ORDER
Jeet Ram Kait, Member (T)
1. This is an appeal filed by Revenue pursuant to the direction issued by the Central Board of Excise and Customs under Section 35E(1) of the C.E.. Act, 1944, against Order-in-Original No. 24/96 dated 16-4-96 by which the Commissioner has dropped the proceedings holding that the charge of suppression would not stand and the invocation of proviso to Section 11A(1) as alleged in the show cause notice is not justified and hence the demand fails on the question of time bar. He has also noted in the order that the respondent had been permitted by the Jurisdictional Assistant Collector to adopt invoice price assessment vide letter C. No. IV/16/6/89 T.5 dated 13-1-89, 27-3-89 and C No. IV/16/155/ 89.VC dated 29-1-90 for the different periods from 1-1-89 to 31-12-39. Aggrieved by this order, Revenue has come in appeal.
2. Brief facts of the case are that M/s. Binny Limited Engineering Division, Madras are engaged in the manufacture of goods falling under Chapters 73, 84, 86 and 87 of the Central Excise Tariff Act, 1985. They had obtained contracts/purchase orders from various sugar mills to design, manufacture, procure and supply machinery, equipment and components etc. Perusal of records of M/s. Binny revealed that they had assembled at site different machinery parts such as weighing scales, juice heaters, sulphitation lunits, furnaces, evaporators, tanks etc. for M/s Vellore Co-operative Sugar Mills (M/s. Vellore) and M/s. Cheyyar Co-operative Sugar Mills (M/s. Cheyyar). These goods were supplied against purchase orders of the Customers. Since it appeared that the activity of fabrication and erection done at the sites of the above mentioned two sugar mills out of (1) structural items and machined steel castings manufactured in their factory and cleared to the site on payment of Central Excise duty under sub-heading 7308.90; 8138.00; 8479.00 & 8483.00; (2) Certain structural items manufactured at the site itself using sub-contracts out of the materials supplied by M/s. Binny Ltd., (3) Bought out mechanical apparatus and electrical machinery and equipments sent by them to the site and (4) Sub-contracted items received through subcontractors to the site did not bring into existence parts and machineries of sugar mill which are rightly classifiable under Chapter sub-heading No. 8438.00 of CETA 1985 and that M/s. Binny had contravened the provisions of Central Excise Rules, 1944, in as much as they had removed the said goods without determining the duty liability on the said goods and without payment of duty by suppressing the fact of fabrication and erection of excisable goods at site, a Show cause notice dated 21-12-93 was issued to M/s. Binny proposing (i) to demand duty of Rs. 15,08,2327/- & (ii) to impose penalty on them.
3. M/s. Binny in their reply to the show cause notice dt. 21-12-93 had stated that they manufactured certain items required for these two sugar mills in their factory and also bought certain components from outside manufacturers. The items cleared to site from their factory had suffered duty at their end and the bought out items had suffered duty at the hands of the respective manufacturers. They further contended that erection/commissioning done at the site is not a manufacturing process as the goods were tailor-made, embedded to earth and hence immovable and not recognised as salable or marketable in the commercial parlance, and that they are not to be treated as goods and attract no duty liability. They further contended that there was no suppression as the department was seized of the matter through monthly R.T. 12s, invoices filed by them with the department.
4. On adjudication, ld. Commissioner vide his Order-in-Original No. 24/96, dated 16-4-96 in respect of machineries assembled/erected at the site of M/s. Cheyyar, has observed that the goods like (1) Juice/water molasses weighing scales, (ii) vertical Juice heaters, (iii) double effect pre-evaporators, (iv) Vacuum Pans and (v) Juice Sulphiter were not affixed to the ground and were not in the nature of immovable property and held them as dutiable. Commissioner has held the remaining goods like (1) Syrup and molasses storage tanks, (2) seed/vacuum vertical crystallisers as immovable and hence non – dutiable and also held the other goods like sulphur furnace burners, milk of lime preparation tanks, syrup sulphitation unit, condenser for evaporators, vacuum pans, sugar elevators and sugar graders as non-dutiable after observing that they were fabricated at the factory of M/s. Binny and cleared on payment of duty and no new product had emerged at the site of M/s. Cheyyar. In respect of parts and machines of sugar mills like Juice weighing scale and gross hopper which were assembled/erected at the site of M/s. Vellore Co-operative Sugar Mills, ld. Commissioner has held the same as dutiable since they were not in the nature of immovable property and also held the machinery like vertical crystalliser as non-dutiable in as much as the same was embedded to earth on assembly. The duty payable by M/s. Binny in respect of parts and machineries assembled/erected at the sites of M/s. Cheyyar and M/s. Vellore, which were held as dutiable by the Commissioner worked out to be Rs. 15,48,277/- and Rs. 1,47,448/- respectively. The Ld. Commissioner has treated M/s. Binny as the manufacturer of parts erected at the sites of M/s. Cheyyar and M/s. Vellore on which duty was liable to be paid, but on the question of limitation of time held that there was no case for invocation of extended period under Section 11A observing that M/s. Binny had referred to the relevant contracts/agreements in all the invoices relating to clearances of goods manufactured and cleared for supply to M/s. Cheyyar and M/s. Vellore.
