TMI Blog2001 (2) TMI 643X X X X Extracts X X X X X X X X Extracts X X X X ..... ngines Ltd., M/s. Kirloskar Cummins Ltd. and M/s. Ashok Leyland Ltd.; Alternators from M/s. Kirloskar Electric Company; Base frame coupling and other components from local market. The appellants in turn sell the said components, in original packed condition, to their customers located in Orissa, West Bengal and other States. At the customers site the components are assembled and installed to make a Diesel Generating Set which is firmly fixed to the ground. 2.1 The allegation of the Revenue is that the appellants not only sold the duty-paid components but also engaged themselves in the manufacture of Diesel Generating Sets at various sites in respect of which they failed to discharge central excise duty liability during the period from 5-9-1991 to 31-3-1993. Separate show cause notices were issued to them demanding central excise duty of Rs. 1,42,060/- from Western India and Rs. 4,49,688/- from Vineet, and also proposing imposition of penalty on them, under the Central Excise law. The appellants denied, all the allegations contending that they did not engage themselves in the manufacture of the Diesel Generating Sets. They, however, admitted to have deputed a mechanic/engineer of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t machinery which are superficially attached/bolted to the ground so as to make them vibration free does not constitute immovable property. So during 24-12-1986 - 31-8-1993 when the Trade Notice was in vogue; no duty was payable by them; (g) Assembly of D.G. Sets was done by the customers and the performance test or commissioning was the responsibility of the assessee. So since they did not install the generating sets at site, they cannot be treated as the manufacturer of the generating sets within the meaning of Section 2(f) of the Central Excise Act, 1944. Since the installations are done by the customers, they should be treated as the manufacturer and duty, if any, is to be paid by them only; and (h) The D.G. Sets cannot be said to be goods because goods are ordinarily bought and sold in the market. The generating sets are fixed to ground and are not bought and sold in the market. Since the D.G. Sets assembled at site are not goods. Those cannot be charged to duty. 2.2 Rejecting the said contentions of the appellants, the adjudicating authority vide his Order-in-Original No. 67 (85) C.E.-11A/93/Commr./3/98, dated 16-4-1998 confirmed the said duty demands besides imposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n overall a good prima facie case in their favour. Consequently, we allow the stay petition unconditionally. 4. When the appeals were taken up for disposal, Shri B.N. Chattopadhyay, ld. Consultant appearing for the appellants, submits that the appellants are merely trader in components of D.G. Sets. Neither they have any factory to undertake manufacture of D.G. Sets nor any independent establishment to do the job of assembling/installation of D.G. Sets at site. The customers themselves erect and install D.G. Sets at their sites with their own electrical personnel/electrical contractors. However, a mechanic/engineer of VDSS, a sister concern of the appellants, was being deputed at the time of commissioning of the D.G. Sets and the VDSS raised bills on the appellants and they paid the same. The work was done on principal to principal basis. Therefore, it is wrong to consider the appellants as manufacturers. In this connection, he relies upon the decisions of the Hon ble Supreme Court in M/s. Ujjagar Prints v. U.O.I. - 1988 (38) E.L.T. 535 (S.C.), M/s. O.R.G. System v. C.C.Ex., Vadodara - 1998 (102) E.L.T. 3 (S.C.), C.C.E., Baroda v. M.M. Khambhatwala - 1996 (84) E.L.T. 161 (S.C.), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty. The ld. Consultant has also invited attention to the Trade Notice No. 89-C.E. (Ch. 84), dated 24-12-1986 of Delhi Collectorate wherein it was clarified that if D.G. Sets assembled at site out of duty paid components and fixed to the ground at a fairly permanent fixture, and are not ordinarily intended to be removed from the place of installation, would not attract further central excise duty. The ld. Consultant also states that the said Trade Notice withdrawn vide Trade Notice No. 17-C.E. (Misc. 14)/93, dated 1-9-1993. He pleads that during the period the Trade Notice, dated 24-12-1986 was valid, duty cannot be demanded on the D.G. Sets installed at site, as the Trade Notice is binding on the Department. In this regard, he relies on the decision in M/s. Nav Gujrat Paper Industries - 1977 (1) E.L.T. (J 67) (Gujarat), Steel Authority of India - 2000 (115) E.L.T. 42 (S.C.) = 2000 (36) RLT 369 ( S.C.), Birla Jute and Industries Ltd. - 1992 (57) E.L.T. 674 (Calcutta), and Packet Plastics (Nasik) Pvt. Ltd. - 1999 (35) RLT 33 (T). Based on the above pleas, the ld. Consultant argues that since the show cause notice was issued on 29-10-1993 for the period from 5-9-1991 to 31-3-1993, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld water and, therefore, deserve to be rejected outright. Accordingly, we do so. 7. The next point for consideration is whether the appellants who sold the duty paid diesel engines, alternators, coupling and other components in original packed condition and who deputed a mechanic/engineer from their sister concern for commissioning of the D.G. Sets would be considered as manufacturers, for the purpose of demand of central excise duty from them. We observe that the show cause notice alleges that Western India and Vineet have undertaken the manufacture of D.G. Sets at various sites. This allegation is based on the documents and the billing pattern referred to in para 7 of the statements of facts annexed to the show cause notice. The appellants contend that they supplied only the components, and assembling and installation of the D.G. Sets was done by their customers. However, commissioning of the D.G. Sets was done by the mechanic deputed by them from their sister concern. On a careful consideration, we are of the view that the evidence on record is sufficient to substantiate the allegation of manufacture of the D.G. Sets at site by the appellants. Accordingly, we consider the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessees were under a bona fide belief that duty was not attracted on the D.G. Sets assembled at site. They cannot be faulted for having taken certain precautions in arranging their business transactions having regard to the confusion referred to supra during the said period. This conduct cannot lead us to conclude that the appellants suppressed the fact of manufacture and clearance of D.G. Sets. Therefore, invoking of a larger period under Section 11A ibid is not justified. As the show cause notice was issued beyond six months period, the demands are clearly barred by limitation and there are no adequate grounds to impose penalties on them. Therefore, we set aside the order impugned on the sole ground of limitation. 