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2002 (10) TMI 392
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....immovable property. Therefore, it is not exigible. The department did not produce any evidence of any experts or any other material, technical or oral for the purpose of considering the activity to be of manufacture of goods and not an immovable property. However, the department had relied on the statement of Shri S. Viswanathan recorded on 8-7-1993 and on that basis had issued a show cause notice as late as 19-1-1999 alleging wilful suppression with intention to evade payment of central excise duty with regard to manufacture of clearances of generator set along with its auxiliary without intimating the department. It had been alleged that appellants had manufactured and cleared "diesel generator sets" in a manner otherwise than as provided under the Central Excise Act, 1944 and Rules made thereunder without payment of Central Excise duty and observing any formalities and as such extended period of five years is invokable under proviso to Section 11A(1) of the C.E. Act. The statement of Shri S. Viswanathan was referred to in SCN and to the clause 9.1 of the contract entered into between the appellants and M/s. Neyveli Lignite Corporation Ltd., Neyveli who had indicated that the "Ex....
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....her discussion was necessary in this regard. 4. We have heard ld. Advocate Shri V. Sridharan, assisted by J. Shankarraman, for the appellants and ld. SDR Shri G.S. Menon and Shri A. Jayachandran, DR, for the Revenue. 5. We have considered the findings of the ld. Commissioner in para 16 of his order and note that the Commissioner could not rely on his earlier Order No. 19/99, dated 5-8-1999 as the said order had already been set aside by the Tribunal and he was required to have re-applied his mind without analysing the statement of Shri S. Viswanathan to see as to whether an immovable property came into existence. Such an exercise, unfortunately, has not been done in the impugned order except to rely upon his earlier order thereby it is clear that the order cannot be sustained and is required to be set aside on this count alone. 6. Be that as it may, we take up the statement of Shri S. Viswanathan to see as to whether the activity has brought into existence goods required to be exigible and dutiable under Chapter Heading 85.02. For the purpose of examining this matter, it is necessary to extract question & answers from 4 to 14 as below :- Q-4 Whether ....
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....rground, along side the structures and walls and the roof as well. Q-7 It is seen from your answer above and from the inspection of the site today (that is on 8-7-93), it is clear that the Diesel Generating Set has come into existence at the site and it is classifiable under chapter sub-heading 85.02 of the Central Excise Tariff Act, 1985, why did you not comply with the Central Excise procedures required thereto? A-7 By nature the DG Sets in the case of NLC are permanently attached plant and can function as a whole with other infrastructure facilities like cooling towers, fuel pumps, transfer system, exhaust arrangement, control arrangement, etc. The DG Sets are inputs to the turbines at NLC 4 x 210 MW at their newly expanded 4th, 5th, 6th, 7th units at TS. II. Being part of immovable plant and machinery forming part of a total package, we were under the impression that the DG Package is not dutiable, especially as it form part of the total immovable package and it is not an article, ordinary market goods. The package that we have carried out at NLC is not goods, being immovable and not marketable. Our impression is that only in the case of goods which are movable ....
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....ver, for the heavy operation of mounting the DG Set (Engine and Alternator) to the foundation bolts embedded to the earth, we have had to hire outside help of cranes from contractors doing similar type of works within NLC complex. Q-13 Would you like to state anything further with regard to this investigation? A-13 From the nature of the supply and work carried out by us, the permanent nature of the facilities, civil work, lot of cabling/wiring, busbar trunking exhaust arrangements, fully automatic controls, synchronization arrangements, the way our DG Set Plant and machinery are immovably attached as part of the DG Set Room, the intended use of the DG sets to take care of emergencies of the TS II 4 x 210 MV turbines under the expansion, the package not being classifiable as goods and not being marketable as such in our opinion, would not be dutiable under the Central Excise & Salt Act, 1944. There are other supporting decisions to this view viz., namely, Union of India v. DCM, Union Carbide case, Geep Industrial Syndicate's case. Q-14 Please state the cost of the items available on the baseframe? A-14 The following items with costs indicated against....