5. Arguing for the Revenue Ld. DR Shri Jayachandran submitted that while the order passed by the Ld. Commissioner holding M/s. Binny as the manufacturer of parts/machineries assembled/erected at the sites of M/s. Cheyyar and M/s. Vellore and confirming their duty liability on such goods appeared to be correct, the decision of dropping the demand of Rs. 16,85,725/- on the question of limitation of time is not proper and legal. The reason being that the show cause notice issued to the respondent M/s. Binny alleged that they had suppressed the fact of fabrication of erection of the excisable goods at sites based on the contracts they had entered into with the said sugar mills with intention to evade payment of duty on the new products which emerged at the site. From the available records, it could be seen that M/s. Binny had not submitted the said contracts to the department. He submitted that there is also no evidence in the records to show that M/s. Binny had intimated about the existence of the contracts to the department. Though the agreement/contract had been mentioned in the invoices relating to the goods manufactured at the factory premises of Binny and cleared by them to the respective sites of sugar mills it was observed that there was no evidence to show that the ‘agreement’ or ‘contract’ as such had been furnished by them to the proper officer. Nor any acknowledgement had been produced in support of their claim that the department was already aware of the full contents of the contract. Mere mentioning of the agreement number in the invoice relating to the goods manufactured at the factory premises at Madras would not amount to furnishing of material information/disclosure of full facts. Since the fact of fabrication of certain machineries erected at site and liable to duty would be known only at the site after the assembly of machinery was over. The respondent assessee working under self removal procedure on their own should have intimated the department or should have obtained clarification about the dutiability of the machineries from the department which they did not do. Similarly, when bought out items, own manufactured items and sub-contracted items are received at site and new items are manufactured by assembling/fabricating the same, it is well settled that the person who undertook such assembly is required to pay duty at site, by taking out C.E. Registration certificate from the proper officer having jurisdiction over the site which the assessee failed to do so.
6. On the question of limitation, Ld. DR argued that the extended time limit under Section 11A is still applicable in as much as the full information about the manufacture of goods at site was not furnished by the respondent to the department. The ratio that the extended time limit is applicable even if the price lists are approved in the cases where full information at the time of filing such lists was not furnished to the department has been upheld in the cases of Mysore Rolling Mills Pvt. Ltd. v. Commissioner of Central Excise [1985 (21) E.L.T. 875 (T)]; Food Specialities Limited v. Appellate Collector [1988 (33) E.L.T. 331] & Elsons Machines Pvt. Ltd. v. Collector of Central Excise [1988 (38) E.L.T. 571 (S.C)]. Ld. DR submitted that M/s. Binny, on their own, should have filed the necessary contracts with the department. But they chose to file the agreement dated 29-10-85 in respect of M/s. Cheyyar and the other agreement dated 22-2-89 in respect of M/s. Vellore with the department vide their letter dated 5-8-91 only after the department had asked them to produce the agreements vide letter dated 19-6-91. He also pointed out that from the covering letter addressed to the Superintendent of Central Excise, Range III C, Madras-III Division, enclosing the monthly RT 12 returns, it could be seen that they had filed copies of gate passes under which the shop manufactured items were cleared to the sites of M/s. Cheyyar and M/s. Vellore along with the relevant copies of invoices. The assessment of RT 12s was done by the department based on the said gate passes and relevant invoices, only with regard to the shop manufactured items, as the fact of fabrication of machineries at site was not at all brought to the knowledge of the department. He argued that in the absence of any evidence to prove that M/s. Binny had produced the copy of the agreement contract to the department and also the fact that M/s. Binny had not intimated the department about their manufacturing activities at sites of M/s. Cheyyar and M/s. Vellore, the Commissioner should have invoked the extended proviso to Section 11A(1) of CESA, 1944 and should have confirmed the duty of Rs, 16,85,725/- and imposed a penalty on M/s. Binny. Ld. DR, therefore, pleaded for allowing the Revenue appeal by modifying the order passed by the Commissioner and by confirming the duty demand of Rs. 16,85,725/- besides imposing appropriate penalty in the matter.