9. In fine, we hold that assembling of D.G. Sets at site from duty-paid diesel engines, alternators, base frame coupling and other components amounts to manufacture under Section 2(f) of the Central Excise Act, 1944. The appellants are considered as manufacturers of the impugned goods during the relevant period. As the allegation of suppression of fact of manufacture and clearance of D.G. Sets has not been proved. Larger period cannot be invoked for demand of duty. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Collectorate. However, we find that the Calcutta-II Collectorate s Trade Notice No. 105 was issued on 5-9-1991 overruling its earlier Trade Notice No. 254, dated 21-12-1990. The earlier view of the Revenue which was to the effect that D.G. Sets assembled at site attract duty under Heading 85.02 was overruled by the subsequent Trade Notice issued on 5-9-1991. It was clarified that dutiability of generating set assembled at site would be examined in individual cases and decided on merits by jurisdictional officer of Central Excise. Industry was informed vide the said Trade Notice - the position that the Diesel Generating sets when assembled at site would not attract duty under Heading 85.02 on the ground that they are immovable property is no longer valid. The machinery which is superficially attached/bolted to the ground so that its operation is fabrication-free, does not, for that reason, become immovable property because it can be easily unbolted and bought and sold for example, Diesel Engine Generating Sets, Power Looms, etc. As rightly observed by ld. Brother, Dr. Busi, such Trade Notices issued by the Commissioners are usually based upon the clarifications issued by the Boa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd you have mentioned excise duty to be charged @ 5%. I do not know it is a typographical error because the excise duty on assembly set is 15%. However, there is a provision in the law that if you order loose components i.e. engine, alternator, base, control panel etc., separately and the same can be assembled at site and grouted to there as permanent fixtures are not likely to be ordinarily removed, in that case, there is no excise duty at all. A copy of the Trade Notice is enclosed. Please keep this as a confidential in case you feel this generator is to be grouted. Please amend the order showing all items separately confirming loose components will be assembled at site and grouted to the earth. In case a complete assembly set is required from Calcutta, please issue an amendment with the excise duty @ 15% and not 5%. Documentary evidence for 15% excise duty will be produced along with bill. A reading of the above letter makes it very clear that the appellants were having knowledge about the generating sets attract duty at 15% as against 5% mentioned by their customers. In fact, the above letter gives us the reasons to believe that some duty was being charged as duty of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NCE OF OPINION Whether the appeals are required to be allowed on the point of limitation as held by the ld. Member (Technical) or the matter is required to be remanded to the Commissioner for fresh adjudication on the point of limitation as held by Member (Judicial). Sd/- (Dr. S.N. Busi) Member (T) Sd/- (Archana Wadhwa) Member (J) 20. [Order per : Justice K. Shreedharan, President]. - This matter has come before me as a Third Member on account of difference of opinion expressed by the Member (Technical) and Member (Judicial) while passing Final Order Nos. M-998-999/Cal/2000, dated 3-8-2000. The difference of opinion is in relation to the period of limitation i.e. whether the Department is justified in invoking the extended period as contemplated under Section 11A of the Central Excise Act. For a proper understanding of the question referred to, I read the same : Whether the appeals are required to be allowed on the point of limitation as held by the learned Member (Technical) or the matter is required to be remanded to the Commissioner for fresh adjudication on the point of limitation as held by Member (Judicial) 21. Even tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er delivered by this Tribunal. That decision of the Apex Court is binding on this Tribunal under Article 141 of the Constitution of India. So viewed, the 3rd Member cannot ignore the Apex Court s decision and deal with the issue of limitation alone. Therefore, according to me on the facts and circumstances of this case, where the Department has no legal claim for levying excise duty the third Member can pronounce on the entire merits. Issue regarding limitation can be gone into only if the duty demand is sustainable. Where no duty can be levied, the issue of limitation has no relevance. On these grounds I am justified in giving the opinion on the basis of the decision of Apex Court. 23. In the situation detailed above, the question of limitation is not at all germane for a different consideration. Therefore, even though the question referred to the third Member is one relating to the period of limitation, in view of decision of the Apex Court, appellants are not engaged in manufacture of any new marketable commodity and consequently not liable to duty under Central Excise Act. The result therefore, is the action initiated by the Central Excise Department for levying duty on the D ..... X X X X Extracts X X X X X X X X Extracts X X X X
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