The judgement of the Supreme Court in the case of CCE, Indore, vs Virdi Brothers 2007 (207)ELT 321(SC), illustrates how field officials are ignoring orders issued by the Central Board of Excise and Customs under Section 37-B of the Central Excise Act, 1944.
When an appeal was filed in the Supreme Court in this case, not only was the binding order under 37-B in existence, but it was even pointed out in the order of the Tribunal 2002 (145) ELT 696 (Tri. Del.) that there was already a binding Circular No. 58/1/2002-Cx. dated 15.1.2002 under Section 37-B.
In the tribunals order, a stricture had also been passed against the commissioner for ignoring a similar order of the tribunal on the issue. So, while filing an appeal to the Supreme Court against the tribunals order, the commissioner ignored the binding order of the board issued under Section 37B.
The issue on which the appeal was filed before the Supreme Court was one relating to erection of plant and machinery at site. On this issue, there is a plethora of Supreme Court judgements over a period of time, which have been also enumerated in the circular of the board.
The circular says that in view of several judgements, the matter had been examined in consultation with the solicitor general.
The final clarification, inter alia, is that when goods are manufactured at site and become immovable property, they are not excisable. If items assembled or erected at site and attached by foundation to earth cannot be dismantled without substantial damage to their components and thus cannot be reassembled, the items would not be considered as moveable and, therefore, not be excisable goods.
Specific examples have also been given of refrigeration/air-conditioning plants. It has been said that these are basically systems comprising compressors, ducting, piping, insulators and sometimes cooling lowers, etc.
They are in the nature of systems and are not machines as a whole. They come into existence only by assembly and connection of various components and parts.
Though each component is dutiable, the refrigeration/air-conditioning system as a whole cannot be considered to be excisable goods. The appeal before the Supreme Court related to precisely the same goods as mentioned in the circular.
Despite such a definite order given by the board in a circular under Section 37B, which makes it binding on all subordinate offices under the board, the commissioner ignored it and filed an appeal in the Supreme Court against the tribunals order.
On this issue, the Supreme Court has given another judgement in the case of Damodar Ropeways reported in 2003 (151) ELT 3 SC. The court decided that the ropeway being erected at site was immovable property and, therefore, not chargeable to central excise duty.
The system of filing an appeal before the Supreme Court needs a review. The present situation is that the board itself gives permission to file an appeal against an order of the tribunal.
Thereafter, it is also necessary to take the permission of the litigation section of the law ministry. It seems that this system of screening cases to prevent undue litigation is more porous than course sand.
This raises a general issue about the multiplicity of senior-level officials who are supposed to take a decision. When there is too much of a hierarchical structure in position, the responsibility, rather than being exercised assiduously, becomes more diluted. Each one thinks that the other has examined it already.