AI Drafter 
TaxTMI 
TaxTMI 
2026 (1) TMI 262
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....1-12 to 2014-15 [upto September 2015], by invoking the extended period provisions. The SCN also proposed confiscation of the seized goods. 2. The appellants filed their reply and attended the Personal Hearing. Their main submission was to the count that the classification under CET 94.06 adopted by the Revenue pertains to Prefabricated Buildings, whereas the appellant was manufacturing only steel structural falling under CET 73.08. They had facility only to manufacture the pre- fabricated structurals. They were procuring several items from other vendors, which were procured under proper Sales Tax / VAT payment and were being supplied to the Army along with the pre-fabricated structurals manufactured by the appellant. Unless all these items are assembled together, the product cannot be termed as Pre-fabricated buildings. Further, even at the end of the buyer, i.e., the Army, the assembly was done by the army itself, with there being no role of the appellant in assembly at their end. Further they submitted that the turnover of the other parties cannot be treated as the turnover of the appellant to deny the SSI benefit. They are all independent vendors, having separate Income Tax P....
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....be twisted to make good the notice inasmuch as the demand notice is foundation of any proceedings. The Appellant relies on the decision of the Hon'ble High Court at Calcutta in the case of Kavita Phumbra v. Commissioner of Customs (Port), Calcutta reported in 2012 (276) E.L.T. 37 (Cal.), wherein it has been held that incompetent notice affecting rights of importer had no force in law and any proceeding initiated thereon must be held to have vitiated proceeding itself 3.3 The Appellant as manufacturer of prefabricated structure, not "prefabricated buildings", has produced Chartered Engineer's certificate and also Chartered Accountant's certificate giving details of calculation of value of the prefabricated structure but the Ld. Commissioner has not discussed the same while passing the order confirming duty on prefabricated building; 3.4 The appellant relies on the case laws of ELECON ENGINEERING CO. LTD. Versus COMMISSIONER OF C. EX., CHANDIGARH reported in 2005 (190) E.L.T. 195 (Tri. - Del.), upheld by the apex court as reported in 2012 (277) E.L.T. A84 (S.C.) and Amiya Corporation Vs. Commissioner of Central Excise, Kolkata-I reported in 1999 (113) E.L.T. 336 (Tr....
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....DELHI reported in 2002 (146) E.L.T. 624 (Tri. - Del.) to observe that Pre-fabricated building could be supplied in knocked down condition and assembled at site of building. 3.10 While relying upon the above case law, the Ld. Commissioner has not considered the contention of the Appellant supported by certificate issued by Chartered Engineer about the capability of the Appellant to manufacture of pre-fabricated building, in CKD/SKD condition in their factory except structure. The prefabricated shelter was not manufactured in the factory of the Appellant as can be observed from the Supply Order with the appendix attached therewith wherein the total value of the shelter has been shown with specific mention of supply of Nuts and Bolts, Vitrified Tiles along with Tiles Cutting Machine, Interlocking Tiles, Non Ceramic Tiles, Table, Chair, Exhaust Fan, MCB, Steel Locker, Cement, Copper wire (for wiring), lamp shed enamel conical, Bulb CFL, PVC Cable 1.5, Pendant Holder, PVC Conduit pipe, PVC Tee, Round Block, Urinal POT, Lightening Conductor, Sintex Tank, Soap Places, Stainless Steel Shrink etc. which are all purchased items and supplied in piecemeal basis. 3.11 The Appellant reques....
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....ses of the appellant. The cause of these documents being found in the appellant's premises has been explained in the reply to SCN. But still, the turnovers of these firms have been added to the turnover of the appellant to hold that the appellant has exceeded the SSI limit. 3.16 The Revenue has not brought in any evidence that all the units are related to the appellants. They are different proprietorship firms with separate Income Tax PAN numbers, Sales Tax VAT number, separate office premises, with separate Bank account numbers. Admittedly even if the goods have been bought by the appellant from these firms, their turnover cannot be added to the turnover of the appellant, unless it is proved beyond doubt that all the firms are operated only by the appellant, the Dept cannot add the turnover only based on presumption. The other firms have not been made a noticee in the present proceedings. Thus, while their independent statements have been recorded about their activities, they have never been given any opportunity to reply to the allegation that they are part of the present appellant. On this ground itself, it is submitted, that the Dept is in error in adding their turnover ....
