RVI Elements are deemed immovable property and not subject to excise duty due to lack of marketability; invocation of extended limitation period was unjustified due to regular compliance.

S. S. GARG :

These two appeals are directed against a common impugned order dated 18.09.2013 passed by the Commissioner of Central Excise, Faridabad, whereby the learned Commissioner has confirmed the demand of excise duty amounting to Rs.1,37,75,564/- under Section 11A of the Central Excise Act, 1944 along with interest under Section 11A B of the Act and imposed an equal penalty under Section 11A C of the Act; and has also imposed a penalty of Rs.14,00,000/- under Rule 26 of the Central Excise Rules, 2002 on Shri Rajeev Shamlal, the partner of the firm (‘The Appellant No.2’).

2. Briefly stated facts of the present case are that M/s Consolidated Engineering Company (‘The Appellant’) is a partnership firm engaged in fabrication and installation of aluminium and alucobond aluminium curtain walls, doors, windows and their frames, thresholds for doors, roofing frames made of sections and alucobond aluminum; retail visual identity elements, namely, spreaders, facility signs, direction signs, moulded logos fixed on walls, monoliths etc. The Appellant was awarded a number of contracts/work orders interalia basis the tenders issued by Indian Oil Corporation Ltd (‘IOCL’) for supply and installation of Retail Visual Identity ('RVI') Elements at their retail outlets i.e. petrol pumps across the country. As per the contracts/work orders, the RVI Elements are to be supplied and installed at the outlets of IOCL. The primary raw materials required for the fabrication of the RVI Elements are Aluminium Composite Sheets/Panels ('ACP'), Aluminium Sections and Mild Steel Sections and other raw materials like electrical components, wires, screws, nuts & bolts, neoprene etc. The Appellant purchased such raw materials from various suppliers on which machining activities like routing, riveting, welding etc were done by the Appellant in the factory with the aid of machines. The Appellant duly made the payment of excise duty on the items cleared from the factory. In respect of worked upon material supplied by the Appellant to IOCL, separate invoices in respect of different materials cleared were raised with applicable excise duty by the Appellant at the time of removal from factory, but no payment was made by IOCL in respect of such invoices. Further, for bought-out items on which no work was done at the factory, the said items were sent along with their purchase invoices from the factory with rest of the goods but no excise duty was paid on the bought-out goods which were sent directly to the site without any work being done on them. Further, on receipt of the material at the site i.e. retail outlets of IOCL, the RVI Elements were assembled and installed at the site either by the employees of the Appellant or by the labour employed by them or by sub-contracting the work to third parties. Once the installation of RVI element is complete, the same is inspected by an engineer of IOCL and upon approval of the same, the IOCL makes the payment of the entire contract/work order amount on the basis of the 'service entry sheet' to the Appellant. Besides this, the Appellant also manufactured aluminium doors, aluminium windows, aluminium frames for various customers during the period 2005-06, 2006-07, 2007-08 & 2008-09.

The Appellant duly paid excise duty on the parts/sections of the aluminium doors, aluminium windows, aluminium frames cleared from the factory.

2.1 Investigation was initiated by the department against the Appellant with a view that the Appellant was levying excise duty by undervaluing the goods supplied to IOCL and other customers by not considering the total contract price for the purpose of payment of e