2018 (3) TMI 1732 - AT - Central Excise

Tribunal allows appeal, sets aside duty demand, penalties, and interest orders

KAY KAY FABRICATORS Versus COMMISSIONER OF CENTRAL EXCISE, JAMMU

KAY KAY FABRICATORS Versus COMMISSIONER OF CENTRAL EXCISE, JAMMU - 2018 (363) E.L.T. 920 (Tri. - Chan.) Issues: Appeal against demand of duty for manufacturing activity.Analysis:The case involved an appeal against an order confirming duty demand for the period January 2012 to June 2013 due to the contention that the activity undertaken by the appellant amounted to manufacture. The appellant, engaged in manufacturing Steel Tubular Poles since December 2005, faced rejection of a refund claim and cancellation of registration certificate based on the view that their activity did not constitute manufacture. Subsequently, the revenue asserted that the activity did amount to manufacture, leading to the issuance of show cause notices demanding duty, interest, and penalties for the specified period. The matter was adjudicated, resulting in the confirmation of duty demand, imposition of penalties, and interest. The appellant challenged this decision before the tribunal.Upon hearing both parties and examining the records, the tribunal reviewed the manufacturing process undertaken by the appellant. The process involved procuring MS Black pipes/tubes, cutting them into required sizes, swaging different portions of the pole, welding the swaged portions, connecting the poles on a straightening machine, and adding finishing touches before clearing them as 'Steel Tubular Poles.' Initially, the revenue had canceled the appellant's registration certificate on the belief that their activity did not amount to manufacture. However, a shift in the revenue's view led to the demand for duty, with the appellant claiming entitlement to an exemption notification. The tribunal noted that if the activity did not amount to manufacture, the appellant was entitled to a refund of any duty paid in cash through exhausting Cenvat credit, resulting in a revenue-neutral situation.Given the circumstances and the conflicting views of the revenue regarding whether the activity constituted manufacture, the tribunal set aside the impugned orders, allowing the appeals with consequential relief, if any. The tribunal emphasized that since the appellant's registration certificate had been canceled, they were not liable to pay duty during the specified period and had not collected duty from buyers as unregistered manufacturers. Therefore, the question of paying interest and penalties did not arise in the given scenario.