7. Ld. Advocate for the respondent submitted that they had undertaken to design, manufacture, supply and erect machinery, equipment and other components at site of a Boiling House, a plant which consisted of Juice Weighing Scale, Juice Heater, Sulpher Furnace etc. at the premises of M/s Cheyyar for a contracted price of Rs. 260.20 lakhs. Similarly, for M/s. Vellore, they undertook to design, manufacture, supply and erect, at site, two vertical crystallizers for a contracted price of Rs. 26.48 lakhs. They manufactured the items required for these two projects and bought certain components from outside manufacturers. He submitted that the items cleared by them to site from their factory had suffered duty at their end, and the bought-out items had suffered duty at the hands of respective manufacturers. In respect of the goods assembled at site, erection/commissioning at site is not a manufacturing process as the goods were tailor made, become embedded to earth and hence immovable and not recognised as salable or marketable in the commercial parlance. They are, therefore, not to be treated as goods and attract no duty liability. In this connection, he relied on the decision in the case of M/s. Tata Robins Fraser Ltd. as reported in 1990 (46) E.L.T. 562 (Tri.). On the question of time bar, he submitted there was absolutely no suppression of information as the department was seized of the matter through RT-12s. Invoices filed by them to the department and by their production of necessary documents like invoices, contract copies, etc. to the local Audit and CERA parties at the time of their visit of the factory for periodical audit. In this connection, he drew our attention to the findings recorded by the Ld. Commissioner in para 17 & 18 of his Order wherein he has stated that the “respondent (M/s. Binny Limited) had been permitted by the Jurisdictional Assistant Collector to adopt invoice price assessment vide letter C. No. IV/16/6/89.T.5 dated 13-1-89, 27-3-89 and C. No. IV/16/155/ 39-VC, dated 29-1-90 for the different periods from 1-1-89 to 31-12-89. The charge of suppression would, therefore, not stand and the invocation of proviso to Section 11A (1) is not justified. The demand thus fails on the question of time bar, and for that reason, there would be no case for imposition of penalty”. Ld. Advocate contended that the order passed by the Ld. Commissioner is legal and proper and hence, the Revenue appeal may be rejected.
8. We have considered the rival submissions and perused the case records. We observe that as far as the liability to duty is concerned, the learned Commissioner has found that it was M/s. Binny Ltd. who had supplied the components and erected them at site. The learned Commissioner in the light of the decision of the Hon’ble High Court of Patna in the matter of Tata Iron & Steel reported in 1988 (33) E.L.T. 297 (Patna), held that M/s Binny are the manufacturers and duty would be payable by them. It was also found by the Commissioner from the relevant records that M/s Binny had referred to the relevant contract in all the invoices relating to clearances of the goods manufactured and cleared for supply to Vellore and Cheyyar and in para 16 he has referred to the relevant contract in all the invoices relating to clearances of the goods manufactured and cleared for supply to Vellore and Cheyyar. He has referred to certain invoice? and relevant GPls as could be seen from para 16 of his order in respect of Cheyyar Co-op Sugar Mills and Vellore Co-op Sugar Mills. Further, M/s Binny had been permitted by the Jurisdictional Assistant Commissioner to adopt invoice price assessment vide letter C.N. IV/16/6/S9.T5 dated 13-1-89, 27-3-89 and C. No. IV/16/155/89. VC, dated 29-1-90 for the different periods from 1-1-89 to 31-12-89. The findings of the learned Commissioner in para 8 to 18 are reproduced herein below :
8. I have gone through the records of the case and the defence submissions, both in writing and oral, The issues to be decided in the case are :-
a. whether assembly of goods at site amounts to manufacture and whether they are excisable; b. who is the manufacturer : the supplier or the buyer and c. whether invocation of proviso to Section 11A(1) is justified in the case.
9. In the case of M/s Narne Tuleman, 1988 (38) E.L.T. 566 (S.C.), the apex court has held that assembling of duty paid components is a process of manufacture under SecHon 2(f) of the Act when both parts and final products are separately and specifically dutiable. In the case of Tata Iron and Steel – 1988 (33) E.L.T. 297 (Patna), the High Court held that to become goods the product must be something which can ordinarily come to the market to be bought and sold and is known to the market as a commercial product. On the question of excisability, however, it has to be determined that they are not affixed to the ground and are not in the nature of immovable property, which in the light of the definition in Section 2(f) of the Act would not qualify as excisable goods. It is in the light of these parameters that the excisability of the goods supplied by Binny to Vellore and Chayyar has to be determined.
