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TMI Blog2019 (2) TMI 1486X X X X Extracts X X X X X X X X Extracts X X X X ..... other miscellaneous products falling under Chapter 25, 26, 38 & 69 of the First Schedule to Central Excise Tariff Act, 1985. 2.2 During the year 1994-95 they through their job workers M/s Wartisile Diesel India (P) Ltd, Secunderabad had assembled components and parts of D G Plant and installed a 6 MW D.G Set in their factory for captive consumption. They capitalized the D G Set in their accounts at a cost of Rs. 7.54 crores. They also availed MODVAT Credit of Rs. 54,36,774/- being the duty paid on the components used for the said D G Set. They did not paid the duty of Rs. 75,48,400/- on the said D G Set falling under Chapter Heading No 8502 of the First Schedule to Central Excise Tariff Act, 1985. 2.3 After tendering appellants sold the "items of D G Set on as is where is basis" to M/s Jindal Strips Ltd Delhi vide their invoice No 137 dated 1.03.2000 for a sum of Rs. 5.30 Crore. They cleared the said goods after paying the duty of Rs. 24,91,862/- after deducting depreciation at rate of 2.5% per quarter for the period of usage. The permission under Rule 57S(2)(b) of Central Excise Rules, 1944 (as it existed then) for the sale of said goods was granted by the jurisdictional Assista ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Aircon Ltd [2003 (154) ELT 710 (T)] f. CBEC Order No 58/1/2002-CX dated 15.01.2002 (e) Since they have availed the credit on the components, they have cleared the same on reversal of the credit as per Rule 57S(2)(b) of the Central Excise Rules, 1944. (f) The show cause notice had proposed to demand duty @ 10 on the value of power plant being Rs. 7.54 Crore. However as per the show cause notice the said goods were sold at Rs. 5.30 crores and hence duty payable ought not to have been in excess of Rs. 53,00,000/-. Thus after taking into account the duty already paid by them the differential duty that could have been demanded from them should be restricted to 24,31,112/-. (g) Demand of interest is beyond the scope of show cause notice. 4.1 We have heard Shri M S Nagaraja Advocate for the Appellant and Dr. J Harish, Authorized Representative for the revenue. 4.2 Arguing for the Appellants, learned Advocate reiterated the grounds taken in the appeal and submitted that- i. By referring to tender and tender schedule that the sale of the said D G Set was on "As is where is basis and no complaint basis". And the components/ equipments listed for sale were as follows: a. Engine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... para 15 of the impugned order and stated that the goods cleared were not the same goods as received by the Appellants but had distinct identity from those. In his view as has been held by the Commissioner the duty should have been paid by the Appellants on the value of clearance as adopted by the appellants by applying the applicable rate of duty as per the heading claimed by them in the documents adopted for clearance. v. From the plain reading of rule 57S(2)(b), it would be evident that the same capital goods against which the MODVAT credit has been taken should have been removed. It is not the case of the appellants that they have cleared the same goods even the tariff heading in respect of the goods cleared and as received do not tally, Hence Rule 57S(2)(b) is not applicable in the present case. vi. Even in terms of the circular of CBEC referred by the appellants which takes into account the decisions cited by the appellants the components, inputs and parts which are specified excisable products will remain dutiable as such identifiable goods at the time of their clearance from the factory or warehouse. vii. Referring to the tariff for the said headings, it is evident that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to you in accordance with terms and conditions of our Tender No.1"URID&C/41/1999-2000 dated 02.06.1999; your oiler No.JSL.102/99 dated 22.06.1999; your revised offer No.JSL/99 dated 15.10.1999 and as per our letter of acceptance No.P:D&C:7639/1999-2000 faxed to you on 02.11. 1999. Items : 6 MW DO Set. The details are as per enclosure enclosed. Rate : Rs. 5,30,00,000.00 (Rs. Five Crores Thirty Lakhs only) Taxes : C.S.T. @ 4% against Form-C otherwise no, 10% extra Excise Duty: Extra as applicable Last date of Payment: Within 60 days from 02nd November 1999 Last date of dismantling and lifting: Within 120 days from 2nd November 1999 Delivery: As is where is no compliant basis. These documents very clearly prove that what was offered for sale and what was actually sold was 6 MW DO Set and excise duty and sales tax were charged for the sale of such goods. These evidences on record very clearly disprove the assessee's contention that the goods involved in the transactions were immovable property and non-excisable goods and hence, no duty can be demanded. Therefore, it is clear that the assessees' relied upon the Hon'ble apex court's judgment