Excise duty on dismantled DG set clearance upheld; limitation and interest objections also failed under the statutory scheme.

Goods cleared on sale of a dismantled 6 MW DG set were treated as identifiable excisable goods classifiable under Heading 8502, so central excise duty was payable and Rule 57S(2)(b) of the Central Excise Rules, 1944 did not apply because the credit had been taken on components and parts, not on the assembled unit removed from the factory. The demand was within limitation under Section 11A because the show cause notice was issued within one year from the relevant date. Interest under Section 11AB followed as a statutory consequence of the short levy. The duty demand, limitation objection, and interest challenge all failed.

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Issues: (i) whether the goods cleared on sale of the 6 MW DG set were exigible to central excise duty under Heading 8502 and whether Rule 57S(2)(b) of the Central Excise Rules, 1944 applied; (ii) whether the demand was barred by limitation under Section 11A of the Central Excise Act, 1944; (iii) whether interest under Section 11AB of the Central Excise Act, 1944 was leviable.

Issue (i): whether the goods cleared on sale of the 6 MW DG set were exigible to central excise duty under Heading 8502 and whether Rule 57S(2)(b) of the Central Excise Rules, 1944 applied.

Analysis: The clearance documents described the goods as items of 6 MW DG set, classified them under Heading 8502, and showed duty payment on clearance. The tender and sale records established that what was sold was the DG set/items of the DG set from the factory after dismantling, not an immovable power plant as erected and used earlier. Rule 57S(2)(b) applies where the same capital goods on which credit was taken are removed after use, but here the credit had been taken on various components and parts, while the clearance was of the assembled DG set as identifiable excisable goods. The contention that the goods were immovable property and not excisable was therefore rejected.

Conclusion: The clearance was dutiable as excisable goods, and Rule 57S(2)(b) did not govern the case.

Issue (ii): whether the demand was barred by limitation under Section 11A of the Central Excise Act, 1944.

Analysis: The show cause notice was issued within one year from the relevant date, which was linked to the filing of the periodical return for the month of clearance. Since the notice was issued before expiry of the statutory period, the demand fell within limitation. The plea that the demand was time barred was accordingly untenable.

Conclusion: The demand was within limitation.

Issue (iii): whether interest under Section 11AB of the Central Excise Act, 1944 was leviable.

Analysis: Once the differential duty was found payable on the short levy, interest followed as a statutory consequence from the date and manner prescribed by Section 11AB. The levy of interest was therefore justified.

Conclusion: Interest was rightly demanded.

Final Conclusion: The duty demand, limitation objection, and interest challenge all failed, and the appeal was dismissed.

Ratio Decidendi: Goods described and cleared as identifiable excisable goods remain dutiable on clearance even if the earlier assembled plant had been used captively, and where the statutory notice is issued within the prescribed period, interest on short-paid duty is consequential.

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