10. Thus, in respect of goods supplied to Cheyyar, the following position emerges :-
i. Juke/Water/Molasses Weighing Scales: Erected out of bought out components and those fabricated at site. Superficially affixed to the structure, movable and hence dutiable under Heading 8423.10. Value : Rs. 5,04,160.
ii. Vertical Juice Heaters: Erected out of bought out and those manufactured by Binny. Superficially attached to stagings, movable and hence dutiable under heading 8419.00. Value Rs. 12,10,042.
iii. Sulphur Furnace/Burners : These are embedded to earth after being supplied as burner. No new article emerges at the time of installation, Hence non-dutiable. Value : Rs. 9,56,176. iv. Milk of Lime Preparation Tanks : Attached to stagings after being cleared by Binny as a plant on payment of duty. No new article emerges at the time of installation. Hence non-dutiable. Value : Rs. 2,60,798. v. Double Effect Ore-Evaporators : Assembled at site out of duty paid goods cleared from Binny and bought out components. Superficially attached to stagings and hence dutiable under heading 8419.00. Value : Rs. 32,75,462. vi. Syrup Sulphitation Unit : A pre-fabricated unit, cleared from Binny after payment of duty in four pieces and assembled at site with bolts and nuts. No new article emerges at the time of installation. Hence non-dutiable. Value: Rs. 1,28,406. vii. Syrup and Molasses Storage Tanks : Manufactured at site by welding steel sheets and embedded to earth. Cannot be dismantled without cubing into pieces. Hence, immovable and non-dutiable. Value : Rs. 4,48,800. viii. Vacuum Pans : Transported after payment of duty in SKD condition and assembled at site by welding and erected over stagings at a height of 60 feet. A new article emerges at the time of installation and hence dutiable under heading 8414.80. Value : Rs. 34,08,754. ix. Seed/Vacuum Vertical Crystallisers : Immovable as embedded to earth on assembly and hence non-dutiable. Value : Rs. 46,37,889. x. Condensers for Evaporators & Vacuum Pans : Fabricated at Binny and cleared on payment of duty. No new article emerges when being installed at site. Hence, non-dutiable. Value : Rs. 4,56,420. xi. Sugar Elevators: Brought from Binny in CKD condition on payment of duty. No article emerges when being installed at site. Hence, non-dutiable. Value : Rs. 2,18,000. xii. Sugar Graders : Brought from Binny in CKD condition on payment of duty. No new article emerges at the time of installation. Hence, non-dutiable. Value : Rs. 4,38,498. xiii. Juice Sulphiter : Assembled at site out of components cleared on payment of duty by Binny. A new article emerges on installation. Hence dutiable under heading 8438.00. Value : Rs. 2,40,412.
11. Thus goods at serial Nos. (i), (ii), (v), (viii) & (xiii) of para 10 supra, totally valued at Rs. 86,38,830 are dutiable. 1 find that for the total contract value of Rs. 2,59,35,972, Binny have paid Rs. 22,36,774 as charges for labour and raw material. This works out to 8.62% of the total value, on account of which an amount of Rs. 7,44,667 has to be added to the price of the goods to arrive at the assessable value of Rs. 93,83,497, duty on which (c) 15% ad valorm and 10% SED on the BED would work out to Rs. 15,48,277.