in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ming to the second issue whether they have discharged the correct duty liability, the assessee's contention is that they had paid a same of' Rs. 24,91,862/- towards duty after allowing a deduction of 2.5% of the credit taken for each quarter of use or fraction thereof from the date of availing of the credit under Rule 57Q under the provisions of Rule 57S(2)(b). The relevant portion of the said Rule 57 S (2) as it stood at the relevant time is reproduced verbatim below:- "(2) In a case, - (a) where capital goods are removed without being used from the factory for home consumption, on payment of duty, or for export on payment of duty of excise, such duty of excise shall in no case be less than the amount of credit that has been allowed in respect of such capital goods under rule. 57Q; (b) where capital goods are removed after being used in the factory for home consumption on payment of duty of excise or for export under rebate on payment of duty of excise, such duty of excise shall be calculated by allowing deduction o12.5 per cent of credit taken for each quarter of year of use or fraction thereof, from the date of availing credit under rule 57Q; and (c) ......... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oration 1173/17.02.95 8413.00 24. M/s. Switchgears & Controls (P) Ltd. 63/12.02.95 8537.00 25. M/s. Thermopads (P) Ltd. 262/19.02.95 8516.00 26. Patny Systems (P) Ltd. 126/18.02.95 7216.80 Central Excise duty has been discharged on these components and parts under these headings. These parts and components have been used in the manufacture and assembly of DG Set and once DG Set is formed, the components and parts do not have any separate identity. These are not the items which has been cleared vide an invoice No.] 37 dated 01.03.2000 and what has been removed vide the said invoice is DG set falling under heading No. 85.02 of the Central Excise Tariff. Therefore, the provisions of rule 57S(2)(b) does not apply to the situation at all and duty liability should have been discharged oil the goods under clearance, namely, DG Set falling under Heading No. 85.02 at the rate applicable for such goods at the relevant time. The rate of duty applicable on the DG Set cleared for home consumption was 16% Adv. The sale value as evidenced in the sale invoice is Rs. 5.30 crore. An argument has been put forth on behalf of the noticee that the value that can be taken for determination ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lants and not on the act of erection of the D G Set in their premises. It is thus evident that demand of duty is not in respect of D G Set erected at the site, which becomes immovable property, which in terms of the catena of judgments referred to by the appellants is not excisable. Since no duty has been demanded on the D G Set which was immovable property the decision relied upon by the Appellants are not applicable in the present case. 5.5 Para 4 (vii) of Order No 58/1/2002-CX dated 15.01.2002 relied upon by the appellants read as follows: "(vii) When the final product is considered as immovable and hence not excisable goods, the same product in CKD or unassembled form will also not be dutiable as a whole by applying Rule 2(a) of the Rules of Interpretation of the Central Excise Tariff. However, components, inputs and parts which are specified excisable products will remain dutiable as such identifiable goods at the time of their clearance from the factory or warehouse." 5.6 In the present case appellants have themselves effected the clearance of the said goods as is evident from the invoice No 137 dated 1.03.2000, "Items of 6 MW DG Set" and not the DG Set as such. They have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) shall not apply to cases where the duty had become payable or ought to have been paid before the date on which the Finance Bill, 2001 receives the assent of the President." Since the differential duty in the present case became payable on determination made by Commissioner under Section 11A (2) the demand of interest is justified. 5.8 In this case the demand for payment of differential duty has been made within period of one year from the date of filing the returns i.e. 06.04.2000 for the clearance made vide invoice dated 1.3.2000. Commissioner has in the impugned order held as follows: "16. The assessee has put forth another argument that the demand is time barred. The basis for this argument is that the DG Set was assembled in 1995 and the demand on the DG set was made in 2011 and there is no allegation of any fraud, collusion, suppression of facts or willful misstatement etc. in the show-cause notice and hence, only the normal period would apply and not the extended period. This argument is misplaced. The liability to pay excise duty arises when the DG set was cleared for home consumption from the factory of production. When the DG set was being captively used, no duty li ..... X X X X Extracts X X X X X X X X Extracts X X X X
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