2014 (11) TMI 746 - HC - Central Excise

High Court upholds CESTAT decision on duty exemption for Concrete Armoured Units

The High Court affirmed the CESTAT's decision, ruling that the respondent was not liable to pay duty on the supply of Concrete Armoured Units (CCA Units) ... Clearance of goods without payment of duty - Extended period of limitation - Fabrication at site - Supply of Concrete Armoured Units (CCA Units) - Interest u/s 11AB - Penalty u/s 11AC - Held that:- Admittedly, there was an adjudication order No. 7/89, dated 23-6-1989 passed by the Additional Collector, Guntur for the period 1987-88 when the respondent had executed work awarded by VPT including casting of CCA Units, holding that the respondent was only a works contractor and not the manufacturer and VPT was the manufacturer of the CCA Units. This order was confirmed by the CESTAT, Delhi in decision reported in [2001 (7) TMI 176 - CEGAT, COURT NO. IV, NEW DELHI]. Respondent is a manufacturer, he should be entitled for exemption under Notifications No. 5/99-C.E., dated 28-2-1999 and Notification No. 6/2000-C.E., dated 1-3-2000 in respect of the CCA Units as they were manufactured at the site of construction for use in construction works at site as clarified by the CBEC Circular dated 18-5-1999. We also hold that where earlier proceedings on the same subject matter have already been decided against a party, there is no question of suppression of facts, wilful mistake, fraud, etc., warranting invocation of the larger period of limitation of five years under proviso to Section 11A(1) of the Act (as it stood then) instead of period of one year prescribed under Section 11A(1) of the Act - respondent is supplying manufactured CCA Units on contract basis to VPT and that he is only a works contractor and not a manufacturer. This finding of fact by the Tribunal cannot be said to be perverse or based on inadmissible material or ignoring of material evidence. - Decided against Revenue. Issues:Appeal challenging order under Section 35G of Central Excise Act, 1944; Determination of duty liability on supply of Concrete Armoured Units (CCA Units); Interpretation of work orders and contracts; Claim of exemption under Notifications No. 5/99-C.E. and No. 6/2000-C.E.; Application of period of limitation under Section 11A(1) of the Act; Allegations of suppression of facts and wilful mistake by the respondent.Analysis:The case involved an appeal filed by the Revenue challenging an order under Section 35G of the Central Excise Act, 1944, regarding the supply of Concrete Armoured Units (CCA Units) by the respondent to Visakhapatnam Port Trust (VPT). The Revenue contended that the respondent was liable to pay duty under the Act for the supply of CCA Units. The Department issued a show cause notice demanding duty, interest, and penalty, alleging that the respondent was the manufacturer of CCA Units. The Commissioner confirmed the duty demand, penalty, and interest, rejecting the respondent's objections. The respondent appealed to the CESTAT, which allowed the appeal based on various grounds.The CESTAT held that an earlier adjudication order from 1989, which determined that the respondent was a contractor and not the manufacturer of CCA Units, was confirmed by the Delhi Bench of CESTAT. The CESTAT further ruled that the extended period of limitation under Section 11A(1) did not apply to the case, and the respondent could be entitled to exemption under relevant Notifications for CCA Units manufactured at the construction site for use in construction works. The Tribunal found that the respondent was a works contractor and not a manufacturer, and there was no suppression of facts warranting the larger period of limitation.The Revenue appealed the CESTAT's decision, arguing that the Tribunal erred in its interpretation of the law and facts of the case. However, the High Court upheld the CESTAT's decision, stating that no substantial question of law arose from the case. The High Court agreed with the Tribunal's findings that the respondent was entitled to exemption for the CCA Units and that there was no basis for invoking the larger period of limitation. The Court confirmed the CESTAT's order, dismissing the Revenue's appeal.In conclusion, the High Court affirmed the CESTAT's decision, holding that the respondent was not liable to pay duty on the supply of CCA Units to VPT. The Court found no grounds to challenge the Tribunal's findings regarding the respondent's status as a works contractor, entitlement to exemption under relevant Notifications, and absence of suppression of facts warranting a longer limitation period. The appeal by the Revenue was dismissed, and the CESTAT's order was upheld.