Residuary Entry Cannot be Applied to RVI Elements without Excluding Other Classifications: CESTAT [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (“CESTAT”) held that residuary entries of classification cannot be applied without excluding other classifications. The items under scanner were Retail Visual Identity (“RVI”) Elements.

The main raw materials required to fabricate RVI Elements include Aluminum Composite Sheets/Panels (“ACP”), Aluminium Sections and Mild Steel Sections. Raw materials also include electrical components, wires, screws, nuts & bolts, neoprene, etc. The appellant had purchased these materials from various suppliers and machining activities like routing, riveting, welding etc were done in the Appellant’s factory with the aid of machines. RVI Elements include directional signs, company logos, monoliths, facility signs and spreaders. They then made payments for excise duty for the items cleared in the factory.

The Appellant, Consolidated Engineering Company, then assembled and installed the RVI Elements by their employees or sub-contracted workers of third parties. Indian Oil Corporation Ltd then made the payment for the services to the appellant as they had initially hired them for this task.

The counsel for the appellant argued that both Sections 3 and 2(d) consider RVI Elements to not be subjected to excise duty as the item was not marketable. Due to the nature of these Elements, if removed from the installed site, it would damage their structure and render them unmarketable for reselling. It had been further submitted that since the heading is residuary in nature meaning any item can be classified under this Heading only if its classification elsewhere is ruled out. She placed reliance on Studio Printall Pvt Ltd v. Commissioner of C. Ex., Delhi - I and Havell’s India Ltd v. Commissioner of Customs, New Delhi. A residuary clause empowers the department to classify any item under their sub-heading if its classification elsewhere in the Tariff is ruled out.

The counsel finally argued that since the item had been under the entry in Heading 9405 of Section XX (Miscellaneous Manufactured Articles) of Chapter 94, the heading is residuary and an item can be classified under this only if its classification elsewhere in the Central Excise Tariff Act is ruled out.

In the case of Studio Printfall New Delhi Pvt Ltd, it was held that 9405 covers those items which have a permanent light source. The RVI Elements were attached to the earth by nuts and bolts and are ‘immovable property’. Reliance on various cases such as Secure Mobile India v. Commissioner of Central Excise and TTG Industries v. Collector of Central Excise, Raipur was taken to enforce their arguments.

The bench, comprising S. S. Garg (Judicial) and P. Anjani Kumar (Technical) held that the Test of Marketability had not been satisfied due to the fact that the RVI Elements are not capable of being bought and sold for a consideration as in the form that they are from the moment they left the factory, the same cannot be marketable. Further, there was no finding in the impugned order to suggest that the RVI Elements were not classified under any other tariff heading so it was covered under 9405. The tribunal observed that the duty on the parts has been paid by the appellant and no further value was added to the parts.

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