Assembled generating set treated as excisable goods, with immovable property argument rejected and valuation issues remanded.

An assembled electric generating set made up of a generator, alternator, control panel and other parts was treated as excisable goods under Heading 85.02; the argument that embedding the generator and alternator in a foundation made it immovable property was rejected, so central excise duty was prima facie leviable. The tribunal also noted that Modvat credit and exclusion of notional margin of profit had not been examined earlier, and directed fresh reconsideration of those valuation and credit issues by the lower authority when redetermining the demand after pre-deposit.

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Issues: (i) Whether the assembled electric generating set was exigible to central excise duty under Heading 85.02 or was to be treated as immovable property outside the levy; (ii) whether the applicant's pleas relating to Modvat credit and exclusion of notional margin of profit required re-examination by the lower authorities while working out the pre-deposit and duty demand.

Issue (i): Whether the assembled electric generating set was exigible to central excise duty under Heading 85.02 or was to be treated as immovable property outside the levy.

Analysis: The assembly of generator, alternator, control panel and other parts resulted in a duty-relevant electric generating set. The contention that the set had become immovable property because the generator and alternator were embedded in a foundation was not accepted. The duty liability was viewed as arising from the assembly activity undertaken on behalf of the applicant.

Conclusion: The claim that no excisable goods came into existence as immovable property was rejected, and duty under Heading 85.02 was held to be prima facie leviable.

Issue (ii): Whether the applicant's pleas relating to Modvat credit and exclusion of notional margin of profit required re-examination by the lower authorities while working out the pre-deposit and duty demand.

Analysis: The tribunal accepted that the questions of Modvat credit and addition of margin of profit had not been examined earlier and required reconsideration at the adjudication stage. The matter was therefore sent back for fresh examination of those points and for redetermination of the demand after hearing the applicant.

Conclusion: The lower authority was directed to re-examine the Modvat credit and margin of profit issues and then quantify the duty demand afresh.

Final Conclusion: The order upheld prima facie duty liability on the assembled generating set, but granted remand for reconsideration of the valuation and credit-related issues after compliance with the ordered pre-deposit.

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