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.... the decisions of the apex court in the case of Jaiprakash Industries Ltd. v. Commissioner - 2002 (146) E.L.T. 481 (S.C.) and Continental Foundation Jt. Venture v. Commissioner - 2007 (216) E.L.T. 177 (S.C.), held the following :- "Demand - Limitation - Suppression of facts - Bona fide belief - Supreme Court held that cost of loading of goods within factory was to be included in assessable value of goods - Different Benches of Tribunal consistently held that said decision of Apex Court was not applicable where cost of loading was incurred by buyer - Claim of bona fide belief acceptable - Assessee's belief stands corrected only with the decision of Larger Bench - Extended period of limitation not invocable - Section 11A of Central Excise Act, 1944"; (ii) INDOFIL CHEMICALS CO. Vs. COMMISSIONER OF CENTRAL EXCISE, THANE-I reported 2016 (333) E.L.T. 115 (Tri. - Mumbai) (iii) KRAP CHEM P. LTD. Vs. COMMR. OF C. EX. & SERVICE TAX, DAMAN, RAJKOT reported 2015 (325) E.L.T. 339 (Tri. - LB) (iv) BLUE STAR LTD. Vs. UNION OF INDIA reported in 2015 (322) E.L.T. 820 (SC) (v) Vaspar Concepts Pvt. Ltd. Vs. Commissioner of C. Ex., Bangalore reported in....
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....arded by the Army. (f) The Army after procuring materials under Part A and Part B, gets the assembly done at their end. The appellant has no role to assemble the same at the site of the Army. The army may use many more items in order to build the sheds, apart from the items supplied by the appellant under Part A and Part B. 7. In the course of the arguments, specific queries were raised by the Bench to the appellant as to whether the goods / items under Part B are such that the same cannot be procured by Army from other vendors / from open market, or the items in question are such that only the appellant can supply these items which would be compatible with Part A (Structures) supplied by the appellants. 8. The Ld. Consultant submitted that the Part B items are general items and can be procured by the Army from any vendor who is dealing in such items. These items are not special type of goods being supplied as a monopoly by the appellant. Part A goods can be used and with help of procurement of Part B items from various vendors, Army would be able to assemble the Shed at their end. Therefore, there is no compulsion that the Part B items should be procured from the ap....
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....ntification sheets placed at Table-I, II and III, as given at Para 4.1, 4.5 and 4.6 of the SCN, it seen that the quantification is based on account of adding of the turnover of the 'Firms of Relatives'. These Tables from the SCN are extracted below for ready reference: DUTY LIABILITYCALCULATION The calculation of the duty liability for the year 2011-12 to 2015-16 ( up to Sept-15) was undertaken based on the Statistical data as per Schedule A supra, Accordingly, the aggregate value of the finished goods manufactured and cleared by the said assessee for 2011-12 to 2015-16 ( Up to September 2015) was as per the Table -I hereunder :- AGGREGATE VALUE OF CLEARANCES ( TABLE-I) YEAR As per received From Army Authorities (Bill Details, invoice & Supply order) As per the invoice /supply order seized/submitted (Related Firms) As per invoice Seized/Submitted (R.K. Steel) As per Balance Sheet As per Sales Tax return 1 2 3 4 5 6 2011-12 27571339 20462260 No invoices Recovered during search 46013235 46029435 2012-13 19053507 - Do- 22357221 22317221 2013-14 35955069 8275300 35871544 346840....
