The Hindu Business Line : Confiscated girders on a railway bridge!

HERE'S an interesting case - Asian Techs Ltd vs Commissioner of Central Excise, Pune, that came up before Jyoti Balasundaram and Moheb Ali of the Mumbai tribunal. It was about pre-stressed concrete (or PSC) girders that Asian manufactured for use in the construction of a bridge on the Konkan Railways. Problem was that these girders were cleared without paying Excise Duty.

One fine morning, Asian received a missive from the taxman demanding a duty of Rs 54 lakh, and also asking it to show cause "why 14 PSC girders cleared without payment of duty should not be confiscated". When the company took up the matter before the Commissioner, he adjudicated the case "confiscating the girders which were by then removed to be placed on the bridge", and also imposed penalties.

At the tribunal, the company's advocate Joseph Kodianthara argued that there was no suppression because the girders were manufactured "in the full view of the public". He said that the Department took two years to issue notice, and so the exercise was barred by limitation.

In response, the taxman's side argued through Hitesh Shah that Excise officials had asked the company for costing particulars and process of manufacture, and that the company was advised to obtain Central Excise Registration. Refusal to take Central Excise registration amounts to contravening the provisions of Central Excise Rules and Act with intent to evade payment of duty, said Shah, pleading for larger period of limitation.

After hearing both sides, the tribunal questioned Asian's contention that the activity of casting PSC girders was going on in the full view of Central Excise officers. "The Central Excise officers are not expected to be in know of the activities of the appellants in the jungles of Konkan," reads the order of Moheb Ali. "It is possible that general public is aware that Konkan Railway is laying a bridge connecting Mumbai with the State of Goa but one is not concerned with the bridge but with the PSC girders. No one can take a plea that if an activity is going on in the open suppression cannot be alleged against the person who is carrying on that activity."

Frowning upon the company's failure to obtain registration as advised by the Department, the tribunal said that a larger period of limitation could be invoked, therefore. "The plea of the bona fide belief does not come to the rescue of an assessee when a proper officer instructs him to do something in accordance with law and the assessee refuse to follow the instructions," stated the tribunal.

Asian had argued that there was no `manufacture' in its activity; but that didn't meet with the tribunal's approval. Separate goods known as `girders' come into existence after cement concrete and steel is subjected to certain processes, reasoned Moheb Ali.

Aren't girders immovable, and so not `goods' for the purpose of Excise Duty, questioned the company? "The fact that the girders are subsequently fixed on the bridge does not make them immovable property," reads the tribunal's order. "It is common knowledge that a bridge consists of various parts which are fixed on it permanently. That does not mean that the various parts of the bridge become immovable property and for that reason are not goods." We are concerned with the assessment of girders and not the bridge itself, reminded Moheb Ali. "In the latter case one can argue that a bridge is not excisable because as it is immovable property and not the former."

Are you wondering how the Commissioner could have confiscated the girders? From the order, you'd know that the fact that the girders have become a part of the bridge after they have been fixed should not make any difference to their confiscability. "The Commissioner imposed a redemption fine of Rs 5 lakh. We do not know what would happen if the appellants do not redeem them. The Commissioner would be in no position to pull down the bridge to recover the blessed girders," is a catchy snatch from Moheb Ali's order.

Ex-parte@TheHindu.co.in

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Confiscated girders on a railway bridge!

Desi spiritual channels offer `nirvana' to the West

Cartoon