1984 (5) TMI 253 - Commissioner - Central Excise

Contractor's activities not manufacturing under Central Excises Act. Fabricated steel not excisable goods. Show Cause Notice baseless.

The judgment concluded that the Contractor's activities did not amount to manufacture under the Central Excises and Salt Act, 1944. The fabricated steel ... - Issues Involved:1. Jurisdiction of Deputy Collector under Section 11A.2. Applicability of Central Excises and Salt Act, 1944 to the Contractor's activities.3. Definition of 'goods' and 'manufacture' under the Act.4. Requirement of a Central Excise license.5. Alleged contravention of the Act and imposition of penalty.6. Relevance of previous judgments and orders.7. Classification of the fabrication yard as a factory.8. Nature of the Contractor's engagement with VSP.9. Nature of the fabricated steel structurals and the shed as immovable property.Issue-wise Detailed Analysis:1. Jurisdiction of Deputy Collector under Section 11A:The Contractor contended that the Deputy Collector had no jurisdiction to serve a notice under Section 11A as their case did not involve recovery of duty not levied or short-levied. The judgment did not specifically address this contention but focused on the applicability of the Central Excises and Salt Act, 1944.2. Applicability of Central Excises and Salt Act, 1944 to the Contractor's activities:The Contractor argued that their activities did not attract the provisions of the Central Excises and Salt Act, 1944 as the fabrication and erection of structural steel were part of a works contract and not 'goods' in commercial parlance. The judgment agreed, stating that the fabricated steel structurals did not amount to 'goods' and thus were not subject to excise duty.3. Definition of 'goods' and 'manufacture' under the Act:The judgment extensively discussed the definition of 'manufacture' as per Section 2(f) of the Central Excises and Salt Act, 1944, citing Supreme Court judgments that 'manufacture' implies a change resulting in a new and distinct commodity. The fabricated steel structurals did not meet this criterion as they retained the essential characteristics of the original raw materials and were not recognized as new and distinct commodities in the market.4. Requirement of a Central Excise license:The Contractor argued they were not required to take out a license under Section 6 of the Act read with Rule 174 of the Central Excise Rules, 1944. The judgment concluded that since the Contractor's activities did not constitute manufacture, the requirement for a license was irrelevant.5. Alleged contravention of the Act and imposition of penalty:The Contractor contended that they had not contravened any provisions of the Act as it was not applicable to their activities. The judgment supported this view, stating that the charges in the Show Cause Notice were baseless and no penalty could be imposed.6. Relevance of previous judgments and orders:The Contractor cited previous judgments and orders, including those involving M/s. Hindustan Steel Works Construction Limited and M/s. Otis Elevator Company (India) Limited, to support their case. The judgment found these references relevant and consistent with the conclusion that the Contractor's activities did not result in the manufacture of excisable goods.7. Classification of the fabrication yard as a factory:The Contractor argued that the fabrication yard was not a factory. The judgment did not delve into this issue, deeming it irrelevant in light of the conclusion that the activities did not constitute manufacture.8. Nature of the Contractor's engagement with VSP:The Contractor was engaged by VSP for the supply, fabrication, and erection of structural steel. The judgment noted that the activities involved mere assembly of raw materials and did not result in the creation of new goods.9. Nature of the fabricated steel structurals and the shed as immovable property:The judgment concluded that the fabricated steel structurals and the shed were immovable property, as they were permanently embedded in the ground and not intended to be moved. Thus, they were not 'goods' and not subject to excise duty.Conclusion:The judgment concluded that the Contractor's activities did not amount to manufacture under the Central Excises and Salt Act, 1944, and the fabricated steel structurals and shed were not excisable goods. Consequently, the Show Cause Notice was deemed baseless, and no further proceedings were warranted.