TMI Blog2004 (5) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... tender, entered into an agreement with M/s. SAIL, Bhilai Steel Plant for design, supply, supervision of erection and commissioning of four sets of Hydraulic Mudguns and Tap Hole Drilling Machines required for blast furnace Nos. 4 and 6 of the Bhilai Steel Plant. For this purpose, it imported several components and also manufactured some of the components at their factory in Marai Malai Nagar, Chennai. These components were transported to the site at Bhilai where the manufacture and commissioning of the aforesaid machines took place. It is undisputed that duty was paid in respect of the components manufactured at its workshop in Chennai, but no duty was paid on manufacture of the aforesaid Mudguns and Drilling Machines which were erected and commissioned on site. 3.A show cause notice dated 3-4-1992 was issued to the appellant demanding Central and Special Excise Duty amounting to Rs. 89,61,525/- on the total assessable value of the aforesaid machines of Rs. 8,53,47,855/-. The notice also proposed initiation of penal action against the appellant. The appellant filed a detailed reply explaining the processes undertaken by it for the manufacture/erection and commissioning of the equ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the majority opinion, the appeal was dismissed by order dated 18-12-1995, which is the order impugned in this appeal. 7.Before us also the same three grounds have been pressed by the appellant. We shall deal with the submissions urged before us later in this judgment, but we consider it appropriate to notice at the threshold, the undisputed facts shorn of unnecessary details. 8.As noticed earlier, the appellant had agreed to design, supply, supervise the erection and commissioning of four sets of Hydraulic Mudguns and Drilling Machines falling under Chapter Heading Nos. 8424 and 8465 of the CETA, 1985. Some of the components were imported while some others were manufactured at their factory in Chennai. These were then brought to the site at Bhilai. The appellants thereafter carried out the manufacture and assembly of these machines at a distance of about 100 metres from the place of erection whereafter the same were removed for commissioning to the blast furnace concerned. 9.In their reply to the show cause, the respondents explained the processes involved, the manner in which the equipments were assembled and erected as also their specifications in terms of volume and weight ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ane and landed on the cast house floor 25 feet high near the concrete platform where drilling machine and mudgun has to be erected. The weight of the mudgun is approximately 19 tons and the weight of the drilling machine approximately 11 tons. The volume of the mudgun is 1.5 x 4.5 x 1 metre and that of the drilling machine 1 x 6.5 x 1 metre. Having regard to the volume and weight of these machines there is nothing like assembling them at ground level and then lifting them to a height of 25 feet for taking to the cast house floor and then to the platform over which it is mounted and erected. These machines cannot be lifted in an assembled condition. 10.So explaining the nature of the processes involved, the appellant contended that the mudgun and the drilling machine came into existence as identifiable units only after assembly on the metal frame, and once assembled they were no longer "goods" within the meaning of the Central Excise Act. 11.The judicial member noticing these facts observed that it is a physical and engineering impossibility to assemble mudguns or the drill tap hole machines elsewhere in a fully assembled condition and thereafter erect or install the same at a h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty is not leviable thereon". 12.On the question of limitation, she came to the conclusion that the appellant could not be held guilty of any suppression. She rejected the contention of the respondent that the suppression was attributable in the face of the non-intimation of erection to the Indore Collectorate being the Collectorate having jurisdiction over the Bhilai Steel Plant. Accordingly, she held that the entire demand was barred by limitation, as the show cause notice for recovery of duty for the period from 25-6-1990 to 22-1-1991 was issued on 3-4-1992/8-4-1992. For the same reasons, the penalty imposed was not sustainable. 13.The technical member after considering the facts of the case and the submissions urged before the Tribunal held that the principle laid down by the Supreme Court in Municipal Corporation of Greater Bombay Ors. (P) Ltd. (supra) did not help the appellant because the catalogue issued by M/s. Paul Wurth SA Luxembourg, an international firm which supplies and erects tap hole guns and drilling machines for use in steel plants had offered such equipment for sale and export to different parts of the world. He held that even though on account of the imme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffering opinions, agreed with the technical member and held that the appeal deserved to be dismissed. The final order dismissing the appeal is impugned before us. 17.We shall first consider the appellants submission that the demand of duty having been raised beyond the period of six months is barred by limitation. The submission proceeds on the assumption that the appellant had made full and complete disclosure of all relevant facts to the excise authorities and was therefore not guilty of suppression of material facts. 