COMMISSIONER OF CENTRAL EXCISE Vs. BINNY LTD.

JUDGEMENT

(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 units , 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.) 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.