Manufacturing company wins appeal against duty demand for on-site work

The Tribunal set aside the duty demand against the appellant, engaged in manufacturing storage systems, for fabrication and installation at customer sites. The Tribunal ruled that if duty applied to on-site activities, it should be imposed on subcontractors, not the appellant. The appeal was allowed, and the duty demand was deemed incorrect and illegal.

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Issues:
Excise duty demand on fabrication/erection/installation of storage system at customer's site.

Analysis:
The appellant, engaged in manufacturing slotted angles and channels, faced a demand for duty on the expenditure related to the erection and installation of storage systems at the customer's site. The adjudicating authority upheld the demand, which was affirmed by the Commissioner(Appeals). The appellant argued that the fabrication/installation of storage systems at the site was not excisable goods as they were immovable once erected. They further contended that the entire fabrication/erection/installation work was outsourced to independent subcontractors, making them liable for any duty. Citing various judgments, the appellant emphasized that if duty was applicable, it should be demanded from the subcontractors who performed the on-site activities.

The Revenue, represented by the Superintendent(A.R.), supported the findings of the impugned order and referred to a Tribunal judgment in a similar case. After considering both sides' submissions and examining the records, the Tribunal found that the duty demand was based on the fabrication/erection/installation of storage systems at the customer's site. It was acknowledged that the manufacturing and on-site activities were distinct, with the appellant supplying the necessary components to subcontractors for the fabrication work. The Tribunal concluded that if duty was applicable to the on-site activities, it should be levied on the subcontractors who performed the work, not on the appellant as the manufacturer of the storage systems. Therefore, the duty demand against the appellant was deemed incorrect and illegal based on the specific circumstances of the case.

In the final judgment delivered on 20/12/2016, the Tribunal set aside the impugned order, allowing the appeal with any consequential relief as per the law.

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