Central Excise Act, 1944 – ss.4, 11A – Excise Duty – Assessment – Invocation of the extended period of limitation u/s.11A – Assessee-manufacture of boiler and boiler parts, cleared boiler from its factory in completely knocked down (CKD) condition – Assessment of excise duty – Value of the duty paid bought out items delivered directly at the buyer’s site, if liable to be included in the value of the said boiler – Show cause notice issued, if legal and valid under the extended limitation period as provided under the proviso to s.11A(1): Held: Value of the duty paid bought out items which were delivered directly at the buyer’s site is not liable to be included in the value of the boiler cleared by the assessee from its factory in CKD condition, for the purpose of assessment of excise duty – Object of the contract was about erection and installation of immovable plant-steam generating plant – Final product that emerges as a result of performing the obligations under the contract, does not constitute excisable goods under the Act – Consequently, the base value of the boiler on which excise duty is to be levied, cannot be equated with the total contract price, thus, the price of the bought out parts cannot be included in the value of the boiler for the purpose of computing excise duty under the Act – CESTAT erred while declining to consider the immovability plea by the assessee – There was erroneous reliance on tariff classification – Revenue appears to have been swayed by the fact that ‘boilers’ and ‘boiler parts’ are listed under Chapter 84 of the Tariff Act, 1985, and thus, seem to have proceeded on the erroneous assumption that all boilers, irrespective of form or configuration, attract central excise duty – However, the revenue should have kept in mind that the mere presence of a product in the Tariff Schedule does not determine its excisability – Final product-steam generating plant, emerges in the form of an immovable product in the course of integrating the CKD parts with the bought out items – Thus, the resultant product of the contract not being excisable goods, it is wholly inconsequential whether or not the bought out items are parts or accessories of it – Excess collection of excise duty from buyer is no proof of excisability on the final product which emerges as an immovable property – Liability of the assessee to pay duty must be determined strictly in accordance with the charging provisions under the law and not on the basis of any purported recovery from the buyer – As regards the show cause notice, in the absence of any deliberate act on the part of the assessee with an intention to evade being established by the revenue, the essential precondition of wilful suppression with intent to evade duty not satisfied, thus, the invocation of the extended period of limitation under the proviso to s.11A(1) not tenable in law – Show cause notice issued under the proviso to s.11A(1) not legal and hence invalid – Thus, the proceedings leading up to the instant appeal to be quashed, and the impugned order set aside – Central Excise Tariff Act, 1985. [Paras 59-83]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Nidhi Jain. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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