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.... system, exhaust arrangement, control arrangement etc. and has become part and parcel of immovable plant and machinery forming part of a total package. There is no reason to disbelieve this technical information and also the answer given to Question 8 which has clearly explained that the engine i.e. diesel engine is the prime mover of the DG set when started it revolves at 1500 RPM. This prime mover rotates the AC generator (Alternator) and by this rotation, the alternator produces electric power. The engine and alternator are coupled together to carry out their respective functions, they are placed on a common base frame which is fixed rooted and grouted to the civil foundation block of the building (DG set room) and connected to the other essential auxiliary systems. In the absence of any rebuttal evidence, the answer given in Question 8 is required to be accepted. So also the answer given in Question 10 which explains that concrete foundation is cast by the civil engineering wing to the original dimensions given by us. The foundation is deep in this case as much as 8 feet or so and the entire block is cast in site using reinforcements and foundation bolts provided by them. The b....
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....CCE, Meerut - 2001 (138) E.L.T. 1223 (T-Del.) also held that Turbo Alternator, installed/erected on the platform specially constructed at site is an immovable property and does not bring into existence excisable goods. Likewise, the Calcutta Bench in the case of Western India Machinery Co. v. CCE - 2001 (133) E.L.T. 574 held that assembly of diesel engine and alternators on a base frame at the site of installation to make complete diesel generating set ready for use and then attached to concrete platform to ensure that it is vibration free does not bring into existence goods, and as such the process of assembly does not amount to manufacture. In this regard, Apex Court's judgment of Triveni Engg. & Indus. Ltd. (supra) has been relied. 10. All the above judgments and the judgment of Triveni Engg. & Inds. Ltd. rendered by the Apex Court apply on all fours and the facts of this case with regard to merits and on due application, the appellants contention with regard to duty being not chargeable on the immovable goods which has come into existence is required to be upheld and appeal to be allowed on this point alone. 11. The Commissioner's finding on limitation is also n....
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....ere to file RT-12 returns for the months January 1994 to 5-2-1994 and the demands were not hit by limitation. Further, we notice that in the present case no periodical returns are being filed and hence clause (b) cannot be applied and clause (c) is required to be applied. Further more, the department had full knowledge in 1982 onwards and the statement was also recorded in 1993 and hence demands are clearly hit by time bar. Ld. SDR made very persuasive arguments to accept the plea that the item is goods as the foundation is only for preventing the vibration. We notice that this was the finding rendered by the Tribunal in Triveni Engg. & Indus. Ltd. This very finding has been negatived by the Apex Court and hence we are required to apply the Apex Court's judgment holding that the item is not goods but immovable property. 13. We have considered all the submissions made by ld. SDR and also perused the impugned order and the entire records. We are not in a position to accept the finding of the Commissioner for the reason that the issue is no longer res integra and is covered by the Apex Court judgment rendered in Triveni Engg., which has been followed by the Tribunal. Further m....
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.... the goods. Learned Member (J) in para 7 (page 8) of the order has held that the activity of manufacture of the goods had been carried out by bought out items and setting up the generating plant by placing the engine, AC generator (alternators) on the concrete foundation provided by the NLC, who is the buyer. He has also held that equipment in question has become functional only after the entire civil work is completed along with deep foundation of eight feet dig for installing the item piece by piece. As rightly noted by the learned Member (J), the concrete foundation is provided by the buyer of the goods viz. M/s. NLC. It is true that the equipment will become functional only after the civil work is completed. By no stretch of imagination it can be held that the concrete foundation is a part of the DG sets. On the other hand it goes without saying that the concrete foundation is a necessity for fixing the DG sets and this is to ensure wobble free operation of the DG sets. That does not mean that the concrete foundation is a part of the DG sets. Fixation of the DG sets in a civil concrete foundation does not in any way alter the position so far as emergence or coming into existenc....
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.... of the case. The appellant seems to have been obsessed by the idea that as a part of machine is liable to duty then the whole end product should not be dutiable as separate excise goods. That is mistake, a part may be goods as known in the excise laws and may be dutiable. The appellant in this case claims to have manufactured only the indicator system. If the indicator system is a separate part and a duty had been paid on it and if the rules so provide then the appellant may be entitled to abatement under the rules. But if the end product is a separate product which comes into being as a result of the endeavour and activity of the appellant then the appellant must be held to have manufactured the said item. When parts and the end product are separately dutiable - both are taxable." 16. In the present, it is an admitted position that DG sets have been manufactured mainly with bought out items. It is manufactured at site by the appellants and after the manufacture is complete and the item DG set, as a new product, has come into existence, it is fitted on to an already constructed concrete platform and alter that only, certain auxiliary items like exhausting arrangement, cabl....
