Fabrication of steel structurals treated as manufacture, while prior departmental knowledge curtailed extended limitation.

Fabrication of steel structurals such as columns, cranes, girders, trusses, roof girders, purlins and bracings was treated as manufacture and classified under Chapter Heading 73.08, sub-heading 7308.90. On limitation, prior departmental knowledge of the activity and earlier proceedings on the same issue were found relevant, so the extended period could not sustain the entire demand. The result discussed is that only the portion of duty falling within limitation survived for recomputation, while the broader demand was time-barred for the major part of the period.

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Issues: (i) whether the fabrication of steel structurals, such as columns, cranes, girders, trusses, roof girders, purlins and bracings, amounted to manufacture and was classifiable under sub-heading 7308.90; and (ii) whether the duty demands were barred by limitation in view of the Department's earlier knowledge and prior proceedings.

Issue (i): whether the fabrication of steel structurals, such as columns, cranes, girders, trusses, roof girders, purlins and bracings, amounted to manufacture and was classifiable under sub-heading 7308.90.

Analysis: The activity of fabrication was treated as resulting in manufacture of steel structurals falling under Chapter Heading 73.08 and sub-heading 7308.90. The precedent relied upon by the Revenue on the extended limitation issue was distinguished, and the view that such fabricated items amount to manufacture was accepted in principle.

Conclusion: The fabrication activity amounted to manufacture and the goods were classifiable under sub-heading 7308.90.

Issue (ii): whether the duty demands were barred by limitation in view of the Department's earlier knowledge and prior proceedings.

Analysis: The Department was found to have been aware of the manufacturing activity and of earlier proceedings that had culminated in orders favourable to the assessee. In these circumstances, the extended period was not available for the entire demand, and the earlier adjudication and departmental knowledge negatived sustained invocation of limitation for the disputed period.

Conclusion: The demands were held to be time-barred for the substantial part of the period, and the Revenue was directed to re-compute only the demand falling within limitation.

Final Conclusion: The appeals resulted in acceptance of the assessee's limitation plea for the major demand, while the Department's challenge failed and only the within-limitation portion of the demand survived for recomputation.

Ratio Decidendi: Where the Department had prior knowledge of the facts and earlier proceedings had already arisen on the same activity, the extended period cannot sustain the entire demand; fabrication of steel structurals may amount to manufacture for excise purposes.

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