- (1.) This appeal is directed against the final Order of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi [hereinafter referred to as 'the Tribunal'] dated 10.12.2002. By the impugned order, the Tribunal has confirmed the order passed by the Commissioner of Central Excise (Appeals), which has affirmed the order of the Assistant Commissioner of Central Excise, levying the duty and penalty under the Central Excise Act, 1944 (hereinafter referred to as 'the Act'). THE ISSUE :
(2.) The bone of contention between the Appellant-assessee [hereinafter referred to as 'the assessee'] and the Respondent [hereinafter referred to as 'the Revenue'] can be crystallized thus: Whether the Iron and Steel structures manufactured and used captively in the factory for installation of the Sugar manufacturing plant by the assessee can be classified as capital goods under Rule 57Q of the Central Excise Rules, 1944 [hereinafter referred to as "the Rules"]. THE FACTS :
(3.) The relevant facts for the purpose of this appeal are:- The assessee is the manufacturer of Sugar and Molasses. The assessee is availing MODVAT credit facility on the excise duty paid for the capital goods used in the factory for manufacturing process under Rule 57Q of the Rules. In April 1999, the assessee, in order to modernize the manufacturing process of sugar and molassess, has installed new machineries by replacing the old one. However, certain machineries like cane milling plant, clarification plant, evaporator and pan boiling plant, power generation plant etc., which are specified as capital goods in terms of Serial Nos. 2 and 3 of the Table below Sub-Rule 1 of Rule 57Q of the Rules, required the support of structural items for their installation. In view of this, the assessee started the manufacturing of iron and steel structures, after purchasing excise duty paid iron and steel sheets, angles, nuts and bolts etc. for the installation of the said machineries. Thereafter, the assessee has filed a declaration under Rule 57Q of the Rules declaring Iron and Steel structures under sub-heading 7308.90 of Chapter 73 as capital goods. The assessee has also filed classification declaration under Rule 173B of the Rules dated 09.07.1999 for the Iron and Steel structures classifying it under sub-heading 7308.90 of Chapter 73 and claiming exemption under the Notification No. 67/95-CE dated 16.03.1995 [hereinafter referred to as "Notification"]. The said Notification exempts the capital goods, as defined in Rule 57Q of the Rules, manufactured and used within the factory from the excise duty leviable on such goods as specified in the schedule to the Central Excise Tariff Act, 1985 [hereinafter referred to as "the Tariff Act"]. Subsequently, the Assistant Commissioner, Central Excise Division, Ambala vide Office letter dated 20.01.2000 has issued a Show Cause Notice to the assessee for short payment of excise duty to the tune of ' 28,14,464/- for the period July, 1999 to September, 1999 as Notification is not applicable to the iron and steel structures. The said Show Cause Notice was replied by the assessee vide its reply dated 24.02.2000 claiming the benefit of Exemption Notification. The assessee has also produced various photographs, drawings and Certificate of the Chartered Engineers during the personal hearing before the Assistant Commissioner dated 21.03.2000 in order to show that the iron and steel structures are components of machinery and quintessential for its effective functioning. However, the Assistant Commissioner, vide its order dated 31.03.2000, confirmed the duty demand and imposed a penalty of ' 5,00,000/- on the ground that the Notification is not applicable to the said Iron and Steel structures as they are neither inputs used in relation to the manufacture of final product nor capital goods as defined in Column 2 of the Table given below Sub-Rule (1) of Rule 57Q of the Rules. The assessee, aggrieved by the order of Assistant Commissioner, preferred an appeal before the Commissioner of Central Excise (Appeals). The Commissioner (Appeals), vide its order dated 23.11.2011, confirmed the order of the Assistant Commissioner and rejected the appeal on the ground that the said Iron and Steel structures form the part of the building. Being aggrieved, the assessee preferred an appeal before the Tribunal, the same was partly allowed. The Tribunal, vide its impugned order dated 10.12.2002, reduced the amount of penalty to '1,00,000/- and affirmed the demand of duty on the ground that Chapter 73 of Schedule to the Tariff, Act under which the said Iron and Steel structures fall, has not been specified in the Table below Rule 57Q of the Rules and the machineries purchased by the assessee were complete in itself. The reasoning of the Tribunal is as under: "We have considered the submission of both the sides. The Ld. Advocate had shown us certain photographs where the impugned structures were used. According to him these structures form integral part of the machinery concerned without which the machinery cannot function. On query from the Bench, the Ld. Advocate has fairly conceded that the various machineries, which have been purchased by them, were complete. Accordingly, we do not find any substance in his submissions that these structures are components of the various machine/machineries. Notification No.67/95-CE provides exemption from payment of duty to the capital goods as defined in Rule 57Q if they are used in or in relation to the final products which are chargeable to duty. The appellants have not succeeded in establishing that the impugned structures are components of the capital goods as specified in the table below Rule 57Q of the Central Excise Rules. Chapter 73 of the Central Excise Tariff under which the impugned goods fall has also not been specified in the table below Rule 57Q. The ratio of the decision in the case of Bhanu Steels is not applicable as therein the appellants had explained that the goods were spare parts for plant and machinery installed in their factory. In the present matter, the appellants have not proved that the impugned goods are components of the machines/machineries. The ratio of the decision in the case of Wainganga is not applicable as the goods were manufactured in the factory and further these were not trusses, column and purlines as was the fact in the Wainganga case. We, therefore, hold that the benefit of Notification No.67/95 is not available to the appellants. Accordingly, we uphold the demand of duty of Excise confirmed against them. However, taking into consideration the facts and circumstances of the case, we are of the view that the penalty imposed is on the higher side and the interest of justice will be met, if the Appellants are directed to pay a penalty of only Rs.1 lakh. We order accordingly. The appeal is thus partly allowed." THE COMPETING ARGUMENTS : ;