SRI KUMARAGURU MILLS AND ANR. Vs. CCE, COIMBATORE

JUDGEMENT

(1.) IN both these appeals a common question of law and facts are involved and hence they are taken up together for disposal as per law. Appeal No. E/5085/92 arises from order in original dated 18.9.1992 and the duty confirmed is Rs. 2,10,540/ - by invoking the proviso to Section 11A of the CE Act besides, penalty of Rs. 1000/ - imposed under Rule 523A (sic), 173Q and 226 of the CE Rules in respect of diesel generating sets assembled and installed in June 1991. Proceedings were initiated by issue of show cause notice dated 13.3.1992 invoking the longer period of limitation.

(2.) APPEAL No. E/5109/92 arises from order in original dated 1.9.1992 confirming duty demand of Rs. 2,61,519 under Rule 9(2) read with Section 11A of the CE Act, 1944 besides imposing penalty of Rs. 1,000/ - under Rule 52A, 173Q and 226 of the CE Rules 1944 in respect of captive use of generating sets installed on 14.3.1991. Proceedings were initiated by issue of show cause notice dated 9.1.1992.

(3.) THE learned Counsel submits that the issue pertains to manufacture and installation of diesel generating sets. The contention raised by the appellants before the authorities was that the manufacture and assembly of generating set did not result in the production of goods, but the generating sets were attached to the earth at site and therefore they are required to be considered as immovable property and not as excisable goods. He further submits that the Central Board has issued Circular vide No. 41/90 -CX -4 dated 11.10.1990 by which it was clarified that if generating sets are erected at site then they are to be treated as immovable property and are not leviable to duty. It is his contention that the appellants were under the bona fide belief that the item being immovable property, no duty is required to be paid on the same in terms of the Board's Circular noted above as there was no intention on their part to evade payment of duty. He further submits that the officers were visiting their factory and they were aware of the fact of installation of generating sets. Hence the invocation of larger period in terms of Section 11A would not be applicable as the demands are barred by time. He submits that department had raised similar demands in respect of other industries and the said industries had also taken the similar view with regard to the item being not excisable goods as they are embedded to the earth and in view of the Board's circular, the longer period of limitation is not invocable as there was no suppression on the part of the appellants. He further submits that the Tribunal after due consideration rejected the plea that the item was not immovable property. However, the plea of the assessee is that demands were barred by time and the larger period cannot be invoked in this case in view of the Board's Circular on this aspect. He further submits that this view was expressed in the case of Triveni Engg Works v. CCE as reported in, 1996 (88) ELT 88 (Tribunal) wherein the Tribunal held that generating sets are not immovable property. The Tribunal also held that demands of duty are hit by limitation. The learned Counsel therefore, submits that the appeals are required to be allowed in this aspect alone.