ORDER
S.L. Peeran, Member (J)
1. Both these appeals arise from common OIO 7/04, dated 14-7-2004 confirming demands on bringing into existence electric power fencing system by use of solar power. The same has been classified under sub-heading 8543.90 as “other electrical machinery and apparatus having individual functions.” The Commissioner has invoked larger period in terms of Section 11A of the Act to confirm duty demand and also to impose like sum as penalty under Section 11AC of the Act. There is a penalty of Rs. 5 lakhs on the Managing Director. It is the contention of the Revenue that for the purpose of manufacture and clearance of the said item namely solar power electric power fencing system, they bring in various items which are also duty paid such as insulator, insulation test tool kit, battery charger and also procured various items from outside stores. They get G1 wire, springs, battery, solar panel and Voltage Stabilizer etc. as bought out items and procured items such as Kiwitha Post, posts and pipes etc. on job work basis and imported certain items such as six channel Controller and Key pad etc. These are all erected as a fence at various sites. The Commissioner after examining the Section 2(b) of the Act has held that process of erection of the fence at the site will bring into existence this item as a new product distinct from all the products used. The assessee has marketed goods through various dealers and the catalogue of the product also stated that the power fence can be modified and shifted without loss of materials. Shri Vishnu Narain MD in his statement dated 7-7-2003 contradicted this. But in his statement dated 9-12-2003 confirmed that the statement in the product catalogue indicates that the fence is modifiable. He also stated that the materials can be reused but additional material has to be purchased and it involved expenditure and there was some loss of materials. The Commissioner has concluded that the goods could be moved from one place to another without modification and they have to be concluded as movable property and excisable under the said tariff heading. The Commissioner has upheld the charge of invocation of larger period and has rejected the submission that the demands are mostly time-barred except for a short period. The appellants had relied on large number of evidences including correspondence with the department. They had produced all the purchase bills invoices etc., on 8th June 98 and besides corresponding with AC on 20th May 1998 and the Superintendent Central Excise on 25-3-98 with regard to the manufacture of the very item and the appellants had submitted all the information but no action had been taken. The Commissioner in the impugned order has not referred to these materials but has held that the demands are not barred by time despite the show cause notice issue on 26-12-2003 for the period October 98 to October 2003.
2. Learned counsel submitted that the item is fixed on the walls and separately also on poles and they are not classifiable as electrical machines and apparatus having individual functions under the Heading 8543.90. He refers to explanatory notes of HSN Chapters 2312 and contend that what is included under Heading 8543.40 is only electrical fence energizers and not the item in question. He further submits that in terms of the Apex Court judgment rendered in the case of Triveni Engineering and Industries , the item is required to be movable one and it should be capable of being removed and re-fixed in any other place. He submits that the item cannot be refixed once it is removed in terms of catalogue also. Hence the item cannot be treated as a movable property. He submits that circular dated 15-1-2002 issued by Board also clarified that the goods should be capable of being dismantled and removed and 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 not excisable. He relied on large number of judgments to contend that item has not come into existence at the factory and not cleared in removable form. It has come in to existence at the site and hence is not classifiable as ‘Electric Fence Energizer’. He also pointed out to the correspondence with the department besides all the information collected in 1989 and therefore, the invocation of larger period is hit by time-bar. He relies on the ratio of the following rulings.
(1) Ugam Chand Bhandari v. CCE, Madras [2004 (167) E.L.T. 491 (S.C.)]
(2) Sri Ayyappan Silicate & Chemicals Products (P) Ltd. v. CCE, Tricky
(3) Gujarat Mineral Development Corporation Ltd. v. CCE, Vadodara [1999 (109) E.L.T. 369]
He also submitted that abatement under Section 4(4)(d)(ii) is available in terms of Larger Bench judgment rendered in the case of Srichakra Tyres Ltd. v. CCE confirmed by Supreme Court as . He also submitted that Modvat credit is also required to be granted to the duty paid inputs in terms of the following judgments.
