1. Storage cabinet, kitchen counters, running counters, large reception/ conference tables etc. are immovable property and are not excisable goods

Facts and issues

Assessee was engaged inter alia in the job of erecting immovable items, viz., partitions, storage, work stations, laying of wooden floor, column cladding, skirting etc. as per customers’ requirements. It was also manufacturing furniture items such as desks, tables and chairs. The revenue authorities demanded duty on the above-mentioned items by treating them ass furniture falling under heading 9403 of the Central Excise Tariff. The assessee contested the demand by contending that except for desks, tables and chairs, the rest of the items were not furniture, as the said items were in the nature of fixtures, which have been erected piece by piece and were fixed to the ground and as such were not movable property.

Held

The Supreme Court held that in common parlance, the expression ‘furniture’ are movable items such as desks, tables and chairs required for use or ornamentation in a house or office. It was held that ordinarily furniture was not something which was immovable or fixed in a position which could be removed only by cannibalizing. Such items were clearly in the nature of ‘fixture’ and not ‘furniture. In common parlance, the term ‘furniture’ referred to only chairs, desks, tables, beds etc. and therefore the same meaning should be assigned to the expression ‘furniture’ while construing the Central Excise Tariff.

Authority

Craft Interiors Pvt. Ltd. vs. CCE, Bangalore – 2006 (77) ELT 464.

2. Proceedings under section 11A for recovery of duties short levied or short paid cannot be initiated without first finalizing the provisional assessments

Facts and issues

Duty demands were raised against the assessee by issuing show cause notices under section 11A of the Central Excise Act, 1944, even though the assessments for the relevant period were being made provisionally by virtue of an order of provisional assessment issued under Rule 9B of the Central Excise Rules, 1944. The assessee contested the demand for duty by submitting that a proceeding under section 11A for recovery of duties which have not been levied, short levied or short paid would arise only after the provisional assessment has been finalized. The accepted this contention and set aside the demand under section 11A of the Act. Revenue filed an appeal against this decision of the before the Supreme Court.

Held

Dismissing the revenue’s appeal, the Supreme Court upheld the contention of the assessee that a proceeding under section 11A of the Central Excise Act cannot be initiated without first completing the assessment proceedings. In coming to this conclusion, the Supreme Court relied upon an earlier judgment of the same court in Ujagar Prints wherein the word ‘levied’ had been held to include all the stages of charge, quantification and recovery. Applying this meaning of the word ‘levied’, the Supreme Court held that the question as to non levy or short levy of duty would arise only after the levy had been made in accordance with law. The Court held that in terms of the provisions of the Central Excise Act, 1944 and the rules framed thereunder, the amount became payable only when the assessee did not deposit the amount levied within 10 days from the date of completion of the provisional assessment. As such, the question of initiating proceedings under section 11A could arise only after expiry of the said period of 10 days from the completion of the assessment proceedings. As such the demand notice was held to be unsustainable.

Authority

CCE, Mumbai vs. ITC Ltd. – 2006 (77) RLT 468 (SC)

3. Plant and machinery assembled at site are not excisable

Facts and issues

The assessee was called upon to pay excise duty on refrigeration plant/cold storage plant/ central air-conditioning plant and caustic soda plant, which had been fabricated at site by using duty-paid bought out items. The set aside the demand by holding that the plants were not excisable as they were in the nature of systems and not machines. The ’s order was challenged in appeal by the revenue.

Held

Discussing the revenue’s appeal, the Supreme Court reiterated the principles laid down in its earlier decisions in the case of Quality Steel Tubes Pvt. Ltd. vs. CCE – 1995 (75) ELT 17 SC and Triveni Engineering Industries Ltd. vs. CCE, 2000 (120) ELT 273 SC. The Supreme Court took notice of a Board Circular dated 15-1-2002 wherein the Board had conceded in para 4(d) that integrated plants/ machines, as a whole, may or may not be “goods” and had cited as an example plants for transportation of materials (such as handling plants) which were actually a system or network of machines.

Authority

Commissioner of Central Excise, Indore vs. Virdhi Brothers – 2007 (207) ELT 321.

4. Revision of approved classification list. Such re-classification effective only prospectively from dated of show cause notice proposing re-classification

Facts and issues

Appellants are manufacturers of electrical appliances falling under Chapter 85 of CETA, 1985. Classification of their control panel was approved under Chapter 8535.00 attracting duty @ 5%. Revenue served a notice to re-classify the said goods under Chapter 8537.00 attracting duty @ 20%. Appellants filed an appeal before Commissioner (Appeals) who have set aside the order of adjudicating authority. Revenue challenged the order before CESTAT, which is also dismissed. Revenue challenged the said order before Apex court.

Held

It is held by the apex court that the goods were cleared under approved classification list and any reclassification of the product can be only prospective from the date of show cause notice.

Authority

CCE vs. Mysore Electrical Industries Ltd. 2006 (204) ELT 517 (SC)

5. Use of brand name belonging to trader/ manufacturer of goods – SSI exemption not available

Facts and issues

Khanna Industries used to manufacture bathroom fittings under the mark ‘ARK’.

This belongs to Arksons Pvt Ltd., who is a trader and not holding any registration under Central excise.

Held

The apex court held that the use of brand name of trader or manufacture is not eligible for the benefit under Notification No. 175/86.

Authority

CCE vs. Khanna Industries – 2006(77) RLT 689 (SC)

NB: The judicial interpretation of law & policies of the regulatory authorities are subject to change from time to time and therefore it may have bearing on the views expressed above. Accordingly any amendment in law or an instruction through circular would necessitate review of comments from time to time. Therefore we do not hold any responsibility for changes taking place after the date of this communication.)