TaxTMI 
TaxTMI 
1999 (6) TMI 106
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....way System to be a teleferic falling under CET sub-heading 8428.90, and imposed a penalty of Rs. 28 lakhs on the second appellant under Section 11AC of the Central Excise Act read with Rule 173Q of the Central Excise Rules, and a penalty of an equal amount on the first appellant under Rule 209A. He has also directed the second appellant to pay interest @ 20% per annum on the duty amount under Section 11AD of the Act read with Notification 34/96-C.E., dated 9-10-1996. 2. We have heard Shri V. Sridharan, learned Counsel for appellant No. 2 who contends inter alia that the duty demand is not sustainable at the pre-erection/installation stage, that Rule 2(a) of the General Rules for Interpretation of the Tariff which has been applied by the adjudicating authority is not attracted in this case as the said Rules refers to goods "removed in unassembled and dis-assembled condition" while the goods in question were duty paid parts/components, etc., brought to site from time to time and that the erection and installation work were going on simultaneously with further receipt of required parts/components. In support of this contention, learned Counsel refers to HSN Explanatory Notes t....
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.... of which is an integral part of the cost of ropeway system, procured different items from sub-contractors or from other sources and supplied a complete ropeway system. He cites the decision of the Hon'ble Supreme Court in the case of Sirpur Paper Mills Ltd. v. Collector of Central Excise, Hyderabad reported in 1998 (97) E.L.T. 3 S.C. in support of his submissions. Learned DR argues that Rule 2(a) of the Rules for Interpretation of Tariff and HSN Explanatory Notes to Rule 2(a) are not relevant for determining marketability and manufacture and would apply only to aid the classification of the goods under the Schedule to the CETA. He submits that there can be no doubt about the marketability of the aerial passage ropeway system as the work orders clearly bring out that appellant No. 2 are engaged in the sale/purchase of ropeways and he cites the decision of the Apex Court in the case of Andhra Pradesh State Electricity Board reported in 1994 (70) E.L.T. 3 (S.C.) in support of his plea that the capability of goods being marketed, and not actual market, is the criterion for holding that the items are "goods" within the meaning of Central Excise Act. He submits that in the event of it b....
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....ral portions of the erection work of the towers and of the terminal points were already completed before the structures for balance towers and certain portions of terminal points were received at the site. It is only when the various items procured by appellant No. 2 are assembled and erected at site of the customers that the whole assembled erected machinery becomes an aerial passenger ropeway system. Therefore, it cannot be held that the parts at site will constitute an aerial passenger ropeway stem in unassembled or disassembled from. our view finds support from the decision of the Tribunal in the case of Space Age Engineering Projects P. Ltd. v. Collector of Central Excise, Pune reported in 1995 (78) E.L.T. 544 considered Rule 2(a) of the Interpretative Rules to the CETA 1985. Relevant portion is reproduced below : 4. The submissions made by both the sides have been carefully considered. The question in both these appeals is whether the goods cleared by the appellants could be classified under 84.28 as conveyors, stackers/reclaimers considering them as removal of such machinery in unassembled or disassembled form by applying Rule 2(a) of Interpretative Rules to the Cent....
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....hines Throughout the Section any reference to a machine or apparatus covers not only the complete machine, but also an incomplete machine (i.e., an assembly of parts so far advanced that it already has the main essential features of the complete machine). Thus a machine lacking only a flywheel, a bed plate, calender rolls, tool holders, etc., is classified in the same heading as the machine and not in any separate heading provided for parts. Similarly a machine or apparatus normally incorporating an electric motor (e.g., electromechanical hand tools of Heading 85.08) is classified in the same heading as the corresponding complete machine even if presented without that motor." "Unassembled Machines For convenience of transport many machines and apparatus are transported in an unassembled state. Although in effect the goods are then a collection of parts, they are classified as being the machine in question and not in any separate heading for parts. The some applies to an incomplete machine having the features of the complete machine [see Part (IV) above], presented unasembled (see also in this connection the General Explanatory Notes to Chapters 84 and 85). However, unassem....