12. In respect of machinery erected at the site of Vellore, I observe the following: –
i. Juice Weighing Scale : Dutiable as discussed in para 10(i) supra. Value : Rs. 3,04,609. ii. Gross Hopper : Assembled at site out of duty paid goods cleared by Binny and components bought out from market. Superficially attached to concrete bed, movable and hence dutiable under heading 8479.10. Value : Rs. 5,28,412. iii. Vertical Crystallisers : Non-dutiable as discussed in para 10(ix) supra. Value : Rs. 21,80,925. 13. Thus the total value of dutiable goods supplied to Vellore works out to Rs. 8,33,021 (no additions need to made as the amount already includes the labour and raw material charges). The duty payable on this @ 15% and 10% SED on BED would work out to 1,37,448. 14. The reliance placed on the judgement in the case of Tata Robins Fra-ser Ltd. [1990 (46) ELT 562 (T)] is misplaced for it related to supply of a turnkey project which being Immovable was held to be non-excisable. 15. As far as the liability of duty is concerned, I find that it is Binny who had supplied the components and erected them. In the light of decision of High Court in the case of Tata Iron & Steel - 1988 (33) E.L.T. 297 (Patna), Binny would qualify as the manufacturer and duty would be payable by them. 16. I find that Binny had referred to the relevant contract in all the invoices relating to clearance of goods manufactured and cleared for supply to Vellore and Cheyyar. To cite a few in respect of RT12 returns, noted against each: Invoice No. Relevant GP1 Date RT12 for the month Cheyyar Co-op GN 0268 144 26-6-90 June 1990 Sugar Mills GN 1077 522 8-1-90 January 1990 Agreement dt. 29-10-88 GN 0573 300 5-9-89 September 1990 Vellore Co-op. Sugar Mills Contract RC 479/89 Exp/22-2-89 GN0822 414 9-11-89 November1989 17. I also find that Binny had been permitted by the jurisdictional Assistant Collector to adopt invoice price assessment vide letter C. No. IV/16/6/89.T.5 dated 13-1-89, 27-3-89 and C. No. IV/16/155/89.VC dated 29-1-90 for the different periods from 1-1-89 to 31-12-89. 18. The charge of suppression would, therefore, not stand and the invocation of proviso to Section 11A(1) is not justified. The demand thus fails on the question of time bar. For that reason, there would be no case for imposition of penalty.
The learned Commissioner has dealt with each and every item supplied by M/s. Binny Ltd. to the two Sugar factories in para 10 to 12 of his order. We therefore, do not find any infirmity in the order of the Commissioner who has held that the items though chargeable to duty, but the demands are barred by time. Since charge of suppression of fact is not brought home, the larger period under proviso (1) to Section 11A is not attracted and the demand therefore fails on the question of time bar and therefore action of dropping the demand and not imposing any penalty is legal and proper and has to be confirmed.
9. We also observe that the issue in regard to manufacture and erection at site is no longer res Integra as it has been decided by the Hon’ble Apex court in the case of Sirpur Paper Mills v. CCE reported in 1998 (97) E.L.T. 3 (S.C.) wherein the Hon’ble Supreme Court had considered the case of paper making machine assembled and then erected at site with mainly bought out components and the Supreme Court had held that the item namely the paper making machine was marketable commodity and something quite different from the components that have gone into it and is therefore excisable goods and that embedding of the machine on to the earth on a concrete base is to ensure wobble free operation and does not make it immovable property. The machine was found to be capable of being sold in parts after being dismantled from its base. The Hon’ble Supreme Court had also distinguished this decision in the case of M/s Name Tuleman reported in 1988 (38) E.L.T. 566 (S.C.). The assessee therein had carried on the work of assembling three components of weigh bridge and brought into existence complete weigh bridge which had distinctive character or use. It was held that activity of fitting and assembly of components resulted in bringing into being a complete weigh bridge of a distinctive name, character or use. Therefore, it was held that manufacture of that product is liable to excise duty. The Supreme Court in the case of Triveni Engineering & Industries v. CCE reported in 2000 (120) E.L.T. 273 (S.C.) had referred to above judgment. In the case of Triveni Engineering & Industries (supra) the Supreme Court had clearly laid down the law that after assembling if the items continue to be goods, only then it can be held to be excisable goods. However, on completion of the process of erection if the items become immovable property, then it is not excisable. Same was the view held by the Hon’ble Supreme Court in the case of Mittal Engineering Works (P) Ltd. v. CCE reported in 1996 (88) E.L.T. 622 (S.C.) as well as Quality Steel Tubes Pvt. Ltd. v. CE reported in 1995 (75) E.L.T. 17 (S.C.).
10. We, find that in the present case, the learned Commissioner has very thoroughly examined the whole issue of excisability in respect of each and every item manufactured by them. We therefore, do not find any infirmity in the impugned order and we are in agreement with the order of the Commissioner as far as the excisability of the goods are concerned.
11. The Commissioner has dropped the proceedings only on the question of time bar aspect as the extended period cannot be invoked in view of the fact that the respondents-assessee had been clearing the goods under invoice after taking permission from the department. The respondents had given the name of the parties and had referred to the contract in all the invoices, RT 12 returns relating to clearance of the goods manufactured by them and they have not suppressed the fact from the department. Hence, the finding that the extended period is not invokable cannot be found fault with. In the result, the appeal filed by the Revenue fails and is dismissed.