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Madan Cold Storage Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1985)(19)ELT265TriDel
AppellantMadan Cold Storage
RespondentCollector of Central Excise
Excerpt:
.....fitted them in their cold storage. the appellants urged that such items are not liable to central excise duty. in may, 1975 some of the officers of the central excise preventive branch, kanpur paid a surprise visit to their cold storage premises and conducted a survey of the plant. the department alleged that the appellants had not taken out a central excise licence for the manufacture of these items and these parts have been utilised without filing their classification list. the goods were seized for contraventions of rules 9(1), 52-a, 52, 173g(4) and 173q read with rule 226 of the central excise rules, 1944.2a. a show cause notice followed. the adjudicating officer ordered the confiscation of the cooling coils and the condensers with option given to the appellants to redeem the.....
Judgment:
1.The appeal against the orders of the Collector of Central Excise, Kanpur in his Order-in-Orginal No. 10/Collr/ MP/78 dated 18-2-1978.

2. The appellants are owners of a Cold Storage in Kanpur. In 1975, they found that some of their bunker type cooling coils and their condensers needed to be replaced. These parts were to be made indigenously. The appellants purchased some pipes from the market and improvisedly made this item by arranging the pipes and connected them with U shape bends and fitted them in their cold storage. The appellants urged that such items are not liable to Central Excise duty. In May, 1975 some of the officers of the Central Excise Preventive Branch, Kanpur paid a surprise visit to their cold storage premises and conducted a survey of the plant. The department alleged that the appellants had not taken out a Central Excise licence for the manufacture of these items and these parts have been utilised without filing their classification list. The goods were seized for contraventions of Rules 9(1), 52-A, 52, 173G(4) and 173Q read with Rule 226 of the Central Excise Rules, 1944.

2A. A show cause notice followed. The adjudicating Officer ordered the confiscation of the cooling coils and the condensers with option given to the appellants to redeem the confiscated goods on payment of redemption fine of Rs. 5,000/-. A penalty of Rs. 1,000/- was also imposed, 3. Shri C.L. Beri, Advocate, appearing for the appellant urged that what was seized could not be considered as goods within the provision of the Central Excises and Salt Act, 1944. Even if, they are considered as goods, they are not excisable under tariff entry 29A. Even if the goods are excisable, they would be entitled to exemption. Initially, he urged that the plant was imbedded to the earth and hence the part seized could not be considered a movable property. According to him only movable items should be charged for duty and these items having gone into the plant or machinery can not longer be called as goods. He drew our attention to the provision regard0 ing seizures under Section 12 of the Central Excise Act which incorporated-the relevant provisions of Sea Customs Act including Section 110 of the Customs Act, and argued that the items fitted in the cold storage could never be construed as movables.

4. On the question of excisability, he pointed out that the ruling of the Gujarat High Court in Vadilal Ice Cold Storage v. Union of India, Mother India Refrigerating Industries Pvt. Ltd v. Superintendent of Central Excise-1980 E.L.T. page 600 have held that under entry 29A Sub-clause (iii) the part would not be liable for excise duty unless there is a sale. He also argued that there was no clandestine removal.

According to him Sections 11A and 11B are independent provisions and the removal was prior to the amendment passed under the Finance Act, 1982. He also raised a question of time-bar. The part was utilised during March, 1975. The deduction was on 8-5-1975. The Show Cause Notice was issued on 4-8-1977. There was no fraud or suppression. He also argued that the goods were exempted under Notification 132/68 of 13-6-1968. He pointed out that the penalty and the redemption fine are not warranted.

5. Shri S.N. Khanna appearing from the department argued that the goods became excisable because they are products manufactured by the appellants. There was no time-bar as the appellant did not maintain the necessary registers. No licence was taken out for the production of these items which are parts of their cold storage plant. Under Section 6 of the Central Excises and Salt Act any product manufactured would be liable for duty. He pointed out that the manufacture of cooling coils has been considered in Anil Ice Factory v. Union of India reported in 1980 E.L.T. page 333. The removal would come under Rule 9(1) attracting the rigour of Rule 9(2).

6. The contention that the items confiscated are not "goods" coming within the purview of the Central Excises and Salt Act, 1944 cannot be accepted. The term goods has been defined under Section 2(22) of the Customs Act as including any other kind of movable property. It is no doubt true that the part manufactured has since been fitted to the plant. Nevertheless what was manufactured by the appellant would be excisable goods and will not be immovable property as contended by the learned counsel for the appellants.

7. The submission that these items are only tailor made parts without any saleable value is also without force. If the appellant has manufactured these items which are commonly known as diffusers and cooling coils then the items would attract duty. Section 3 of the Central Excises and Salt Act contemplate levy of duty of excisable goods produced or manufactured. These items are also saleable as such and hence the objections raised are without force Once the basis that these items or goods are liable to duty is established, the question is whether Tariff Item 29 A would be applicable. The learned counsel for the appellant mainly relied on the judgment of the Hon'ble Allahabad High Court in 'Mother India Refrigerating Industries Pvt. Ltd.'. This decision has since been considered by the Hon'ble Gujarat High Court and the reasons set out in the judgment of the Hon'ble Gujarat High Court indicate that the question of sale would arise only in respect of Clause (iii). The SDR also cited the decision of the Punjab & Haryana High Court in the matter of Frick India Ltd. v. Union of India.

8. It is, therefore, manifest that the appellant who manufactured excisable goods is liable to pay duty paid thereunder. The question of time-bar also does not arise because the manufacture of these items falls under Rule 9(1). Though the requirement of removal for captive consumption was introduced under the Finance Act of 1982, in the present case their levy would be attracted under Rule 9(1). The limitation prescribed under Sections 11A and 11B will, not be applicable. Of course, the amendment has been upheld (1980 E.L.T. 320) and it is no longer open to the appellant to contend to the contrary.

The question of penalty and redemption fine will, however will not arise.

9. The learned counsel for the appellants urged that, in any event, the appellants would be entitled to the benefit of the exemption under Notification 132/68, dated 13-6-1968. We are of the view that the appellants are not entitled to the benefit of this notification.

Firstly, Notification 132/68 refers to the earlier Notification 80/62 of Central Excise. Under that notification, cooling coils, compressers, condensers etc. have been held to be dutiable parts. The subsequent Notification No. 132/68 should be construed in the light of the earlier notification. Hence cooling coils and condensers concerned in the present manufacture would also attract duty. Even otherwise, the appellant has not applied for the exemption. He has not obtained any licence for the manufacture of these parts. So the appellant cannot claim the benefit of the notification.

10. The lower authorities have confiscated the goods, imposed the redemption fine of Rs. 5,000/- and a penalty of Rs. 1,000/-. It is well settled that the amendment made in Rules 9 and 49 of the Central Excise Rules by the notification of the Govt. of India in the Ministry of Finance (Deptt. of Revenue) No. G.S.R. 74(E), dated 22-9-1982 contains an explanation whereby it is declared that no action or omission on the part of any person shall be punishable as an offence which would not have been so punishable if this section had not come into force. In view of this explanation, the question of confiscation and imposition of redemption fine and personal penalty cannot be sustained. The appellant, is, however, liable to pay the duty. The appeal is hence allowed in part confirming the duty but setting aside the penalty as well as the confiscation.


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