TaxTMI 
TaxTMI 
2024 (12) TMI 344
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....acturer as well as dealer of various types of railway wagons, parts and railway components falling under Chapters 72 and 73 of the First Schedule of the Central Excise Tariff Act, 1985.The Appellant-company is a registered supplier to the Railways and is also registered with NSIC as a manufacturer. The Appellant submits tenders for supply of railway parts such as striker casting wear plate, lock lift lever hook, universal lock lift connector, etc. Since the manufacturing process in the Appellant's factory became unworkable because of labour unrest, since 2000/2001, the Appellant claimed that they started outsourcing all orders of railway components received from the Railways to various job workers. From the railways, the Appellant used to get the designs and forward it to the job workers and the goods were required to be manufactured by the job workers as per the designs furnished. 2.1. The appellant claimed that after getting the orders from railways, they outsourced the work to various job workers, namely, M/s. S.S. Enterprises, Saraswati Industries, M/s. Navin Enterprises, M/s. Unique Tube Industry, M/s. Gobinda Industries, etc. These job workers worked independently. The appel....
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.... submitted that the entire case has been built upon by the department on the basis of the statements recorded from the job workers. Some of the job workers allegedly stated that they have worked under the supervision of the Appellant. It was also alleged that some of the summons sent to the job workers were returned undelivered accordingly, it was concluded that the job workers were not in existence. The allegation of the department is that even when the appellant supplied raw materials to the job workers, they have not undertaken the completer manufacturing process and the appellant has undertaken some processes on the semi-finished goods to complete the process of manufacturing. Accordingly, the contention of the department is that appellant is the actual manufacturer of the goods and they are liable to pay central excise duty on the finished goods supplied to railways. In this regard, the appellant submitted that none of the job workers who have undertaken the job work have given the statement that they have not undertaken the job work. According to the appellant, the job workers have undertaken the complete manufacture of the goods as per the designs furnished by the railways. ....
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....hose statements were relied upon in the adjudication proceedings; however, the adjudicating authority has not allowed cross-examination of the persons who have given the statements. Thus, the appellant submits that the statements cannot be relied upon against the appellant in this case. 6.5. The Appellants relied up various decisions in support of their contention that the job workers are the actual manufacturers. Some of the decisions relied upon by the appellant are furnished below: - (i) Aska Equipment Pvt. Ltd. v. Commissioner of Central Excise, Nagpur [2006 (202) E.L.T. 795 (Tri. - Mumbai)] (ii) Commissioner of Central Excise, Jaipur v. Sabhyata Plastics Ltd. [2002 (145) E.L.T. 166 (Tri. - Del.)] 6.6. The Appellants submits that they have only involved in trading of the goods and not any manufacturing activity, as has been alleged in the impugned order. Accordingly, the Appellant contends that the demand confirmed in the impugned order is not sustainable. 6.7. The Appellant further submits that a similar issue was raised earlier for the period 1995 to 1999 and a Show Cause Notice bearing DGAE F.No. 243/Cal/CE/99 was issued alleging that the Appellant was the manufacture....
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.... search; there was no manpower employed by them for undertaking the manufacturing process; the monthly electricity charges of the factory was within Rs.4,000/- to Rs.5,000/- which evidences that no manufacturing activity was undertaken in the factory; they have out sourced the entire activity through job workers; the job workers have undertaken the complete manufacture of the goods as per the designs furnished by the railways. In many cases, the goods were directly dispatched from the job workers premises. In some cases, they received the finished goods into their factory premises for quality check and the goods were subsequently supplied to railways. The quality check undertaken by them does not amount to 'manufacture' as defined in Section 2(f) of the Central Excise Act, 1944. They have not undertaken any other process amounting to 'manufacture' in their premises; the impugned order also has failed to bring any evidence on the record to show that any manufacturing activity was going on at the time when the search was conducted, or thereafter. Thus, the Appellants contended that the evidence available on record does not indicate that they have undertaken any manufa....
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....s amounting to [manufacture; or] (iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer,] and the word "manufacturer" shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account;" 10.2. Thus, if the appellant-company undertakes any process which are incidental or ancillary to the completion of a product, then the appellant can be considered as 'manufacture' as defined under section 2(f) of the Central Excise Act, 1944. Thus, even in respect of the goods manufactured by the job workers, if the appellant-company undertakes any process to complete the manufacturing, then the Appellant can be considered as the actual manufacturer of the goods. In this regard, the findings of the adjudicating authority is that as per the agr....
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....ppellant under cover of challan and sent the goods to the appellant under challan. When asked whether the goods were ready to use, Shri Paul stated that the items were not finished product. However, we observe that Shri. Paul's statement has not mentioned what were the further processing required to complete the process of manufacture of the goods. The statement also does not indicate whether such process, if any required, were carried out by the appellant in their premises. Since, no opportunity was granted to the appellant to cross-examine Shri Paul, these facts could not be confirmed from him. We observe that without any evidence on record, the adjudicating authority concluded that they have received semi- manufactured goods from Shri. Paul and under taken further processing to complete the process of manufacturing at their premises. Accordingly, we observe that on the basis of the statement of Shri. Paul, it cannot be concluded that the appellants have undertaken some activities amounting to 'manufacture' in their factory premises. Statement of Sri Alok Adak having overall supervision of M/s. S. S. Industries 10.3.2. From the impugned order, we observe that the st....
