2008 (7) TMI 1015 - AT - Central Excise

Tribunal overturns order, finding items not furniture.

The Tribunal set aside the Order-in-Original and allowed the appeal filed by the appellant. The Tribunal found that the items fabricated by the appellant, ... Permanently fixed fittings - cannibalization test - excisability of furniture - time-bar and invocation of the longer period - Board's Circular dated 15-1-2002 - remand to the original authorityPermanently fixed fittings - cannibalization test - excisability of furniture - Whether the items fabricated and installed by the appellant constitute excisable furniture or are non-excisable permanent fittings. - HELD THAT: - The Tribunal, applying the Supreme Court's reasoning in Craft Interiors, examined the nature of the items and the photographs placed before it and found that the items are permanently embedded in the walls and fixed to the roof and floor. The Tribunal held that such items cannot be removed from the premises and relocated without causing damage or requiring cannibalization. Applying the cannibalization test, the Tribunal concluded that such permanently fixed items do not qualify as movable furniture for purposes of excisability. The department's claim on merits was therefore held to be weak in view of that test. [Paras 4, 7]Items permanently fixed to walls/roof/floor are not excisable furniture as they fail the cannibalization test and thus are not chargeable as furniture.Time-bar and invocation of the longer period - Whether the demand confirmed by the Commissioner is valid notwithstanding delay, i.e., whether the extended limitation period could be invoked. - HELD THAT: - The appellants contended that information had been furnished in 1997 and that the department issued the show-cause notice only after three years while there was genuine doubt about excisability until the Supreme Court's decision. On consideration, the Tribunal found no justification for invoking the longer period and concluded that the entire demand is hit by limitation. Consequently, the demand could not be sustained on account of time-bar. [Paras 5, 7]The demand is time-barred; invocation of the longer period was unjustified and the demand must be set aside.Final Conclusion: The impugned order demanding duty and imposing penalties is set aside: the fabricated items being permanently fixed are not excisable as furniture under the cannibalization test, and in any event the demand is barred by limitation; appeal allowed with consequential relief. Issues involved: Appeal against Order-in-Original regarding excisability of items fabricated by the appellant and imposition of duty and penalties.Summary:The appeal was filed against Order-in-Original No. 35/2003-04 passed by the Commissioner of Central Excise, Visakhapatnam. The appellant, engaged in interior decoration work, was alleged to be manufacturing excisable furniture. The Tribunal remanded the matter to examine in light of relevant circulars and Supreme Court decisions. The impugned order was challenged by the appellants, who argued that the items manufactured by them, permanently fixed to walls, cannot be moved without damage, citing a Supreme Court ruling. They also contended that the longer period for issuing Show Cause Notice was unjustified due to doubts regarding excisability settled by the Supreme Court. The Tribunal found that the items fixed by the appellant cannot be considered furniture as per the cannibalization test, as established by the Supreme Court. Additionally, the demand was held to be time-barred. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.The Tribunal carefully considered the issue and found that the items fabricated by the appellant, permanently fixed to the room, cannot be moved without damage, aligning with the Supreme Court's observations in Craft Interiors case. The test of cannibalization was applied, leading to the conclusion that the items cannot be considered furniture. The department's case was deemed weak on merits, and the demand was considered time-barred, warranting the setting aside of the impugned order and allowing the appeal with consequential relief.