Construction-site fabrication and manufacture: steel processing was not manufacture, while site-made cement blocks qualified for exemption.

Mere cutting, punching, drilling, welding and shaping of steel for use in construction did not amount to manufacture because no distinct excisable product emerged, so the duty demand on that activity failed. Cement blocks fabricated at the construction site and used in the same site's godown and store construction fell within the section 11C exemption for site-made building material covered by Chapter 68, so they were not liable to duty. On that basis, the duty demand and penalty were unsustainable and relief followed.

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Issues: (i) Whether fabrication of steel structurals by cutting, punching, drilling, welding and shaping steel for use in construction amounted to manufacture. (ii) Whether cement blocks fabricated at the construction site and used in the construction of godowns and stores were covered by the exemption notified under section 11C.

Issue (i): Whether fabrication of steel structurals by cutting, punching, drilling, welding and shaping steel for use in construction amounted to manufacture.

Analysis: The steel items were made only by cutting angles and sections to required sizes and by drilling, punching and welding them for use in the construction of the godown and store buildings. The Tribunal applied the settled principle that such processing, where no distinct final product emerges, does not amount to manufacture. The activity was confined to preparing structural items for construction use.

Conclusion: The fabrication of steel structurals did not amount to manufacture and the demand on that count could not survive.

Issue (ii): Whether cement blocks fabricated at the construction site and used in the construction of godowns and stores were covered by the exemption notified under section 11C.

Analysis: The cement blocks were admittedly fabricated at the site and used in the construction work during the relevant period. The notification issued under section 11C covered building material falling within Chapter 68 of the Central Excise Tariff Act, 1985 manufactured at the site of construction of a building and used at that site, for the period specified in the notification. The cement blocks fell within that covered category.

Conclusion: The cement blocks were covered by the exemption and were not liable to duty.

Final Conclusion: The impugned duty demand and penalty were unsustainable and the assessee was entitled to relief.

Ratio Decidendi: Mere fabrication of steel items for use in construction does not amount to manufacture when no distinct excisable product emerges, and building materials manufactured at the site and used at that site are entitled to the benefit of the applicable exemption notification under section 11C.

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