TaxTMI 
TaxTMI 
2017 (9) TMI 13
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....Project. A part of the work covered in the said contract was awarded to the main appellant in terms of the above-mentioned work order. The main appellant fabricated pipes out of steel supplied to them by the second appellant and thereafter installed/laid-down the said pipes using cement etc. It is said that the main appellant paid service tax on the work executed by them as a sub-contractor to the second appellant. The dispute in the present case is relating to central excise duty liability of the main appellant with reference to the manufacture of pipes. The Revenue entertained a view that the pipes manufactured by the main appellant will fall under the CETH 730539, under the main heading of 'other tubes and pipes and steel.' After verification of the premises, where the work is carried-out and on collecting record, proceedings were initiated against appellants to demand and recover central excise duty not paid on such manufactured pipes. The appellants filed the replies and contested the case. The matter was adjudicated resulting in the impugned order. The original authority confirmed central excise duty liability of Rs. 1,91,61,777/- on the main appellant and Imposed equal amoun....
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....elied on various case laws in support of the above submissions. 4. The second appellant contested the imposition of penalty on them under Rule 26. It is submitted that the contract with the main appellant is a service contract. They have not abetted any non-payment of central excise duty and there is no application of Rule 26 in the present case. The penalty under Rule 26 without any reference to specific sub-rule provision is not tenable. 5. The ld. AR supported the findings of the original authority. He submitted that the main appellant were engaged in the manufacture of pipes which emerges as excisable products before being embedded to earth and connected into a pipeline. Regarding limitation, the ld. AR submitted that the main appellant were discharging duty on similar activity undertaken at Vishakhapatnam. They are aware of the central excise duty provisions applicable. They have resorted to payment of service tax only to help the main contractor to avail CENVAT credit which may not be available if they paid excise duty on pipes as the pipes were consumed in civil work resulting in immovable property. 6. We have heard both the sides and perused appeal records. First, ....
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....ther immovable property, a new material with a distinct commercial name, identify and use (prior to such product being assimilated in a structure which would render them, as a part of immovable property), emerges and then the said goods are taken to their erection site within NTPC Vindhyachal premises. This fact has been admitted by the party, themselves, vide their letter dated 01.07.2013. Hence, ratio of the decisions cited by the party cannot be applied to the present case which speaks about a totally different situation. In the present case, before being taken to the erection site, processing of inputs result in a new product with a distinct commercial name, identity and use. Hence, the present case is covered by the situation referred to in para 4(ii) if the CBEC's order No.58/1/20032-CX dated 06.02.2002 issued under Section 37B (relied upon by the party) and this order does not support M/s KFPL's plea." 7. Regarding the plea of the main appellant that they are only labour suppliers, the following is the finding of the original authority: "68.2- In their submission, the party has also contested that they are not the actual manufacturer on the grounds that the Pu....
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....ddressed by DVC to Chief Executive of the appellants' Incharge of the Site Merely because the appellant had a Site Incharge, it is by itself not sufficient to hold that the appellants are manufacturers. We also observe that letter dated 26.3.1990 of DVC, referred to by the learned SDR, makes a mention of appellants' contractor. Rainbow having taken out their tractor and trolley. Further, the fact that the appellants informed Rainbow being manufacturer after lapse of more than 9 years will not go against them as to treat them as manufacturer under the provisions of law. We, therefore, held that the appellants cannot be considered as manufacturer of the C.W. in question. In view of this finding we do not find it necessary to go into other questions such a demand being beyond the period of 5 years, demand being hit by time limit and quantification being not property done. We allow the appeal filed by the appellants." In view of the said ruling, M/s KFPL's contention has no force and they are the actual manufacturer liable for payment of central excise duty." 8. As already noted, we have perused the work order and the discussion recorded by the original authority and we are in ag....
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....ry and used within the factory of production as well as of excisable goods manufactured in a factory and used within the factory of production in or in relation to manufacture of final products. The said exemption has no application as the main appellant is not using the capital goods in the factory of manufacture. It appears that the manufacture is in the factory premises of NTPC. However, no clear position about the status of the location of manufacture activity has been brought out in the appeal papers. 11. The main appellant also claimed adjustment of central excise duty liability with the service tax already paid. We find that the same is neither factually nor legally tenable. Service tax is liable to be paid on the taxable services rendered by the main appellant. We are not concerned with the service tax liability, if any, of the appellants. Similarly, we note that the claim of Revenue neutrality is not tenable in the present case. The main appellant received, free of cost, the main raw material and as such have not paid any central excise duty on such input. Hence, the question of availing credit is not for consideration in the present proceedings. 12. We note that the....