movable nature. Consequently, the impugned order was upheld, but in line with other Supreme Court judgments, the appellants were granted the benefit of credit for inputs used in manufacturing the machines. Therefore, the appeal was dismissed, with the appellants entitled to credit as per the law.