Retail Visual Identity Elements are Immovable Once Installed: CESTAT Quashes Excise Duty Demand [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the excise duty demand on Retail Visual Identity (RVI) elements as they become immovable once they are installed. These are also used in petrol pumps.

The appeal arises out of the order dated 18.09.2013. Consolidated Engineering Company, the appellant, is a partnership firm engaged in fabrication and installation of aluminum and alucobond aluminium curtain walls, doors, windows and their frames, roofing frames, retail visual identity elements such as spreaders, facility signs , moulded logos fixed on walls, monoliths, etc.

Indian Oil Corporation Ltd (“IOCL”) had hired the appellant to supply and install Retail Visual Identity (“RVI”) Elements at their petrol pumps. The appellant accordingly purchased the raw materials like wires, screws, nuts and bolts and machining activities like routing, riveting, welding, etc. were done in the appellant’s factory.

The rest of the goods on which no work was done were sent directly to the site. At the site, the IOCL outlets, the appellant vicariously assembled the RVI Elements and installed them. After installation, an inspection was done which upon completion would result in the appellant getting their payment.

Investigation then proceeded as the Department was of the opinion that the Appellant had undervalued their goods supplied to IOCL and levied excise duty accordingly. The show cause notice alleged that Rule 26 of the Central Excise Rules is to be applied as clandestine removal of exciseable goods in an irregular manner had been exercised by the appellant and that the same goods were dutiable and liable for confiscation.

The counsel for the appellants used several case laws to back their arguments and argued that the department has not produced any evidence to prove mala fide intention, that no excise duty is leviable on bought-out items as the same were not subject as manufactured goods and that no new product as been manufactured at the site with a different identity among other noteworthy arguments.

The Authorized Representative (“AR”) for the department simply reiterated the findings of the impugned order.

The bench, with S. S. Garg (Judicial) and P. Anjali Kumar (Technical), observed that since RVI Elements are not resold/marketable by IOCL, it cannot be said that the Appellant manufactured the RVI Elements. It also noted that RVI Elements once fixed with civil foundation are attached to the earth and are ‘immovable property’ due to the fact that the parts that have attached the Elements to earth would be damaged upon removal.

The tribunal removed the penalty attracted by the application of Rule 26 as the department did not produce mala fide intention as had been alleged in the show cause notice.

In summary, the impugned order was held not sustainable in law and was set aside on merit and limitation by the Tribunal as it allowed both appeals brought forth by the Appellant.