Site-based excise exemption extends to project-yard manufacture and related scrap when the premises form part of the construction site.
Site-based excise exemption was available for PSC girders and horizontal members manufactured in a flyover project where the contract, correspondence and access arrangements showed the casting yard and manufacturing premises formed part of the project site and were used exclusively for the construction work. A formal allotment of land by the project owner was not necessary where the manufacturing activity was carried on under the contract for the project alone. On that basis, the goods qualified for exemption under Notifications No. 3/2001-CE and No. 6/2002-CE, and the scrap and waste arising from their fabrication also followed the exempt treatment under Notification No. 85/95-CE.
Issues: (i) Whether PSC girders and horizontal members manufactured and used in the flyover project were eligible for exemption as goods manufactured at the site of construction under the relevant excise notifications. (ii) Whether scrap and waste generated during fabrication of the exempted goods were also entitled to exemption.
Issue (i): Whether PSC girders and horizontal members manufactured and used in the flyover project were eligible for exemption as goods manufactured at the site of construction under the relevant excise notifications.
Analysis: The exemption applied to goods falling under Heading 68.07 when manufactured at the site of construction for use in construction work at such site. The contract and correspondence showed that the casting yard and manufacturing premises were identified as part of the project site, and the NHAI and its engineers had access to that place. The location was also near the construction site, and the Board Circular explaining the expression "site" was satisfied. The absence of a formal allotment of land by the principal did not defeat the exemption where the manufacturing activity was carried on in terms of the contract and for the project alone.
Conclusion: The exemption under Notification No. 3/2001-CE and Notification No. 6/2002-CE was admissible to the assessee.
Issue (ii): Whether scrap and waste generated during fabrication of the exempted goods were also entitled to exemption.
Analysis: Once the principal goods were held to be exempt, the scrap and waste arising in the course of their fabrication followed the same exempt treatment as an incidental consequence of the exempt manufacturing activity.
Conclusion: The scrap and waste were also covered by the exemption under Notification No. 85/95-CE.
Final Conclusion: The departmental challenge to the grant of exemption failed, and the order granting relief to the assessee was affirmed.
Ratio Decidendi: Where the contract and surrounding materials show that the manufacturing premises form part of the project site and are available for access and use in the construction work, the site-based exemption is available even without a formal allotment of land by the project owner.
TaxTMI 
AI Drafter ✕
TaxTMI 