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....r decision in the case of Sirpur Paper Mills Ltd. (supra). Therefore, I am of the considered opinion that the case laws which are squarely applicable to the present case are the ratio laid down by the Hon'ble Supreme Court in the case of Sirpur Paper Mills (supra) and that of Narne Tulaman Manufacturers (supra) not that of the Triveni Engineering (supra) more particularly because in the present case. Shri Viswanathan himself has clearly stated that DG set is only a part of immovable property, (emphasis supplied by me). Further as already noted above, it is not the case of the appellants that the DG sets are not marketable and it cannot be detached from the concrete foundation once it is fitted on to it. In any case just because the concrete foundation is an immovable property, it cannot be said under any circumstances that the machinery fitted on to it also becomes immovable property. The appellants have taken a plea before the original authority that the Generator Sets and auxiliaries and setting up of the power plant were executed brick by brick. This plea cannot be accepted for the reason that DG sets were assembled at site and were then shifted to the already prepared concrete ....
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....o the contract and information in that regard was provided only on 29-12-1992. Therefore, it cannot be said that the department had knowledge about the activities undertaken by the appellants particularly when they had not taken any licence. Show cause notice was issued in this case on 19-1-1999. In this case according to the learned Commissioner, the relevant date would be in terms of Section 11(B) whereas according to learned Member (J) it should be in terms of Section 11(C). Both Section 11(B) and 11(C) are extracted hereunder : "(B) Where no monthly return as aforesaid is filed, the last date on which such return is to be filed under the said rule; (C) In any other case, the date on which the duty is to be paid under this Act or the rules made thereunder." 18. Admittedly in this case no monthly return has been filed by the assessee and hence in my view, the Sections 11A(C) and (B) would be applicable as held by the original authority. The DG sets were repaired and trial run was done on 5-1-1994 and hence the date of completion of the DG sets can be taken to be 5-1-1994 and the assessee was required to file the first monthly return on 5-2-1994. Since show....
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....present appeal. 20. One of the learned Members of the regular Bench which heard the matter allowed the appeal both on merits and on limitation while the other learned Member rejected the appeal on both counts. Hence the point of difference before me as Third Member. 21. The learned Counsel Shri V. Sridharan for the appellants and learned SDR Shri G.S. Menon for the Revenue have reiterated their respective positions. 22. The learned Counsel submits that the question of excisability of the item under reference has been squarely settled by the Hon'ble Supreme Court in the case of Triveni Engineering & Industries reported in 2000 (120) E.L.T. 273 (S.C.). In that case, the item considered by the Apex Court was a turbo-alternator. The turbo-alternator consisted of a turbine and an alternator. The steam turbine was the prime mover and the alternator generated power. The item considered by the Apex Court was thus a power-generating system. It was found by the Court that the turbo-alternator was brought into existence by fixing the steam turbine and alternator with accessories thereof permanently to civil foundation and further that installation or erection of the tu....
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....p;The learned SDR, on the other hand, urges that the view taken by the learned Member (Technical) of the regular Bench be endorsed. The SDR appears to be banking on the finding recorded by the learned Commissioner to the effect that the DG sets had been assembled before being fixed to the concrete block foundation and hence were capable of being removed as such to the market for being sold. 25. Examined the submissions. I find that Shri S. Viswanathan, a senior functionary of the appellant-company, had stated as early as on 8-7-1993 to the Central Excise authorities their claim that the DG sets were not excisable. He had also given an account of the process undertaken by the appellants under the contract dated 26-10-1989. According to that account, the diesel engine and the AC generator (the 2 main components of DG set) were placed on the concrete block foundation provided by M/s. NLC in the DG set room and were permanently grouted and rooted to the foundation. Thereafter, other auxiliary items like exhaust arrangement, cabling, bus bar turnking, wiring to control panel were linked up and fastened so as to be integrated into a whole system interlinked to function with each ....