TaxTMI 
TaxTMI 
2008 (6) TMI 125
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....e involved is the excisability of Electric power Fencing System by use of solar power manufactured by the appellants. The Original Authority in the impugned order classified the item under 8543.90 of the Central Excise Tariff and demanded appropriate duty invoking the larger period under Section 11A. Penalties were also imposed. The appellants approached this Tribunal which passed the Final Order No. 1312-1313/2005 dated 8-8-2005 [2005 (190) E.L.T. 343 (Tri.)] upholding the impugned order. However, the penalty on the Managing Director was reduced to Rs. 50,000/- from Rs. 5,00,000/-. It was also decided that the benefit of modvat credit should be extended. The appellant approached the Hon'ble Apex Court against the above mentioned Final Order. The Apex Court remanded the matter for fresh decision. 4. The learned advocate has urged two essential points. The first one is regarding the classification of the impugned item and the second point is that the impugned item is an immovable property fixed to earth, hence, it would not be excisable at all. He relied on the Board's Circular dated 15-1-2002. 4.1 The Adjudicating Authority has classified the solar power electric fence system....
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....ding appropriate to that function. It was argued that in terms of Note 4 to classify the impugned item under this Chapter, its function should have been covered by any one of the headings in Chapter 84 or Chapter 85. As far as the impugned item is concerned, its function can be taken as "deterring intrusion". The note requires that the clearly defined function should be one that is covered by one of the headings in Chapter 84 and Chapter 85 and only if such a function is so specifically covered, the entire ma chine consisting of individual components that are interconnected would be classified under the Heading appropriate to that function. In this case, Chapter heading 8543.90 does not refer to "deterring intrusion" as function at all. Once such a function is not mentioned, then the classification of the machine with the components under Heading 8543.90 is ruled out. In view of the above submissions, the learned advocate argued that the solar electric fence system would never fall under Chapter Heading 8543.90. Since there is no specific Sub-Heading under which the impugned goods can be classified, they cannot be considered as excisable goods. 4.5 On the question of excisabi....
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....s permanently grouted to the ground. Shri Vishnu Narayan, Managing Director in his statement dated 7-7-2003 has specifically stated that it is not possible to take out the power fence system once installed. Shri Vishnu Narayan, Managing Director in his letter dated 8-7-2003 has stated that the parts are indeed firmly grouted to the soil with cement concrete at site. Shri Harish Bhimaiah of M/s. Powertech India, a dealer of the company in his statement dated 30-9-2003 has stated that if the fence that is installed is removed, minor modifications are required requiring extra material that is to be utilized. From the above it comes out that there is indeed an erection of power fence system at site and it is not possible to remove the fence from the site and reinstall it since it is permanently grouted in the ground. Even in the case of reinstallation, there would be loss of materials. 4.7 The department has not made any verifications or enquiries to show whether the fence can be removed from one place to another without dismantling it into various components and whether dismantling into components after assembly of the fence is merely for the purpose of transportation. No evidence ....
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....ed without loss of materials. It is portable. (vii) Following are the components of a typical fence. Component Temporary Fence^a Permanent fence Energiser (mains powered) ã ã Energiser (battery powered) ã ã ã ã Battery charging system (wind solar) ã ã Battery charging from mains ã ã ã ã Non-rechargeable battery ã Straining post -wood ã ã ã Contour post -wood ã ã Turning post -wood ã ã ã Strut-wood ã ã ã Stake-wood, plastic, metal or fiberglass ã ã ã ã Insulators integral with sake ã ã Porcelain insulators ã ã Plastic insulators ã ã ã ã Tube insulators ã ã Off-set insulators ã ã 1.6 mm and 2.00 mm medium-tensile steel and aluminium wire ã ã 2.5 mm high tensile, 2.65 spring-steel and 3.15 mm mild steel wire ã ã Multi-strand steel cable ã ã ã Polythene and stainless steel wire Tolywire' and 'Polytape'....
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....5 qualifies the components and not function' as contended by the learned advocate. In other words, it cannot be argued that the function should be specified in Chapter 84 or 85 for Section Note 4 to apply (xii) The power fence performs the function of 'deterring intrusion' and is not specifically mentioned in any of the headings upto heading 85.43 of Chapter 85. Since Heading 85.43 is a residuary heading, power fence would appropriately be classifiable under Heading 85.43. (xiii) In the context of CBEC circular dated 15-1-2002, provisions of clause (e) of Para 4 describes when goods would not be considered as movable. Power fence which is capable of being dismantled without damaging the components and can be reassembled answers the description of movable goods. Thus, testing with the criteria laid down in Para 4 of the circular, it can be said that power fence qualifies to be called as goods being movable, marketable and arising out of manufacture. Power fence is therefore, clearly excisable. Power fence has an individual function satisfying the description of heading 85.43 of Central Excise Tariff. (xiv) It was further argued that the following case laws relied on by the ....
