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TMI Blog2009 (4) TMI 258X X X X Extracts X X X X X X X X Extracts X X X X ..... ith production, inspection and purchase of signages two Show Cause Notices were issued to Virgo proposing to recover central excise duty tentatively found to have been due from Virgo and to penalize them assessee as well as the Managing Director of the assessee, Shri Mathew Kuncheria. Adjudicating the Show Cause Notices issued following due process of law, the Commissioner of Central Excise, Pondicherry classified the signages manufactured by Virgo under CSH 9405.90 and demanded a total amount of Rs. 99,05,053/- towards duty on the signages manufactured and cleared during period 1999-2000 to 2002-2003 along with applicable interest. He confiscated excisable goods of value of Rs. 3,29,925/- under Rule 173Q(2) of Central Excise Rules, 1944 (CER)/Rule 25 of Central Excise Rules, 2002 and offered an option to redeem the same on payment of a fine of Rs. 1 lakh. He imposed a penalty of Rs. 99,05,053/- on Virgo under Section 11AC of the Central Excise Act, 1944 (the Act) and another penalty of Rs. 7 lakhs under Rule 173Q of CER. A penalty of Rs. 10 lakhs was imposed on Shri Mathew Kuncheria, under Rule 209A of CER/Rule 26 of CER, 2002. 2. In the appeal filed by Virgo the main groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both sides. The issue to be decided is whether signages erected at various petrol bunks of IOC are exigible to duty. Another factual issue involved is whether the assessee had cleared complete signages in unassembled form to the sites or whether sign poles alone were cleared by the assessee from its factory and the remaining parts of signages got manufactured by it on job work basis were received at the respective locations directly from the contractors of Virgo for eventual erection. Each signage comprises a steel structure namely, the sign pole fabricated at the premises of Virgo which is got galvanized on job work basis. The sign pole is provided with electrical wiring for fixing lighting of the signage. Each illuminated sign also requires a set of FRP claddings, the top one of which also bears the logo of IOC. Lexon poly carbonate rolls for display and the vinyl stickers for logo display are also got cut and fabricated into required sizes for fitting on the steel sign poles. These components are got lectured by job workers. The case of the Revenue is that the complete signages are assembled at Virgo premises and each of them is inspected by RITES, a government inspecting agenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -99 One number - Main sign pole including provision of circuit breakers, provision of cable for electrical connection etc. complete as per specification and drawings. One number - Facility sign pole including provision of circuit breakers, provision of cable forelectrical connection etc. complete as per specification and drawings. Two numbers - directional sign pole including provision of cable for electrical connection etc. complete as per specification and drawings. Erected, Commissioned and handed over in good condition. 5.2 Another document relied upon by the Commissioner to find that the complete signages were cleared to the IOC outlets for erection is report 13-7-2000 filed by the erection gang which reads as follows:- "I write this report for the erection gang who went for installing full signages at Coimbatore Division. Name of the R/O's are (1) Saravana & Co. Tirupur (2) Krishna Auto Service, Aerodrome post (3) TIC Kaniyur. Name of the Erection gang (1) D. Mani (2) Chokkalingam (3) Elango (4) Driver Samraj. Our Vehicle (No. TN-01-R455) left Chennai works by 9.30 p.m. on 10th July 2000. They reached Saravana & Co. Tirupur by 10 am on the 11th and installed completely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -5-2000. The letter dated 5-6-2000 addressed to IOC intimated them that signages worth Rs. 50 lakhs were under erection on at different locations and signages of value Rs. One crore were in stock at Ambattur and Virgonagar factories. The balance-sheet for the year ending 31-3-2001 of Virgo Industries showed signages of value Rs. 28,90,000/- in stock at the end of the year ending 31-3-2001. 7. Virgo got FRP claddings manufactured by M/s. Venkateswara Fibre Glass Industries. The Commissioner noted the one of the terms of the work order placed on M/s. Venkateswara Fibre Glass Industries in leter dated 25-11-1999 and 25-1-2000 as 'free delivery may be given at our works at Chennai - 58'. The fact of seizure of components of signages from the premises of Virgo also showed that Virgo received at their premises the components to assemble into complete signages before they are dispatched for erection at site. 7.1 In their letter dated 21-2-2000 addressed to the Principal Commissioner and Commissioner of Commercial Taxes, Chennai, Shri Mathew Kuncheria intimated their activity. An excerpt is reproduced hereunder. "Then all the items are assembled and tested and painted with the pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were inspected and cleared for erection. Therefore, it cannot be disputed that signages are goods and exigible. The claim of the assessee is that signages emerge only at the premises of outlets of IOC. The question whether signages after erection continue to be goods needs to be examined. In the Hyderabad Race Club case (supra) the Tribunal held that totalizater system which had been erected at site and was permanently fixed to earth and in respect of which the Collector had not used the word 'manufacture' but described the same as constructed or erected could not be called to be movable and hence could not be held as goods. We find that in that case facts were that totalizater could not work and could not have come into being as a complete integral item without the civil works and the generator. The panel with all their adjuncts like ticket issuing machines and counters, generator etc., formed a totalizater system having been built and constructed as such for the first time by Hyderabad Race Club. Without the civil work the different components could not have been assembled and without the generator the complete totalizaterer could not perform its work. The authorities had allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. Signage is complete before fixing on the concrete plateform. The facts of the judicial authorities relied on by the appellants are therefore different and their ratio inapplicable to the facts of the instant case. In the Radiant Electronics case (supra) cited it was held that installation and commissioning of EPABX being post-manufacturing activity, those expenses were not includible in the value of EPABX as long as erection charges were realized separately. Value of bought-out items was not includible even if essential for the operation of manufactured goods if they were not fitted to the machinds before their clearance. This case law applies to removal of machines in incomplete form, parts of which are sourced from outside and installed at site. This case law again is on a different set of facts. Installation and commissioning charges were held to be not includible if the same were collected separately by the manufacturer. In the case on hand, the manuacture, erection and commissioning is a works contract and separate elements of expenditure are not available. In the India Pistons case (supra) the Tribunal held that bought-out 'circlips' supplied along with the automobile pis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we uphold the impugned order demanding duty on the consideration realized by Virgo for manufacture and erection of signages. The issue whether the signages are aptly classified under CSH 9405.90 for the reason of a permanent light source being in-built in the signage or otherwise is not an issue before us. The appellants have not challenged confiscation of the goods seized from the premises of Virgo on any particular grounds. As regards the claim of limitation we find that the appellants have undertaken manufacture, supply and erection of signages involving huge value under a contract with IOC without intimating the activity to the Department. No acceptable reason has been advanced by the appellants to support the claim that they had not wilfully suppressed the fact of the impugned activity from the Department. We, therefore, hold that the demand of duty on the signages has been validly made invoking larger period. Penalty imposed on Virgo in accordance with the provisions of Section 11AC is upheld. Considering the penalty under Section 11AC imposed on Virgo we hold that penalty of another Rs. Seven lakhs under Rule 173Q on Virgo is uncalled for. Shri Mathew Kuncheria being the Man ..... X X X X Extracts X X X X X X X X Extracts X X X X
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