1999 (10) TMI 382 - AT - Central Excise

Tribunal rules duty demands time-barred due to classification as immovable property

The Tribunal ruled in favor of the appellants, holding that the duty demands raised beyond the six-month period were time-barred. This decision was based ... Demand - Limitation Issues:1. Duty demand and penalty imposed under CE Act and CE Rules for diesel generating sets assembled and installed.2. Whether the generating sets should be considered as excisable goods or immovable property.3. Applicability of the larger period of limitation under Section 11A of the CE Act.4. Interpretation of Circular issued by the Central Board regarding excisability of generating sets.5. Comparison of judgments in similar cases regarding time bar aspect.Issue 1: Duty demand and penalty imposed under CE Act and CE Rules for diesel generating sets assembled and installed.The appeals involved duty demands and penalties imposed under the Central Excise Act and Rules for diesel generating sets assembled and installed. The duty amounts confirmed were Rs. 2,10,540 and Rs. 2,61,519 in separate appeals, along with penalties under relevant rules. The proceedings were initiated through show cause notices in 1992, and the matter was heard based on the same pleadings.Issue 2: Whether the generating sets should be considered as excisable goods or immovable property.The main contention raised by the appellants was whether the manufacturing and installation of generating sets should classify them as excisable goods or immovable property. The appellants argued that since the sets were attached to the earth at the installation site, they should be considered immovable property. They cited a Circular by the Central Board clarifying that erected generating sets should be treated as immovable property and not leviable to duty. The appellants claimed a bona fide belief based on this Circular and previous industry practices.Issue 3: Applicability of the larger period of limitation under Section 11A of the CE Act.The key legal issue revolved around the invocation of the larger period of limitation under Section 11A of the Central Excise Act. The appellants argued that the demands were time-barred as there was no intention to evade duty, supported by the Circular issued by the Central Board. They contended that the demands should not be subject to the longer period of limitation due to the belief that the generating sets were not excisable goods.Issue 4: Interpretation of Circular issued by the Central Board regarding excisability of generating sets.The interpretation of the Circular issued by the Central Board regarding the excisability of generating sets played a crucial role in the arguments presented. The appellants relied on this Circular to support their claim of a bona fide belief that no duty was required to be paid on the generating sets. They emphasized that the Circular clarified the doubt regarding the excisability of such sets and, therefore, no duty evasion was intended.Issue 5: Comparison of judgments in similar cases regarding the time bar aspect.A significant aspect of the case involved comparing judgments in similar cases to determine the applicability of the time bar aspect. The appellants referenced a previous case, Triveni Engg Works v. CCE, where the Tribunal held that demands of duty were time-barred in similar circumstances. They argued that the findings in this case should apply to their situation, as there was a bona fide belief and no suppression of facts regarding the excisability of the generating sets.In conclusion, the Tribunal accepted the appellants' arguments regarding the time bar aspect, ruling that the demands raised beyond the six-month period were barred by limitation. The decision was based on the belief that the generating sets were not excisable goods and the existence of a bona fide belief supported by the Circular issued by the Central Board. Consequently, the appellants were entitled to relief as per law.