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.... Sirpur Paper Mills Limited v. CCE, Hyderabad [1998 (97) E.L.T. 3 (S.C.)] (iv) Silica Metallurgical Ltd. v. CCE, Cochin [1999 (106) E.L.T. 439 (Tribunal)] (v) as confirmed by the Supreme Court vide their order dated 22-2-99 [1999 (108) E.L.T. A58 (S.C.)] (vi) Duncan Industries Ltd. v. CCE, Mumbai [2000 (88) ECR 19 (S.C.)] (vii) Triveni Engineering & Industries Ltd. v. CCE [2000 (120) E.L.T. 273 (S.C.)] (viii) CCE, Jaipur v. Man Structurals Ltd. [2001 (130) E.L.T. 401 (S.C.)] 4. The plethora of such judgments appear to have created some confusion with the assessing officers. The matter has been examined by the Board in consultation with the Solicitor General of India and the matter is clarified as under :- (i) For goods manufactured at site to be dutiable they should have a new identity, character and use, distinct from the inputs/components that have gone into its production. Further, such resultant goods should be specified in the Central Excise Tariff as excisable goods besides being marketable i.e. they can be taken to the market and sold (even if they are not actually sold). The goods should not be immovable. (ii) Where processing of inputs results in a ....
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....r it is practically possible (considering the size and nature of the goods, the existence of appropriate transport by air, water, land for such size, capability of goods to move on self propulsion-ships- etc.) to remove and sell the goods as they are, without dismantling into their components. If the goods are incapable of being sold, shifted and marketed without first being dismantled into component parts, the goods would be considered as immovable and therefore not excisable to duty. (vii) When the final product is considered as immovable and hence hot excisable goods, the same product in CKD or unassembled form will also not be dutiable as a whole by applying Rule 2(a) of the Rules of Interpretation of the Central Excise Tariff. However, components, inputs and parts which are specified excisable products will remain dutiable as such identifiable goods at the time of their clearance from the factory or warehouse. (viii) The intention of the party is also a factor to be taken into consideration to ascertain whether the embedment of a machinery in the earth was to be temporary or permanent. This, in case of doubt, may help determine whether the goods are moveable or immovable....
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.... escalators are not excisable goods. Also refer CCE v. Kane Elevators India Ltd. reported in 2001 (138) E.L.T. 635 (Tri.-Chen.) = 2001 (45) RLT 676 (CEGAT-Chen.). (b) There may, however, be instances of fabrication of complete lifts and escalators which are movable in nature as a whole and can be temporarily installed at construction sites or exhibitions for carrying men or material. Such cases alone would be liable to duty under sub-heading 8428.10 of the Central Excise Tariff. 6. Based on the above clarifications pending cases may be disposed of. Past Instructions, Circulars and Orders of the Board on this issue may be considered as suitably modified. 7. Suitable Trade Notice may be issued for the information and guidance of the trade. 8. Receipt of this order may please be acknowledged. 9. Hindi version will follow. The above Board's instructions itself are based on seven decisions of the Apex Court which have been enumerated in Para 3 of the above Order. During the course of hearing, both sides extensively referred to the above decisions particularly those of Sirpur Paper Mills Ltd. and Triveni Engineering & Industries Ltd. In any case, the relevant instructio....
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....ny case, a fence is specific to a particular area. The way a fence is erected depends upon the geometry of the said area. If a fence is formed in a particular area, the same thing cannot be shifted and used in another area without dismantling and also without adding some more components or diminishing the original components. That is so, because the geometries of two areas may not be identical. At this stage, we have to refer to Para 4 (vi) of the Board's Circular dated 15-1-2002. We reproduce the last sentence "if the goods are incapable of being sold, shifted and marketed without first being dismantled into component parts, the goods would be considered as immovable and therefore not excisable to duty". If an electric fence has to be shifted, then the entire thing cannot be just removed without being dismantled into component parts. This is obvious from the various components of the electric fence. We cannot say that only for ease of transportation, the components are removed. It is very clear that the corner posts are grouted to the earth. These posts are also part of the electric fence. Grout means a thin liquid mortar for filling gaps and in tiling. The verb grout means to pro....