Complete cranes assembled at the factory were dutiable; exemption, extended limitation, penalty, and confiscation were all upheld.

Complete cranes assembled and tested at the Adityapur unit were treated as excisable goods even though they were later despatched in knocked-down form for erection at the main plant. Exemption under the central excise notification was denied because the goods were not merely components for maintenance, but machinery integral to a production modernisation project, and the notification excluded complete machinery used for production or processing. Suppression and misdescription of the manufacture justified invocation of the extended limitation period, so the demand was time-barred? No, it was within time. Penalty and confiscation were also upheld because duty was removed without payment after suppression with intent to evade duty, and the residuary tariff item was held constitutionally valid.

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Issues: (i) Whether the cranes were manufactured and assembled at the Adityapur unit as complete excisable goods; (ii) Whether the assessee was entitled to exemption under the relevant central excise notification for goods manufactured for use in its own factory; (iii) Whether the demand was barred by limitation under the extended period provision; (iv) Whether penalty and confiscation were justified; (v) Whether the residuary tariff item was ultra vires.

Issue (i): Whether the cranes were manufactured and assembled at the Adityapur unit as complete excisable goods.

Analysis: The work orders called for design, manufacture, assembly, testing and supply of complete cranes, and the documents showed trial runs and load testing at Adityapur before despatch. The cranes were supplied in knocked down condition to the main plant, but that did not prevent their coming into existence as complete commercial goods at the manufacturing unit. The fact that they were later erected at the petitioner's plant did not alter their character at the stage of manufacture.

Conclusion: The cranes were manufactured and assembled at Adityapur as complete excisable goods, against the assessee.

Issue (ii): Whether the assessee was entitled to exemption under the relevant central excise notification for goods manufactured for use in its own factory.

Analysis: The notification exempted goods manufactured in a factory for use in the same factory or another factory of the same manufacturer, but the benefit was subject to compliance with Chapter X procedure and excluded complete machinery meant for production or processing of goods. The declarations obtained by the assessee spoke only of components and assemblies for maintenance of the steel plant and did not disclose manufacture of cranes for a new production project. The cranes were integral to the modernisation and production process, not maintenance of the existing plant, and therefore fell within the exclusion.

Conclusion: The exemption was not available, against the assessee.

Issue (iii): Whether the demand was barred by limitation under the extended period provision.

Analysis: The assessee did not disclose that it was manufacturing cranes and instead proceeded on incomplete declarations for components and assemblies required for maintenance. The non-disclosure and misdescription amounted to suppression of facts and wilful misstatement in the context of self-removal and self-assessment. The extended period provision was therefore attracted.

Conclusion: The demand was within time under the extended period provision, against the assessee.

Issue (iv): Whether penalty and confiscation were justified.

Analysis: The goods were removed without payment of duty after suppression of the true nature of the manufacture and with intent to evade duty. The statutory conditions for confiscation and penalty were satisfied, and the quantum imposed was within the permissible limit.

Conclusion: Penalty and confiscation were justified, against the assessee.

Issue (v): Whether the residuary tariff item was ultra vires.

Analysis: A residuary excise entry was held to be legally permissible because manufactured commercial articles may validly fall within a general residual classification where no specific entry applies.

Conclusion: The constitutional challenge to the tariff item failed, against the assessee.

Final Conclusion: The manufacture was held to be of excisable cranes, the exemption claim failed, the demand was in time, and the penal consequences were sustained, so the writ petition failed in full.

Ratio Decidendi: A complete commercial article assembled and tested at the factory is dutiable even if later despatched in knocked down form, and exemption or limitation benefits cannot be claimed where manufacture and removal are accompanied by suppression of the true facts with intent to evade duty.

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