TMI Blog2002 (5) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... on 4-5-99 and conducted various checks over the records/documents. On scrutiny of records/documents, it was observed that the appellants having their factory at Thane, were engaged in the manufacture of certain products such as compressors SH 8414.10, compressor parts SH 8414.30, Chiller SH 8414, 8415, 8419, Condenser and Heat Exchange Unit SH 8419, Cooling Coils and Evaporating Coils SH 8415, 8419, heat pumps/vapour absorption machines SH 8418, purge unit SH 8419, Air Handling Unit SH 8415 and rest of the material/components such as GI sheets for ducting, GI/MS pipes, Electrical Control panels, cables, pumps, motors, valves, grills/diffusers, thermocole of PUF, Aluminium or GI cladding, aluminium foils for insulation of piping, ducting and AHU rooms, etc., were purchased from various vendors. All the equipments/materials/components and parts were brought to the site of the customers. These equipments/material/components and parts were used in the manufacture of a Central air-conditioning plant falling under Chapter Heading 8415 chargeable to 30% adv. duty under Central Excise Tariff Act, 1985, at the material time. That the appellants undertook the work of design, fabrication, su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... condenser, cooler, pumps, condenser and chilled water piping, electrical panel and cables. To feed cool air, in conditioned space, sheet metal ducts are fabricated at site and installed along with grills and diffusers. The ducts and chilled water piping is insulated at site and the plant as a whole is handed over and its warranty started only when it was commissioned and tested for the performance as a whole. 3.A show cause notice dated 11-1-2000 was issued to the appellants calling upon them for contraventions mentioned therein and the proposal to impose duty/penalty/interest, etc. 4.Vide reply dated 17-4-2000, the appellant has mainly contended that erection, installation and commissioning of a CAP at the customer's site using duty paid articles amounts to manufacture of a CAP was not correct; that the CAP became a part and parcel of the building structure where it was installed and, therefore, form part of the immovable property of the customers. Therefore, the CAP upon erection and commissioning could not be considered as "goods" much less as "excisable goods" attracting levy of Central Excise duty; that under Chapter Heading 8415 of the CETA, 1985, only machines are liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'low side' items such as ducts, pipes, cables, insulation etc. which together with other machinery make a total Central Air-conditioning plant, on removal would be scrapped; that therefore, on dismantling Central Air-conditioning plant, one does not get a Central Air-conditioning plant but only the basic machines known by their individual names and groups of metal and tubes. I find substantial force in their arguments. The Supreme Court in the case of Triveni Engineering and Industries Ltd. v. CCE [2000 (120) E.L.T. 273 (S.C.) = 2000 (40) RLT 1 (SC), after referring to the decision in the case of Sirpur Paper Mills held that "the marketability test requires that the goods as such should be in a position to be taken to the market and sold and from the above finding, it follows that to take it to the market the turbine alternator has to be separated into its components - turbine and the other alternator - but then it would not remain turbine alternator, therefore, the test is incorrectly applied." Applying the ratio of the said decision, I am of the view that Central Air-conditioning plant cannot be taken to the market and sold as such as it is to be separated into its components. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Excise upheld the department's stand and confirmed the demand of duty on the CAPs, besides imposing penalties on the party. The assessee preferred appeal to this Tribunal. Ld. Member (J) of the Bench which heard the case upheld the impugned order on the substantive question of excisability but vacated a part of the penalty. Ld. Member (T) of the Bench, in his dissenting order, held that the CAPs were not marketable and excisable, relying on the Supreme Court's decision in Triveni Engg. Industries Ltd. v. CCE [2000 (120) E.L.T. 273 (S.C.) = 2000 (40) RLT 1 (SC)]. 12.Examined the records and heard both sides. Ld. Advocate, Shri R. Ravindran for the appellants submits that the CAPs were not removable and hence not capable of being taken to the market for sale. He submits that the ducts and pipes with their insulations and other accessories were an essential part of the CAP and the same would be irretrievably damaged in any dismantling or disassembly of the CAP. If at all any dismantled CAP could be taken to the market for sale, that would be only an assortment of some components viz. compressors, condensers, etc. but never the CAP as a whole. Ld. Counsel, therefore, submits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 (97) E.L.T. 3 (S.C.)] wherein it was held that the assessee's paper making machine had been fixed to civil foundation only for better efficiency and the same could be dismantled from its foundation and sold in the market. Ld. SDR also relies on sub-paras (i) and (iv) of Para 4 of the aforesaid Board's circular. Ld. SDR further relies on TTG Industries Ltd. v. Collector of Central Excise, Raipur [1996 (82) E.L.T. 517]. Ld. SDR finally urges that the view taken by ld. Member (J) be endorsed. 14.It appears from the orders recorded by ld. Brothers that the question whether the CAPs were manufactured goods stands concluded and what arises for consideration by Third Member is the limited question whether the CAPs were marketable or not. 15.It is not in dispute that the CAPs had emerged by assemblage of various components - some of them manufactured by the appellants themselves and removed on payment of duty to the customer's site and the remaining components procured from open market - and erection and installation of the system in the customer's premises as per the specifications of the customer. It is the appellants' case that the CAPs cannot be taken as such to the market for sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing plants to be systems and has held them to be non-excisable. The limited point to be considered by me is the marketability of the air-conditioning plants erected by the appellants, which I shall consider in the light of the Apex Court's judgment in Triveni Engg. Industries (supra) which was considered by CBEC also. 16.In Triveni Engg. Industries (supra), the question was whether a Turbo-Alternator was excisable or not. The Tribunal had held the item to be excisable. The Apex Court set aside the Tribunal's decision, observing that the Tribunal's conclusion was not justified by its own finding. The Apex Court held that the marketability test required that the goods should be in a position to be taken to the market and sold. In that case, as found by the Tribunal, the Turbo-Alternator had to be separated into its components viz. Turbine and Alternator for being taken to the market. The Apex Court, therefore, held that the marketability test was erroneously applied by the Tribunal. In the instant case, the factual position is analogous to that of Triveni Engg. Industries. Even the Revenue has no case that the CAP was capable of being taken as such to the market for sale. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered in the above case. Ld. SDR has also made a reference to the terms of contracts between the appellants and their customers. He submits that, under the contract, it was agreed between the parties that, in the event of non-performance of their part of the contract by the customer, the appellants had the right to remove the installed system of air-conditioning. According to the DR, this condition in the contract indicated that the appellants were aware of the removability of the CAPs and hence they cannot be heard to say that the CAPs were immovable. I am unable to accept this logic for holding the CAPs to be movables capable of being marketed. It is the independent function of the department, as held by the Apex Court, to establish the marketability of any goods before subjecting them to levy of duty of excise and the same has got to be discharged by placing on record independent cogent evidence. In the instant case, the department has not been able to establish that the CAPs were capable of being taken as such to the market for being sold. 18.In view of the findings recorded above, I concur with the order recorded by ld. Member (Technical) holding that the Central Air-condit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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