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....AT number 1989587038 dt 6.5.2005 and Bank account. They are into trading and not into any pre-fabricated items manufacture. The proprietor submitted that since the appellant firm belongs to his father, the documents of RK Steel Engg works were kept in the appellant's place. In case of Prabhu Dayal, it is HUF run by Raj Kumar Sharma, with PAN No.AAJHR2753L, VAT number 1989165780 etc. 14. Thus, it is clear that these are individual firms supplying to army directly or some Part B items to the appellant on payment of VAT. Since these firms / owners are liable for assessments under VAT and Income Tax individually, it cannot be presumed that they are dummies / shell firms. The recordings of these firms extracted in the SCN, clarifies that they have always taken the stand of their independent working. Even in the reply filed by the appellant, they have explained the factual details of these firms. In case the Revenue takes a view that they are dummy / shell firms of the appellant, they have to be necessarily put to notice alleging that they are dummy / shell firms, whose finances and other managerial control vests with the appellant. This has not been done by the Revenue since thes....
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....ne of the statements recorded, there is any whisper about the flow back of consideration or mutuality of interest. The SCN does not explain as to how the appellant was the sole beneficiary of the contracts executed independently by some of the `related firms' in question. By a simple allegation that that they are `related firm', based purely on presumption, Revenue cannot add the turnover, by blatantly disregarding the principles of natural justice by not putting the other `related firms' to notice. 18. The Hon'ble Calcutta High Court in the case of CCE, Kolkata-II v Diamond Scaffolding Company [2011(274) E.L.T 10 (Cal)], has held as under: 8. In respect of the second point, i.e., clubbing of clearance, the Tribunal further came to the conclusion that clearances of two other units were clubbed with the clearance made by the importer without issuing any show cause notice to the other units and there was no notice to the two units for clubbing clearance with the clearance of the importer. In such circumstances, in our opinion, the Tribunal was quite justified in holding that demand by clubbing the clearance of other units without issuing any show cause not....
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.... that the subterfuge of physical segregation is intended to avail the benefit of small scale exemption. Consequently, only one of the entities proposed to be clubbed is to bear the burden of duties sought to be evaded thus. No evidence to fasten these roles on either of the two appellants has been brought put in the notices. The decision to issue two notices followed by two independent proceedings highlight the lack of any investigation in that direction. Furthermore, even after finding reasons to club clearances of the two units, duty liability arises on the clubbed value of clearances to the extent that it exceeds the threshold prescribed for small scale exemption. The failure to identify the principal entity has, therefore, led to denial of this threshold exemption. 14. It would, therefore, render the entire proceedings from issue of notice till the impugned order to be tainted by lack of application of mind. 21. We find that the ratio of the above cited decisions of the Kolkata High Court, Supreme Court and Allahabad High Court are squarely applicable to the facts of the present case. The entire proceedings have been vitiated by non-issuing of SCN to the so called &....
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....d for these buildings, are excluded from the heading and are in all cases classified in their own appropriate headings." As per the appellant : CTH : 73.08: Structures (excluding pre-fabricated buildings of Heading No. 94.06) and parts of structures (for example, bridges and bridge-section, lock-gates, towers, lattice masts, roofs, roofing frame works, doors and windows and their frames and thresholds for doors, shutters, balustrades, pillers and columns), of iron or steel; plates, rods, angles, shapes, sections, tubes and the like prepared for use in structures of iron and steel. 23. A careful reading of the above two CETs would clarify that mere structures, would get classified under CET 73.08. However, if they are 'complete buildings' in assembled or in unassembled condition, the same would be classifiable under CET 94.06. In order to prove that the goods cleared by the appellants are CKD of the pre-fabricated building, the Revenue should come out with evidence that the goods supplied under Part A and Part B put together would form part of the building. In the present case, the appellant has brought in the evidence to the effect that they ha....
