2004 (3) TMI 68 - SC - Central Excise

Court Upholds Duty Demand Despite Appellant's Suppression

The court upheld the extended period of limitation for duty demand, finding wilful suppression by the appellant despite their arguments against it. The ... Extended period of limitation - wilful suppression - trade notice - manufacture: supplier v. customer - immovable property - discrimination in levy - Central Excise (Valuation) Rules, 1975 - Rule 6(b)(ii)Extended period of limitation - wilful suppression - trade notice - Availability of the extended period of limitation on the ground of wilful suppression of manufacture of generating sets - HELD THAT: - The Tribunal and Collector found as a fact that the assessee wilfully suppressed the manufacture and installation of the generating sets, a fact which came to the Department's notice only upon inspection on 17th March, 1992. Earlier Trade Notices (24-12-1986) did not leave the matter free from doubt because subsequent clarificatory Trade Notices (11-10-1990 and 15-11-1990) made clear that superficial bolting did not convert sets into immovable property and that dutiability had to be examined case by case. In view of those subsequent notices, the assessee was obliged to disclose assembly so that excisability could be determined; non-disclosure amounted to wilful suppression and justified invocation of the extended limitation period. [Paras 4]Extended period of limitation was available as there was wilful suppression of manufacture.Manufacture: supplier v. customer - Whether the supplier (contractor) rather than the assessee was the manufacturer liable to duty - HELD THAT: - The question of who is the manufacturer is one of fact. On inspection of invoices and surrounding facts the Collector concluded that the assessee had not merely purchased ready-built sets from the supplier but had itself manufactured/assembled the generating sets; the invoices did not show that assembly and installation were to be performed by the supplier. The Tribunal confirmed that factual finding, and there is no demonstration that the finding is perverse or unsupported. [Paras 5]Finding that the assessee was the manufacturer stands and duty could be demanded from the assessee.Immovable property - Whether the generating sets constituted immovable property and hence were not exigible to excise duty - HELD THAT: - The generating sets were bolted to a frame but capable of being unbolted and shifted; mere bolting to ensure vibration-free operation does not convert such machinery into immovable property. As the sets remained movable in substance and capable of sale, they could not be treated as immovable property exempting them from excise duty. [Paras 6]Generating sets were not immovable property; excise duty could be levied.Discrimination in levy - Allegation of discriminatory enforcement against the assessee compared to other mills - HELD THAT: - The claim of discrimination was a general averment without particulars. No details were furnished of other mills allegedly allowed to retain sets without demand; the Department in fact issued show cause notices in other instances and outcomes varied. Absent specific comparators and particulars, discrimination could not be established on the material before the Court. [Paras 8]Allegation of discriminatory treatment rejected for want of particulars.Central Excise (Valuation) Rules, 1975 - Rule 6(b)(ii) - Legitimacy of adding a notional profit element under valuation rules where the assessee had not sold the goods - HELD THAT: - Rule 6(b)(ii) of the Central Excise (Valuation) Rules, 1975 contemplates adding a normal profit element where value cannot be determined under Rules 4 and 5. The Tribunal's addition of a 10% profit is an application of that provision; the fact that the assessee had not sold the generating sets does not preclude applying Rule 6(b)(ii) when valuation under other rules is not possible. [Paras 9]Addition of the 10% profit element under Rule 6(b)(ii) was permissible.Final Conclusion: The Tribunal's judgment upholding duty demand was affirmed. The findings of wilful suppression, that the assessee was the manufacturer, that the generating sets were movable, rejection of discrimination, and the valuation addition under Rule 6(b)(ii) are sustained; the appeal is dismissed with no order as to costs. Issues:- Extended period of limitation for duty demand- Liability for payment of duty- Classification of generating sets as immovable property- Allegation of discriminationExtended period of limitation for duty demand:The appellant argued that the extended period of limitation was not applicable due to the absence of wilful suppression and the department's awareness of the generators' installation. They relied on a Trade Notice clarifying duty exemption for certain types of generating sets. Citing legal precedents, they contended that doubt regarding dutiability negates the need for the extended limitation period. However, both the Collector and the Tribunal found wilful suppression in the case, supported by the fact that the department only discovered the manufacture during an inspection. The subsequent Trade Notices left no doubt about dutiability, necessitating the appellant's disclosure. The court agreed with the findings, upholding the availability of the extended limitation period.Liability for payment of duty:The appellant claimed that if any duty was payable for the manufacture, it was the supplier, not them, who should be liable. They cited a Tribunal decision supporting this argument. However, based on inspection of invoices, the Collector concluded that the appellant had purchased components only, not the entire assembly service from the supplier. This factual finding, confirmed by the Tribunal, was deemed valid, and no interference was warranted.Classification of generating sets as immovable property:The appellant contended that the generating sets were immovable property, thus exempt from excise duty. However, the court disagreed, noting that the sets were bolted on a frame, making them capable of being unbolted, shifted, and sold. Consequently, the court rejected the argument that the sets qualified as immovable property.Allegation of discrimination:The appellant alleged discrimination, claiming that they were singled out for duty payment while other mills in the region were not paying. Citing legal precedents against discrimination, the appellant failed to provide specific details or evidence of discriminatory treatment. The court highlighted the lack of particulars or proof, noting that a general statement of non-payment by others was insufficient to establish discrimination. Additionally, the court pointed out that the department had issued a show cause notice to another party for a similar matter, indicating lack of discrimination.In conclusion, the court found no infirmity in the impugned judgment, dismissing the appeal without costs.