2015 (4) TMI 241 - AT - Central Excise

Tribunal upholds decision rejecting Revenue's appeals, affirms no clubbing for SSI exemption, goods not excisable

The Tribunal upheld the Commissioner (Appeals)'s decision, rejecting the Revenue's appeals. It affirmed that the three units should not be clubbed for SSI ... Clubbing of clearances for SSI exemption - classification of modular office furniture and workstations - excisability of on-site assembled/installed goods - common managerial control versus flow back of funds - mutuality of interest as test for treating separate entities as one - no manufacture where assembly at site does not create a movable/new commodityClubbing of clearances for SSI exemption - common managerial control versus flow back of funds - mutuality of interest as test for treating separate entities as one - Whether the clearance values of M/s. Tab Top Steel Industries and M/s. Fab Craft Industries could be clubbed with M/s. B.K. Office Needs Pvt. Ltd. for determining SSI exemption and denial of exemption by treating them as a single entity - HELD THAT: - The Tribunal examined the material relied upon by Revenue and the adjudicating authority and found that the three concerns carried distinct legal and business identities (constitution as company, partnership, proprietorship; separate sales tax and income tax registrations). Mere common managerial involvement or family relationships and exclusive sales to B.K. Office were insufficient to establish that the other units were dummies or that there was flow back of funds. The Tribunal followed the principle that exclusivity of transactions or common personnel does not, without evidence of financial flow back or mutuality of interest, justify clubbing of clearances. In the absence of proof of return of funds or other indicia of unity of business, the Commissioner (Appeals) was right in holding the units to be separate and in granting SSI exemption accordingly. [Paras 10, 14, 15]Clubbing of clearances was not warranted; the three units are to be treated as separate entities and SSI exemption could not be denied on the basis of clubbing.Classification of modular office furniture and workstations - excisability of on-site assembled/installed goods - no manufacture where assembly at site does not create a movable/new commodity - Whether the modular office partitions, workstations and related on site assembled installations are classifiable as excisable goods under Chapter 94 (systems furniture and workstations) - HELD THAT: - The Tribunal accepted the Commissioner (Appeals)'s finding that the activity of procuring components and assembling/fixing them at the customer's premises did not result in the emergence of a new movable or marketable commodity. The component parts (aluminium posts, extrusions, laminated/melamine boards, glass panels, bought out furniture items) retained their identity after installation and the assembled modular cubicle was effectively an immovable installation at site which, if dismantled, would be partly damaged and not a distinct marketable product. Applying established precedent and the reasoning recorded by the Commissioner (Appeals), the Tribunal concluded that such on site assembly did not amount to manufacture of excisable furniture or parts under Chapter 94. [Paras 11, 14, 15]The modular office partitions and on site assembled workstations are not excisable as goods under Chapter 94; classification as systems furniture/workstations was not sustainable.Final Conclusion: Both appeals filed by Revenue were dismissed; the Commissioner (Appeals)'s order setting aside the adjudication and allowing the respondents' appeals is affirmed. Issues Involved:1. Clubbing of the clearance value of three units and denial of SSI exemption.2. Classification of the goods.Issue-wise Detailed Analysis:1. Clubbing of the Clearance Value of Three Units and Denial of SSI Exemption:Revenue filed appeals against the order of the Commissioner (Appeals), which set aside the adjudication orders and allowed the respondents' appeals. The respondents are suppliers of modular office partitions, workstations, and furniture, and also supply bought-out items. The Revenue contended that the respondents manufactured 'Modular Office Furniture Systems, Work Stations, and general furniture' and proposed a demand of duty by clubbing the clearance value of three units: M/s. B.K. Office Needs Pvt. Ltd., M/s. Tab Top Steel Industries, and M/s. Fab Craft Industries.The adjudicating authority clubbed the clearance value of these units, classified the goods under chapter heading 9403.00, and confirmed the demand of duty along with interest and penalty. The Commissioner (Appeals) set aside this order, leading to the Revenue's appeal.The Revenue argued that the Commissioner (Appeals) erroneously treated the three units as separate entities based on their separate sales tax registration and lack of financial flow-back. They claimed that the Managing Director of M/s. B.K. Office Needs controlled the other two units and provided evidence of common management and financial control.The respondents argued that the three units are independent entities with separate income tax registrations and no financial flow-back. They cited previous decisions and Board's Circular to support their argument against clubbing.The Tribunal found that the three units had separate legal identities and registrations, and there was no evidence of financial flow-back. The Tribunal referenced the case of Alpha Toyo Ltd. Vs. CCE, New Delhi, which held that common managerial control alone is insufficient to consider units as one entity. Consequently, the Tribunal upheld the Commissioner (Appeals)'s decision, rejecting the Revenue's appeal on this issue.2. Classification of the Goods:The Revenue contended that the modular office furniture systems were excisable as they were mobile and could be re-installed. They relied on statements from company representatives and customers, and cited previous Tribunal decisions.The respondents argued that the goods were immovable and would be damaged if dismantled, thus not excisable. They cited the Supreme Court decision in Craft Interiors Pvt. Ltd. Vs. Commissioner, which held that such furniture is not excisable.The Commissioner (Appeals) observed that the respondents supplied modular office partitions and furniture by assembling components at customer premises. The assembly did not result in a new, movable commodity. The Commissioner (Appeals) concluded that the goods were not excisable, as they were not marketable or movable.The Tribunal noted that similar proceedings in Hyderabad and Bangalore were dropped by the respective Commissioner (Appeals) and upheld by the Tribunal. The Tribunal agreed with the Commissioner (Appeals)'s findings that the goods were not excisable and rejected the Revenue's appeal on this issue.Conclusion:The Tribunal upheld the Commissioner (Appeals)'s decision on both issues, rejecting the Revenue's appeals. The Tribunal found no reason to interfere with the Commissioner (Appeals)'s order, affirming that the three units should not be clubbed for SSI exemption and that the goods were not excisable. The order was pronounced in open court on 02.12.2014.