2016 (7) TMI 799 - AT - Central Excise

Supreme Court remands duty demand on fabricated steel structures

CC&CE, Hyderabad-III Versus M/s. Hindustan Steel Works Construction Ltd.

The Supreme Court remanded the case for de novo adjudication after the CEGAT, New Delhi set aside the duty demand on fabricated steel structures used for ... Manufacture - fabricated structure - classification - fabricated structures like purlins, monorails, beams, girders, columns, bracings, platforms, cable ends, etc. - Held that:- the steel structures were undeniably fabricated at site, by assembling them piece by piece, the structure came into existence as they were erected at site and as correctly held by adjudicating authority, the structures fabricated are fixed to the earth. - Demand set aside. - Decided against the revenue. Issues:1. Classification of fabricated steel structures under Central Excise Tariff Act, 1985.2. Whether the fabricated steel structures are excisable goods and liable to duty.3. Applicability of Notification No. 46/81-CE and CBEC Order No.58/1/2002 CX.4. Interpretation of the Larger Bench decision in Mahindra & Mahindra case.Analysis:1. The appeal was filed by Revenue against the Commissioner's order dropping duty demand, interest, and penalty on fabricated steel structures used for construction. The Collector of Central Excise had issued a show-cause notice proposing to classify the structures under CHH 7308.90 and demand duty. The CEGAT, New Delhi set aside the order, which was later remanded by the Supreme Court for de novo adjudication.2. The Commissioner passed an order dropping the proceedings, stating that the structures were not excisable goods classifiable under CTH 7308.90. The Revenue challenged this order, arguing that the fabrication work amounted to manufacture. The respondent had entered into a contract with NTPCL for structural work, receiving materials and fabricating structures on-site.3. The respondent contended that the Central Excise Tariff Act, 1985 came into force after the period in question, making the classification under CTH 7308.90 invalid. They argued that the steel supplied by NTPCL remained their property, and the structures were not excisable goods. The Tribunal noted previous judgments and the applicability of Notification No. 46/81-CE and CBEC Order No.58/1/2002 CX.4. The Tribunal found that the structures were fabricated on-site and fixed to the earth, distinguishing the case from the Mahindra & Mahindra decision where parts were first fabricated on the ground. The Tribunal held that the demand was not sustainable, setting aside the impugned order and dismissing the appeal.This detailed analysis covers the issues of classification, excisability, legal provisions, and interpretation of relevant judgments, providing a comprehensive understanding of the judgment.