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Kamal Engineering Corporation Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1985)(20)ELT366TriDel
AppellantKamal Engineering Corporation
RespondentCollector of Central Excise
Excerpt:
.....to be business name and style of a young engineering graduate (who says he was not conversant with central excise rules and regulations) hereinafter called appellant, are the outcome of visit dated 5-6-74 by preventive officers of central excise bareilly to appellants premises.the excise authorities found six coolers-two complete and four partly assembled and valued at rs. 4,105/ at the appellant's shop. on further investigation, the authorities also found that the appellant had sold component parts of coolers through different sales vouchers to different consumers. it was found that the appellant had assembled these component parts into coolers at the consumers premises. show cause notice dated 23-9-74 as to why penalty be not imposed for manufacturing cooler without licence and duty.....
Judgment:
1. The question for decision in this appeal originally a Revision Application to the Govt. of India is whether demand of duty under item 29A(2) of CET from the appellants in respect of assembly of 22 coolers at the consumers premises is legal and justified. The proceedings against the appellants M/s. Kamal Engineering Corporation-said to be business name and style of a young Engineering Graduate (who says he was not conversant with Central Excise Rules and Regulations) hereinafter called appellant, are the outcome of visit dated 5-6-74 by Preventive officers of Central Excise Bareilly to appellants premises.

The Excise authorities found six coolers-two complete and four partly assembled and valued at Rs. 4,105/ at the appellant's shop. On further investigation, the authorities also found that the appellant had sold component parts of coolers through different sales vouchers to different consumers. It was found that the appellant had assembled these component parts into coolers at the consumers premises. Show Cause Notice dated 23-9-74 as to why penalty be not imposed for manufacturing cooler without licence and duty demand was served on the appellant on 26-9-74. In his reply, the appellant raised several pleas denying that he had manufactured any coolers. The Assistant Collector of Central Excise, Bareilly by his order dated 1-3-75 found against the appellants. The order was substantially upheld in the appeal by the Appellate Collector of Central Excise, New Delhi by his order dated 18-10-75. The appellants then filed a Revision Application to the Government of India which is now the Appeal before us.

2. In this Revision Application, the appellant has urged that the impugned order may be modified to exclude the demand of duty for 22 coolers which is claimed to be against law. Further prayer is that the appellant being fresher from college and in-experienced in Central Excise Rules and Regulations make mistakes out of ignorance though he did try to ascertain the implications from local Central Excise officers. The penalty is urged to be too harsh under the circumstances.

The appellant had also prayed for personal hearing but by communication dated 22nd January, 1985 addressed to the Assistant Registrar of the he Tribunal, requested for passing orders on merits without insisting on the appellants presence on the date fixed for hearing. In view of the appellants request, the appeal is being decided on merits in his absence.

3. We have heard Shri K.V. Kunhi Krishnan, Departmental Representative for the respondents. In terms of the appellant prayer, the decision is confined to demand of duty on 22 coolers and the quantum of penalty. In this connection, the Assistant Collector of Central Excise in his order observed, "Although the party had not issued any voucher for full and complete coolers, but these had been issued for component parts and cabinets, but the fact remains that the cabinet of a cooler be utilised for any other purpose except manufacturing and completing a cooler by supplementing other component parts through different sale vouchers. In a number of cases, the party made out more than one vouchers for sale of all the component parts required in a cooler and recovered assembly charges as well".

4. The Appellate Collector in his order very briefly stated this part of the case as under :- "In this connection it is observed that the appellants has sold various parts like cabinet, motors and water pumps to different parties, from whom he has charged assembling charges. This is an admitted fact. It appears that the appellant insteadof completing the process of manufacture in his premises performed the same job at the premises of his customers and charged from them assembling charges. It has, therefore, been correctly held by the Asstt.

Collector that the appellant was manufacturing these coolers. It is immaterial whether this process of assembling was done at his premises or at the premises of his customers." 5. It has to be seen whether on the above facts, the appellants can be held liable for demand of duty on coolers under Item 29A(2) of the CET.for reference Item 29A(2) is extracted below :- 29A.Refrigerating andAir-Conditionign Appliances and Machinery, All Sorts and parts Thereof (2)Air-conditioners and other air conditioning appliances, 110% 10% of the which are ordinarily sold or offered for sale as ready Adv. basic duty assembled units, including package type of air- chargeable conditioners and evaporative type of coolers.

It would be seen that the sub-item makes units which are ordinarily sold or offered for sales ready assembled units liable to duty. If the appellant sold component parts and these parts were got assembled by cousumers either through appellantor some other agency as coolers, it cannot be said that ready assembled units ordinarily sold or offered for sale within the meaning of sub item 29A(2) were manufactured to attract duty liability under the item. It has also not been suggested or argued that these 22 coolers Would attract duty liability under some other item of the tariff. In taking this view, we are firtified by another decision of the Bench in Life Insurance Corporation v.Collector of Central Excise, Bombay (Order No. 45/85-B, dated 25-1-1985) where the Bench in respect of coolers installed by the LIC at its office at Raipur by obtaining Exhaust fans and payment of installation charges to a company on job work basis held that no duty liability angainst the LIC under item 29A(2). We, therefore,set aside the demand of duty in respect of these colors.

6. As for penalty of Rs.250 admittedly with respect to other coolers, the appeallat carried on manufacturing activity. The penalty is even otherwise modest and calls for no interference. It is upheld. The appeal is thus paitly allowed and disposed of in terms above said.


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