18.Having considered the reasons recorded in the differing opinions, we are satisfied that the demand of duty is not barred by limitation having regard to the provisions of Section 11A of the Act. Learned counsel for the parties took us through the documentary evidence on record, including the correspondence exchanged between the appellant and the Collectorate of Excise authorities having jurisdiction over their factory at Chennai. We have noticed earlier that some of the components were manufactured by the appellant at its factory in Chennai. In the classification list they had sought classification of Hydraulic Drilling Machines under heading 84.59 and the Mud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hbridge, namely, (1) a platform, (2) load cells and (3) the Indicating system. The Tribunal found that the appellant brought the three components together at site, fitted and assembled them so that they could work as one machine and, as such, the appellant manufactured a weighbridge. The question, therefore, was whether the activity carried out by the appellant, of assembling the three components of the weighbridge, brought into being a complete weighbridge, which had a distinct name, character or use. The argument of the appellant was that it was making only a part of the weighbridge, that is, the indicating system, and that alone was dutiable. It was held that the end product, namely, the weighbridge, was a separate product which came into being as a result of the endeavour and activity of the appellant and the appellant must be held to have manufactured it. The appellant's case that it was liable only for a component part and not the end product was, therefore, rejected. Learned counsel for the Revenue submitted that if even a weighbridge was excisable, as held in the case of Narne Tulaman Manufacturers Pvt. Ltd., so was a mono vertical crystalliser. The only argument on behal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manency is the test. The chattel whether is movable to another place of use in the same position or liable to be dismantled and re-erected at the later place? If the answer is yes to the former it must be a movable property and thereby it must be held that it is not attached to the earth. If the answer is yes to the latter it is attached to the earth. If the answer is yes to the latter it is attached to the earth." 23.Applying the permanency test laid down in the aforesaid decision, counsel for the appellant contended that having regard to the facts of this case which are not in dispute, it must be held that what emerged as a result of the processes undertaken by the appellant was an immovable property. It cannot be moved from the place where it is erected as it is, and if it becomes necessary to move it, it has first to be dismantled and then re-erected at another place. This factual position was also accepted by the Adjudicating Authority. 24.The technical member, however, held that the aforesaid decision was of no help to the appellant inasmuch as a leading international manufacturing firm had offered such machines for export to different parts of the world. He further obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt, were not satisfied in the case of appellant as the tube mill or welding head having been erected and installed in the premises and embedded to earth they ceased to be goods within meaning of Section 3 of the Act." 26.In Mittal Engineering Works Pvt. Ltd. v. CCE - 1996 (88) E.L.T. 622 (S.C.); this Court was concerned with the exigibility to duty of mono vertical crystallisers which are used in sugar factories to exhaust molasses of sugar. The material on record described the functions and manufacturing process. A mono vertical crystaliser is fixed on a solid RCC slab having a load bearing capacity of about 30 tons per square meter. It is assembled at site in different sections and consists of bottom plates, tanks, coils, drive frames, supports, plates etc. The aforesaid parts were cleared from the premises of the appellants and the mono vertical crystalliser was assembled and erected at site. The process involved welding and gas cutting. The mono vertical crystalliser is a tall structure, rather like a tower with a platform at its summit. This Court noticed that marketability was a decisive test for dutiability. It meant that the goods were saleable or suitable for sale, tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso held that the decision of this Court in Sirpur Paper Mills Ltd. must be viewed in the light of the findings recorded by the CEGAT therein, that the whole purpose behind attaching the machine to a concrete base was to prevent wobbling of the machine and to secure maximum operational efficiency and also safety. In view of those findings it was not possible to hold that the machinery assembled and erected by the appellant at its factory site was immovable property as something attached to earth like a building or a tree. 28.Keeping in view the principles laid down in the judgments noticed above, and having regard to the facts of this case, we have no doubt in our mind that the mudguns and the drilling machines erected at site by the appellant on a specially made concrete platform at a level of 25 feet above the ground on a base plate secured to the concrete platform, brought into existence not excisable goods but immovable property which could not be shifted without first dismantling it and then re-erecting it at another site. We have earlier noticed the processes involved and the manner in which the equipments were assembled and erected. We have also noticed the volume of the m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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