Complete machine cleared in disassembled form is assessed as the full machine, but procedural breach can still attract penalty.

Goods removed in disassembled form for transportation and assembled at site were treated as complete machines, because the invoices described them as complete machines and the record showed only a transport-related dismantling. On that basis, duty could not be demanded on the footing that only parts were cleared, and the duty demand was set aside. Failure to follow the prescribed procedure for removal of consignments of complete machinery in parts, however, remained a separate procedural breach, so the penalty was sustained despite the annulment of the duty demand.

---

---

Issues: (i) whether the goods cleared in disassembled condition were to be treated as complete Gantry Crane and Gangsaw machines or merely as parts liable to duty as parts; (ii) whether the penalty was sustainable for non-compliance with the prescribed procedure for removal of such consignments.

Issue (i): whether the goods cleared in disassembled condition were to be treated as complete Gantry Crane and Gangsaw machines or merely as parts liable to duty as parts.

Analysis: The invoices described the goods as complete machines, and the departmental notice itself proceeded on the basis that the machines were being cleared in parts only for transportation convenience. The Tribunal applied the settled principle that where a complete machine is removed in piecemeal form for ease of transport and assembled at site, the clearance is to be treated as clearance of the complete machine and not as clearance of separate parts.

Conclusion: The goods were to be assessed as complete machines, and the demand of duty on the footing that only parts were cleared was set aside.

Issue (ii): whether the penalty was sustainable for non-compliance with the prescribed procedure for removal of such consignments.

Analysis: The assessee ed that the procedure prescribed in the Board circular governing removal of consignments of complete machinery in parts had not been followed. That procedural lapse justified penal consequence notwithstanding the setting aside of the duty demand.

Conclusion: The penalty of Rs. 5,000 was sustained.

Final Conclusion: The demand of duty was annulled, but the penalty remained in force because the prescribed removal procedure had not been complied with.

Ratio Decidendi: A complete machine cleared in disassembled form for transportation and assembled at site is to be assessed as the complete machine, but failure to follow the prescribed removal procedure can still attract penalty.

---