Branding Structures Installed At Indian Oil Fuel Stations Not Liable To Excise Duty: CESTAT

The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has recently held that branding and signage structures installed at Indian Oil Corporation Ltd. fuel stations are not subject to central excise duty.

These structures are known as Retail Visual Identity or RVI elements. They include monoliths, logos, directional signs and facility signs.

The tribunal said the structures come into existence only at the site. Once installed, they become permanent. They qualify as immovable property.

The tribunal held that clearing parts from a factory does not amount to manufacture. This is so when the final structure is not marketable and cannot be dismantled and reinstalled without damage.

A bench comprising Judicial Member S.S. Garg and Technical Member P. Anjani Kumar allowed appeals filed by Consolidated Engineering Company and its partner Rajeev Shamlal. It set aside a central excise duty demand of Rs 1.37 crore, along with interest and penalty, imposed by the Commissioner of Central Excise, Faridabad.

“The RVI Elements once fixed with civil foundation, are attached to the earth and are immovable property because the said parts once installed become permanent and if dismantled would get damaged and no longer remain usable,” the bench said.

Indian Oil Corporation Ltd. awarded contracts to Consolidated Engineering Company for the fabrication, supply and installation of branding and signage structures at its retail outlets across the country.

Under these contracts, parts were fabricated at the appellant's factory. Excise duty was paid on the parts cleared from the factory. The final structures were assembled and installed at the fuel station sites.

The tax department alleged that the appellant had undervalued goods by not including the full contract value for payment of excise duty. It also classified the RVI elements under tariff heading 9405, which covers lamps, lighting fittings and illuminated signs and applies only when goods cannot be classified under any other heading.

Rejecting this, the tribunal held that only parts were cleared from the factory. The complete RVI structures came into existence only at the installation site. The bench said the parts, in the form cleared, were not shown to be capable of being bought and sold and could not be treated as marketable goods.

The tribunal also rejected classification under tariff heading 9405, a residuary category.

The bench also set aside the demand on aluminum doors, windows, and frames. It noted that the issue had already been decided in favour of IOC in earlier proceedings.

On limitation, the tribunal held that the extended period could not be invoked. The appellant had regularly filed returns. It had disclosed the goods manufactured at its factory and paid excise duty under the applicable tariff headings. The tribunal therefore set aside the entire order.

For Appellant: Krati Singh

For Respondent: Anurag Kumar and Goverdhan Dass Bansal