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J.K. Export Industries Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1983)(14)ELT2390TriDel
AppellantJ.K. Export Industries
RespondentCollector of Central Excise
Excerpt:
.....of the central excises and salt act, 1944. accordingly he issued a demand for payment of central excise duty amounting to about rs. 25.000/- under rule 9(2) of the central excise rules and imposed personal penalty of rs. 15.000/- on the appellants under rule 173-q(1) of the central excise rules, 1944. in their appeal to the tribunal, the appellants have stated that the question involved is whether the dal mill which is attached to earth should be charged to duty under item 68 of the central excise tariff. the advocate for the appellants has stated that the dal mill in question cannot be called "goods" and accordingly cannot be subjected to central excise duty. the photographs of the dal mill which were produced by the departmental representative were perused by the bench. the advocate.....
Judgment:
1. The Appellants M/s. O.K. Export Industries are manufacturers of Vegetable Non-essential Oil. The Additional Collector of Central Excise, Ahmedabad in his Adjudication Order dated 3-9-82 has held that the appellants had fabricated, manufactured and installed one Soyabin Dal Plant in their factory premises which was dutiable under item 68 of the Central Excises and Salt Act, 1944. Accordingly he issued a demand for payment of Central Excise duty amounting to about Rs. 25.000/- under Rule 9(2) of the Central Excise Rules and imposed personal penalty of Rs. 15.000/- on the Appellants under Rule 173-Q(1) of the Central Excise Rules, 1944. In their appeal to the Tribunal, the appellants have stated that the question involved is whether the Dal Mill which is attached to earth should be charged to duty under item 68 of the Central Excise Tariff. The Advocate for the Appellants has stated that the Dal Mill in question cannot be called "goods" and accordingly cannot be subjected to Central Excise duty. The photographs of the Dal Mill which were produced by the Departmental Representative were perused by the Bench. The Advocate for the Appellants argued that the said Dal Mill Plant was manufactured by assembling duty paid parts and this could not be subjected to further Central Excise duty. He cited the case reported in ELT 1975 J 525 to state that the goods purchased from the open market should be considered as duty paid. He further referred to the Delhi High Court decision in the case of Sulekhram & Sons v. Government of India wherein the Court observed that it would be intolerable if the purchasers of the manufactured products were to be required to prove whether excise duty on the manufactured goods was paid. The Advocate also referred to the Appellate Order of the Central Board of Excise & Customs as reported in ELT 1982 J 77 wherein the Board has laid down that installation of plant which is attached to earth and is not intended to move thereafter, does not bring into existence any excisable goods. He referred to Government of India Order in Revision reported in 1979 Cencus 36-D wherein the Government has ruled "their lordships of the Supreme Court in DCM's case (Civil Appeals) 168-170 of 1960 ==1977 ELT (J 199) have laid down the test that an article to be excisable must be known to the trade in the condition in which it is sought to be excised and must be something which can ordinarily come to the market to be bought and sold". Since the Dal Mill in question is not marketable, it cannot be considered as excisable goods.

2. The Advocate further submitted that the Dal Mill in question has been constructed without the aid of power and this has been clearly explained in the submissions that were made to the Additional Collector. The Advocate, however, did not submit any further evidence to this effect. The Advocate for the Appellants argued, without prejudice to the earlier argument, that the Dal Mill in question had not been removed from the factory nor was it consumed or utilised within the factory premises and accordingly could not be subjected to Central Excise duty. He referred in this connection to the case reported in ELT 1983 Page 239 relating to J.K. Cotton Spinning & Weaving Mills v. Union of India. Lastly, the Advocate argued that the Dal Mill plant in question had been assembled by independent contractors by way of job-work and accordingly the Central Excise duty, if any, could be levied only on the value of the job-work under Notification No. 119/75, dated 30-4-75. The Advocate further stated that imposition of the penalty on the appellants was entirely unwarranted. The appellants had kept the Central Excise Department informed about the erection of the plant and also submitted a ground plan to them on 4th November, 1980. Accordingly, there have been no violation of Rule 375-G of the Central Excise Rules and no penalty could be levied on the appellants.

3. The Departmental Representative observed that the Dal Mill was not part of immovable property within the meaning of Section 3 of the Transfer of Property Act. He referred to the case reported in 1978 ELT Page 1 relating to Jeep Light Manufacturing Co. v. Union of India wherein the Hon'ble Allahabad High Court has decided that an article need not be marketed for sale, it is enough it is well known to those who deal in it or use it. The Dal Mill plant in question is not permanently embedded to the earth. It is merely attached to each by bolts and nuts. He further argued that it is not correct to say that the said plant has been fabricated without the aid of power since electric welding electrodes were used for manufacture of elevators which are part of the plant. Similarly, there was no question of job-work in this case since under Notification No. 119/75, dated 30-4-75, the parts used in manufacture of the plant were not sent to any job-worker in the latter's premises. At the most, the appellants could avail of the concession of set-off of duty under Notification No.178/77, dated 18-6-77 if they so desired.

4. The Bench has carefully considered the points made by both the parties. They have also had the benefit of perusing the photograph of the plant submitted by the Departmental Representative. The Bench is of the view that the plant in question was firmly attached to the earth and accordingly could not be described as 'goods' attracting levy of Central Excise duty. The plant in question was admittedly assembled at the site and accordingly had become part of the immovable property. It is by now well settled law that such plant and machinery which is erected at site cannot be considered as excisable goods since it was assembled on the site out of the parts and materials purchased from the market. The Bench considers that the plant could not accordingly be subjected to excise duty. In view of this, it was not necessary for the Bench to go into other arguments of the Appellants. The Adjudication Order of the Collector is accordingly set aside and the appeal is allowed.


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