2002 (4) TMI 339 - AT - Central Excise

Appellate Tribunal rules conveyors not subject to Central Excise duty, penalty overturned

DALSINGPARA TEA ESTATE Versus COMMISSIONER OF CENTRAL EXCISE, BOLPUR

The Appellate Tribunal CEGAT, Kolkata, held that the overhead conveyor system assembled by M/s. Dalsinghpara Tea Estate from duty-paid parts was not ... Conveyor system - Excisability Issues:Central Excise duty on overhead conveyors under Heading 84.28 of Chapter 84 - Levying of penalty under Rule 173Q of the Central Excise Rules, 1944.Issue 1: Central Excise duty on overhead conveyors under Heading 84.28 of Chapter 84The case involved M/s. Dalsinghpara Tea Estate appealing against an order passed by the Additional Collector of Central Excise and Customs, Siliguri. The Additional Commissioner held that the Tea Estate manufactured overhead conveyors falling under Heading 84.28 of Chapter 84 of the Central Excise Tariff Act, 1985, using parts purchased from different parties without paying the proper Central Excise duty. The appellants argued that they bought duty-paid parts and assembled the conveyor systems on their premises, which they claimed did not attract further Central Excise duty. The Tribunal noted that the overhead conveyor was erected using duty-paid bought-out items and became embedded to the earth, making it immovable property. Citing previous decisions, the Tribunal held that such systems, when assembled from components at the place of assembly and becoming immovable, do not amount to manufacture for the purpose of Central Excise duty.Issue 2: Levying of penalty under Rule 173Q of the Central Excise Rules, 1944The Additional Commissioner imposed a penalty of Rs. 20,000 on M/s. Dalsinghpara Tea Estate under Rule 173Q of the Central Excise Rules, 1944. However, the Tribunal, after considering the arguments presented, found that the overhead conveyor system, being immovable and non-marketable goods, did not satisfy the criteria of being excisable goods under the Central Excise Act, 1944. Referring to the decisions in Ludhiana Bottling and Quality Steel, the Tribunal held that the conveyor systems did not meet the definition of goods under the Act and, therefore, were not subject to Central Excise duty. Consequently, the appeal was allowed, and any consequential relief was deemed admissible to the appellants in accordance with the law.In conclusion, the Appellate Tribunal CEGAT, Kolkata, through a detailed analysis, determined that the overhead conveyor system assembled by M/s. Dalsinghpara Tea Estate from duty-paid parts was not subject to Central Excise duty as it became immovable property. The Tribunal relied on previous decisions and the definition of goods under the Central Excise Act, 1944, to conclude that the conveyors did not qualify as excisable goods. As a result, the penalty imposed under Rule 173Q of the Central Excise Rules, 1944, was set aside, and the appeal was allowed in favor of the appellants.