2002 (8) TMI 144 - AT - Central Excise

Manufacturer - Excisability - SSI Exemption - Brand name - Penalty - Quantum of - Confiscation - Justification of

Summary

Issues Involved:
1. Classification of goods as parts or machinery.
2. Eligibility for SSI exemption under Notification 1/93.
3. Determination of the manufacturer of the complete plant.
4. Whether the plant assembled at the client's site constitutes "goods".
5. Jurisdiction of the Commissioner to adjudicate on demands.
6. Correctness of duty quantification.
7. Applicability of Modvat credit.
8. Limitation period for demand.
9. Imposition of penalties and confiscation orders.

Issue-wise Detailed Analysis:

1. Classification of Goods as Parts or Machinery:
The Commissioner concluded that the manufacturing units produced parts of machinery, not complete machinery, and thus were liable for a higher duty rate of 10% instead of 5%. The appellants did not contest this finding, and the resultant confirmation of duty was upheld.

2. Eligibility for SSI Exemption under Notification 1/93:
The Commissioner denied the benefit of Notification 1/93 to the manufacturing units, asserting that the goods bore the brand name "Solidmec" of the marketing company. However, the appellants argued that their individual brand names were prominently displayed, and the name "Solidmec" was merely a marketing label. The Tribunal found that the existence of the marketing company's brand name, in the described circumstances, did not deprive the manufacturing units of the SSI exemption benefit. Consequently, the demands based on this denial did not survive.

3. Determination of the Manufacturer of the Complete Plant:
The Commissioner held that M/s. Solidmec was the manufacturer of the complete plant, as they undertook erection and commissioning at the client's site. The Tribunal, however, found that the activities performed by M/s. Solidmec, including supervision and commissioning, did not make them the manufacturer as per Section 2(f) of the Central Excise Act, 1944. The Tribunal concluded that the buyers themselves erected the plant under Solidmec's supervision.

4. Whether the Plant Assembled at the Client's Site Constitutes "Goods":
The Tribunal examined whether the assembled plant could be considered "goods." It was found that the plant was firmly affixed to the ground and could not be disassembled and reassembled without significant civil work. Therefore, it was not considered "goods," and the confirmation of duty on this ground did not sustain.

5. Jurisdiction of the Commissioner to Adjudicate on Demands:
The Tribunal did not find it necessary to address the jurisdictional issue due to its findings on other grounds.

6. Correctness of Duty Quantification:
The Tribunal noted the appellant's claim that the duty was quantified incorrectly without proper deductions. However, this issue was not further examined as the primary findings negated the duty demands.

7. Applicability of Modvat Credit:
The Tribunal did not delve into the Modvat credit issue, given its conclusions on the primary issues.

8. Limitation Period for Demand:
The appellants argued that the demand was barred by limitation, as the department had knowledge of their operations since 1996. The Tribunal did not examine this plea in detail, as the primary findings negated the duty demands.

9. Imposition of Penalties and Confiscation Orders:
Penalties were imposed on the units and their partners under Rule 173Q, 226, and Section 11AC. Given the Tribunal's findings, the penalties were reduced to token amounts for the surviving demands against two units. The penalties on the partners were remitted, and the orders of confiscation were set aside.

Conclusion:
The Tribunal upheld the duty demand of Rs. 1,97,875/- against M/s. Solmec Earthmovers Equipment and Rs. 2,16,347/- against M/s. Solid & Correct Engineering Works. Penalties were reduced to Rs. 2 lakhs each for these units, and penalties on the partners were remitted. The orders of interest payment and confiscation of plant, land, and building were set aside. The appeals were decided accordingly.