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2004(4) Supreme 652
SUPREME COURT OF INDIA
(From Central Excise, Customs and Gold (Control) Appellate Tribunal, New Delhi)
Mrs. Ruma Pal & B.P. Singh, JJ.
M/s. T.T.G. Industries Ltd., Madras -Appellant
versus
Collector of Central Excise, Raipur -Respondent
Civil Appeal No. 10911 of 1996
Decided on 7-5-2004
Counsel for the Parties :
For the Appellant : A.R. Madhav Rao, Vishwanath Shukla and V. Balachandran, Advocates.
For the Respondent : Ms. Nisha Bagchi, Ms. Rekha Pandey, P. Manish and B.K. Prasad, Advocates.
Held : 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 Mudguns under heading 84.24. This description in the classification list was misleading, because the complete machinery was manufactured and erected only at Bhilai. The concerned officers of Central Excise, namely the Indore Collectorate which had jurisdiction over Bhilai were never informed about the manufacturing activities of the appellant at Bhilai where the machines were finally manufactured. They neither filed the necessary classification list with the Central Excise Officers having jurisdiction, nor did they comply with other necessary Excise formalities as required by the Excise Rules. In these circumstances, we find no fault with the finding of the CEGAT that on account of suppression of facts from the concerned authorities, Section 11 A came into play, and the demand notice cannot be held to be barred by limitation invoking the extended period of limitation. (Para 17)
The core question that still survives for consideration is whether the processes undertaken by the appellant at Bhilai for the erection of mudguns and drilling machines resulted in the emergence of goods leviable to excise duty or whether it resulted in erection of immovable property and not "goods". (Para 18)
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 machines concerned and their weight. Taking all these facts into consideration and having regard to the nature of structure erected for basing these machines, we are satisfied that the judicial member of the CEGAT was right in reaching the conclusion that what ultimately emerged as a result of processes undertaken and erections done cannot be described as "goods" within the meaning of the Excise Act and exigible to excise duty. (Para 27)
It is not necessary for us to express any opinion as to whether the mudgun and the drilling machines are really a component of the plant and machinery of the steel plant, but we are satisfied that having regard to the manner in which these machines are erected and installed upon concrete structures, they do not answer the description of "goods" within the meaning of the term in the Excise Act. (Para 27)
JUDGMENT
B.P. Singh, J.-In this appeal the appellant has impugned the final order of the Customs, Excise and Gold (Control) Appellate Tribunal (for short CEGAT ) dated 28.12.1995 dismissing its appeal against the order of the Collector of Central Excise, Raipur, confirming the demand of duty on Hydraulic Mudguns and Tap Hole Drilling Machines, and imposing a penalty of Rs. 8 lakhs for suppressing the fact of such manufacture and removal of excisable goods from the Department of Central Excise, failure to obtain Central Excise Licence and its failure to maintain statutory records and to file the required returns.
2. The facts of the case are not in dispute. The appellant-Company pursuant to the acceptance of its 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. 8961525/- on the total assessable value of the aforesaid machines of Rs. 85347855/-. 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 equipments, the purpose of the equipments so erected, their size and weight etc. After considering the plea of the appellant, the Collector of Central Excise, who was the Adjudicating Authority, concluded that the processes undertaken by the appellant resulted in the manufacture of two distinct equipments having there own name, character and use and which were specifically included in the Central Excise Tariff, and were therefore excisable goods and had to discharge duty liability. It rejected the plea of the appellant that the Mudguns and Drilling Machines were immovable property and hence not excisable. The Adjudicating Authority relied upon the decision of this Court in Narne Tulaman Manufacturers Pvt. Ltd. Vs. Controller of Central Excise 1988 (38) ENT 566 (SC); where the issue related to the manufacture of weigh bridge, and held that the principles laid down therein squarely applied, particularly having regard to the similarly of facts. Accordingly, it confirmed the demand and imposed a penalty of Rs. 8 lakhs by order dated 27.5.1993.
4. The appellant preferred an appeal before the CEGAT which was heard by a bench of two members. Of the several grounds urged in the Memorandum of Appeal, only three grounds were pressed before the CEGAT namely:-
"(a) erection of mudgunds and tap hole drilling machine at the site of the Bhilai Steel Plant would result in erection of immovable property and not goods and, therefore, no excise duty is leviable thereon.
(b) the appellants had made a full disclosure even at the time of dispatch of the goods from their factory at Marai Malai Nagar, Madras and drilling tap hole machines at Bhilai Steel Plant in their price list and thus the demand of duty having been raised beyond the period of six months is barred by limitation.
(c) for the same reason as in (b), no penalty can be imposed on the appellants".
The cross objection filed by the Collector was not pressed.
5. The members of the CEGAT differed in their opinions. While the judicial member was in favour of allowing the appeal, havi
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