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....another advance of Rs.1,00,000/- on July 19, 2008 which was to be adjusted against the supplies to be made by M/s. S. S. Industries. 10.3.5. We observe that this is a normal practice between companies to give some advance at the time of placing the orders or before the actual delivery of the goods. Such payment of a small advance of Rs.1,50,000/-cannot lead to a conclusion that the appellant-company has provided "financial back up" to M/s. S. S. Industries for running its business. Thus, we observe that the surmise in the impugned order that M/s. S. S. Industries procured raw materials "on the strength of the finance made by" the appellant is not supported by the ledger accounts of both parties during the relevant periods. 10.3.6. Based on the statement of Shri. Adak, in the impugned order, the Ld. adjudicating authority has arrived at the conclusion that the job worker M/s. S. S. Industries manufactured the goods as per the direction and supervision of the appellant-company. It was further concluded in the impugned order that the appellant provided finance or financial back up to M/s. S. S. Industries or that M/s. S. S. Industries was the appellant's dummy and that the appel....
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....turing. Thus, we observe that this statement cannot be relied upon to conclude that the appellant has undertaken some process amounting to 'manufacture' in their factory premises. 10.3.10. We have also perused the following statements relied upon in the impugned order. Statement dated April 21, 2009 of Sri Govinda Datta, proprietor of M/s. Govinda Industries Statement dated April 23, 2009 of Sri Raghunath Sett, Proprietor of M/s. S. R. Enterprise Statement dated May 15, 2009 of Sri Tanmoy Ghosh, proprietor of M/s. Tanmoy Engineering Works 10.3.11. A perusal of these statements revealed that all of them accepted that they have received raw materials from the appellant company and manufactured the goods as per the designs supplied by the appellant. Some of them in their statements mentioned that the goods supplied them are not finished goods which require further processing. Some of them stated that the goods supplied were finished goods, but need to be tested further for quality control which was done by the appellant in their premises. We observe that the adjudicating authority has interpreted these statements to arrive at the conclusion that the appellant, after recei....
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....nal, Delhi in the case of Commissioner of C.Ex., Jaipur v. Sabhyata Plastics Ltd. [2002 (145) E.L.T. 166 (Tri. - Del.)] wherein the Tribunal has observed as under : - " 6. The other operation was subjecting the goods to quality control. Quality control in the instant case was to indicate that the goods were of ISI standard. Since this quality control did not change the name, character or use of the material, the test of quality control did not amount to manufacture. Fixing of brand/trade name also did not bring into existence any new item and therefore, this also did not amount to manufacture. We further note that the ld. Commissioner (Appeals) relied on the decision of this Tribunal in the case of Hindustan Zinc Ltd. v. CCE reported in 2000 (115) E.L.T. 823. He also relied on the decision of the Hon'ble Supreme Court in the case of Indian Metals & Ferro Alloys Ltd. reported in 1991 (51) E.L.T. 165. We note that the ratio of these two decisions fully covers the facts in the present case. We further note that nothing has been brought on record by Revenue to show that the ratio of these decisions was not applicable to the facts of the present case." 10.4.2. From the decisions cite....
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....ing' as the letters 'AE' is not a brand. We observe that the adjudicating authority has not produced any other evidence to substantiate the allegation that the appellant has actually carried out testing, branding etc in their premises. In the absence of any such evidence, it cannot be presumed that the appellant has undertaken these activities after receiving the goods from the job workers. 10.4.5. Further, we observe that the levy of Central Excise Duty is on the activity of "manufacture", but in the Show Cause Notice it is nowhere mentioned as to what item had been manufactured and as to what quantity of the goods had been manufactured by them. We observe that without identification and quantification of the goods, the Show Cause Notice issued is ex-facie bad in law. 10.4.6. We observe that another ground based on which the adjudicating authority has concluded that the appellant is the manufacturer is that the appellant has registered themselves as a 'manufacturer' with Railways. Accordingly, it was presumed that the appellant is the actual manufacturer of the goods supplied to railways. In this regard, we observe that mere registration with railways departm....
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....ined during the said two years a separate set of sale bills referred to as 'trading sales'. Notwithstanding that the appellant firm may have flouted the procedures under central excise law relating to job work, no duty liability could have been fastened on the appellant firm as regards job work activities undertaken by the job workers on principal- to-principal basis. D. Testing at third party premises : The adjudicating authorities should have observed that only visual/ physical inspection of the goods had taken place at the appellant firm's premises and that tests like galvanization test, mechanical test, slip load test etc. had been conducted in outside laboratories. Such position is evident from the documents relied upon while issuing the show cause notice dated 21.02.2014 such as Annexures 'X' and 'B1' as also the test reports filed by the appellant firm in their defense, such as the documents at page nos. 5149 to 5400 (Part 8), page nos. 7897 to 7944 (Part 14), page nos. 8761 to 8786 (Part 17) of the combined Paper Book filed before this Tribunal." 10.4.8. Thus, by relying upon the decisions cited supra, we hold that the evidence available on record does not indicate that ....
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.... and respectfully following the same, hold that there was no suppression of facts on the part of the assessee/appellant." 11.1. We find that the demand has been raised against the Appellant for the period from 2004-05 to 2008-09 vide the Show Cause Notice issued on 09.07.2009. The said Notice was adjudicated wherein the adjudicating authority dropped the charges and demand of Central Excise Duty amounting to Rs.1,33,48,977/-. It is observed that no appeal has been filed by the Department against the above order and hence, the same has attained finality. In these circumstances, we observe that majority of the demand raised against the Appellant is hit by time- bar. Thus, by relying on the decision of the Hon'ble Apex Court cited supra, we observe that part of the demands confirmed in the impugned order by invoking the extended period of limitation is not sustainable. Accordingly, we hold that part of the demand is liable to be set aside on the ground of limitation also. 12. Since there is no corroborative evidence brought on record by the respondent to substantiate the allegation that the Appellant are the actual manufacturers of the goods in question, we hold that the job wor....