2017 (11) TMI 477 - AT - Central Excise

CESTAT Mumbai: Fabrication of Iron & Steel Structures Not 'Manufacture' for Excise Duty

Tata Motors Ltd Versus Commissioner of Central Excise, Pune-I

The Appellate Tribunal CESTAT MUMBAI allowed the appeal against the confirmation of demand and penalty imposition for manufacturing various articles of ... Manufacture - iron and steel structure and parts thereof required for construction of factory building/additional factory in their factory premises at Pimpri - Held that: - M/s. TELCO contracted M/s. Shapoorjee Pallonjee Pvt Ltd for construction of shed and their premises as per designed by provided by the TELCO. M/s. TELCO has purchased structural steel material, angle, channel etc and provided the same to M/s. Shapoorjee Pallonjee Pvt Ltd who after cutting, drilling, bunching etc used the same for construction of shed - In the identical circumstances in the appellant's own case Tribunal has vide order reported [2006 (4) TMI 322 - CESTAT, MUMBAI] held that said activity does not amount to manufacture - appeal allowed - decided in favor of appellant. Issues Involved:- Appeal against confirmation of demand and imposition of penalty for manufacturing various articles of iron steel- Interpretation of whether the activity amounts to manufacture for excise duty purposesAnalysis:1. Confirmation of Demand and Penalty Imposition:The appeal was filed against the confirmation of demand and imposition of penalty related to the manufacture of various articles of iron steel. The appellant, a company, along with their contractor, was alleged to have manufactured and cleared items like bridges, lock gates, towers, and roofing framework for construction purposes. The Revenue filed appeals against the earlier orders dropping the show cause notices, leading to the confirmation of demand and penalty by the Commissioner(Appeals). The appellant argued based on legal precedents and decisions in similar cases to contest the imposition of duty and penalty.2. Nature of Activity and Manufacture Interpretation:The core issue revolved around whether the activity undertaken by the appellant amounted to 'manufacture' for excise duty purposes. The appellant's counsel cited various legal cases, including decisions by the Hon'ble Bombay High Court and Tribunal judgments, to support their argument that the activity did not attract excise duty. They highlighted that the fabrication work done on-site using raw materials supplied by the principal did not constitute manufacture as per legal interpretations. The Tribunal's previous orders in the appellant's own case were referenced to show consistency in the interpretation that such activities did not amount to manufacturing for excise duty liability.3. Judicial Interpretations and Legal Precedents:The judgment extensively quoted the Hon'ble Bombay High Court's decision in a similar case, emphasizing the importance of permanency in determining whether an article qualifies as immovable property. The Court's ruling reiterated that activities like fabrication of structural elements on-site using supplied materials did not amount to manufacture for excise duty purposes. Additionally, the judgment referenced the Doctrine of Merger and legal principles from other cases to support the conclusion that the appellant's activity should not attract excise duty liability.4. Adjudicating Authority's Findings:The Original Adjudicating Authority's observations on the nature of the activity undertaken by the appellant were crucial in determining the outcome of the case. The Authority's detailed analysis of the construction process, including the usage of various iron and steel materials, cutting, welding, and erection of structural elements, supported the argument that the activity did not constitute manufacturing. The Authority's findings aligned with the legal interpretations and precedents cited by the appellant, leading to the allowance of the appeal against the demand and penalty.In conclusion, the judgment by the Appellate Tribunal CESTAT MUMBAI focused on the interpretation of whether the appellant's activity of fabricating iron and steel structures on-site amounted to 'manufacture' for excise duty purposes. By analyzing legal precedents, judicial interpretations, and the nature of the activity, the Tribunal concluded that the activity did not attract excise duty liability. The decision was based on a thorough examination of the facts, legal principles, and consistency with previous rulings in similar cases.