(1) Keltron v. CCE, Cochin
(2) Merinoply & Chemicals Ltd. v. CCE, Shillong [2001 (135) E.L.T. 470]
(3) Kesha Sales (P) Ltd. v. CCE, Meerut
(4) Lakshmi Card Clothing Mfg. Co. Ltd. v. CCE, Madras
(5) CCE, Bombay v. Bamcee Ltd. [2001 (128) E.L.T. 126]
3. Learned SDR filed detailed comments from the Commissioner and pointed out that appellants are clearly declaring the item as movable goods in all their invoices and this is erected on the site and the item comes into existence as an immovable property but as a movable as all the items function as a unit as electric fence energizer. Therefore they are classifiable under the chapter subheading 8543.90 as electrical appliances having individual function. He submitted that it is not only electrical fence energizer which comes under 8543.90 but also the solar power fence which acts as electrical appliance having individual function. The individual function is to act as a fencing system that gives security to a variety of locations including country borders, airports, defence locations etc., this is erected on the site and the item comes into existence as an immovable property but as a movable as all the items function as a unit as electric fence energizer. Therefore they are classifiable under the chapter sub-heading 8543.90 as electrical appliances having individual function. He submitted that it is not only electrical fence energizer which comes under 8543.90 but also the solar power fence which acts as electrical appliance having individual function. The individual function is to act as a fencing system that comes security to a variety of locations including defence installations etc. Although the length of the fence may vary from few metres to several metres but it can be replaced and worked out for another place. Therefore it satisfies the test of movable property. He refers to the Apex Court judgment rendered in the case of Sirpur Paper Mills which lays down the proposition that imbedding the machinery in a concrete base to ensure it’s wobble free operation does not make the commodity immovable property in the sense a building or a tree is. He points out that poles which are the basis for fixing the wires and fence can be removed and refixed elsewhere. He submitted that larger period can be invoked.
4. On a careful consideration and examining the impugned order, and the record, we are satisfied that the item which has come into existence is an electrical appliances having individual functions. All the items are put together to bring into existence this item, Electric Power Fencing system and the same is also powered by using solar power. The catalogue as well as the statement of the MD is relied by Revenue to say that the item can be relocated and item can be saved and it does not get destroyed and dismantled merely because the evidence has to be reused if at all for use in other places does not mean that the item has got destroyed while refixing the same. The item has not become immovable property on erection piece by piece. The poles are fixed and the wires are fenced with all the other parts. The fence gives electric shock to animals when they want to cross the same it acts not only as an electrical barrier but also as a psychological barrier as no human or domestic animal having felt the shock once will attempt to go anywhere near the fence again. The power fence systems of various components which are bought out and some are manufactured and some are imported. They are all assembled to bring into existence solar power fence as a system. There is no civil work for erection and the item does not become part and parcel of immovable property as contended. Therefore, the item satisfies the tariff description. We are of the considered opinion that it is goods and liable for duty in the Chapter heading already noted supra. However the prayer of the appellant for Modvat credit and cum-duty benefit is required to be extended in terms of the ratio of the judgment cited (supra). The submission that the demands are partly time-barred as the department was aware of all the demands are partly time-barred as the department was aware of all the details collected by them for 1998 and the show cause notice issued in 2003 makes the demands time-barred is a well considered plea an require to be accepted in the light of the following judgments cited by them.
(1) Cosmic Dye Chemical v. CCE, Bombay
(2) CCE v. Chemphar Drugs & Liniments
(3) Padmini Products v. CCE
(4) Pushpam Pharmaceutical Company v. CCE, Bombay
The penalty of Rs. 5 lakhs on the Managing Director is excess. Hence it is reduced to Rs. 50,000/-. The matter is remanded to Commissioner for re-working out after granting benefit of Modvat and treating clearances as cum-duly as pleaded by the appellants in the light of Large Bench judgment rendered in the case of Srichakra Tyres. Appeals are allowed by remand only for recomputation of duty. Ordered accordingly.
(Pronounced in open Court on 8-8-2005)