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....then transported to the buyers premises from where it was again installed and erected by the appellant. That the bought out items are therefore, essential part of the cleared finished goods and includible in the transaction value. The appellants contend that they are manufacturing only parts of brewery plant, i.e., storage tanks/machinery. The tanks are manufactured as per buyers specifications. The bought out items are used for erection/installation of the tank in the buyers premises and to connect the tank/machinery to other parts of brewery plant. The bought out items are also as per specifications of each tank. The tank and bought out items along with other machinery goes to form the brewery plant. The photograph of the plant with tanks was placed before us. On the look of these photographs, we have to say that the brewery plant is a massive structure and if once structured and fixed to the ground, it cannot be dismantled and transported without damaging it. Therefore, the case of the department that appellants manufactured complete plant and the bought out items are part of the complete plant manufactured by the appellant is untenable. In view of the above, the plea of the app....
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....ich is extracted below: 27. It is observed that the appellant has limited machineries to carry out the basic work on the iron and steel items, because of which pre- fabricated structures come into existence. They do not have facility to manufacture and supply other items specified under Part B of the contract issued by the Army. These have to be necessarily procured from third party vendors for supply to the Army. 28. The appellants have also submitted the Certificate dated 14.12.2016 issued by the Chartered Accountant, giving the details of the turnover of the manufactured goods, trading goods, job work and VAT /CST payment etc, which is reproduced below : 29. From the CA's Certificate, it is seen that the manufacturing activity details and the turnover of the Trading, along with the VAT paid details are shown. From the Table II extract at para 12 above, it is seen that the Dept. has also considered the turnover of Trading Activity to the extent of Rs.65,15,067/- only and deducted the same from the total turnover of the appellant. 30. The factual matrix discussed above along with the case laws discussed above, makes us to come to a conclusion that basically the app....
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....999 (31) RLT 5. He therefore, submits that the appellants could not be treated as manufacturer and hence the products are not dutiable at all. 5. After having heard the ld. Constt. for the appellants, we agree with him that these items are not dutiable and the items cannot be the result of the manufacture. It is not a dutiable activity. We rely on the Tribunal's judgment in the case of Elecon Engineering (supra). In view of our aforesaid discussion, the question of clubbing the clearance of two factories does not arise. Consequently, we set aside the impugned orders and allow the appeals with consequential relief to the appellants. 32. We find that the above decision addresses all the three issues raised in the present case. First of all, when the pre-fabricated structures are cleared but are not in complete form and are assembled at the end of the buyer, it is held that the goods in question cannot be classified under CET 94.06 but are classifiable under CET 73.08. Secondly, even the work undertaken on the iron and steel items would not amount to manufacture of pre-fabricated items falling under CET 73.08. Hence, the appellant cannot be even held to be manufacturin....
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.... be carrying the bonafide belief that the SSI benefit being claimed by them is correct. Further, the case laws of Elecon and Amiya support the view of the appellant that work carried out on iron and steel items on its own will not make the goods excisable under CET 73.08 and supply of the Part B items by sourcing from the third party will not make the item fall under CET 94.06. These factual details show that the appellant has not made any attempt to suppress any details with an intent to evade Excise Duty. On the other hand, the Dept., has not brought in any proper evidence towards the alleged suppression on the part of the appellant. Even while alleging the dummy status of the other firms, no evidence has been brought in about the mutuality of interest and flow back of the benefits to the appellant. 37. We take a look of the judgements of the Supreme Court in respect to invocation of the extended period: 1989 (40) E.L.T. 276 (S.C.) CCE Vs CHEMPHAR DRUGS & LINIMENTS The Apex Court held : " In order to make the demand for duty sustainable beyond a period of six months and up to a period of 5 years in view of the proviso to sub-section 11A of the Act, it has to ....
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....mand for the extended period is not legal. Therefore, we set aside the confirmed demand for the extended period on the ground of time-bar also. 39. To summarize : (a) The Revenue is seeking to add the turnover of other units, without considering the factual evidence brought in to the effect that they are independent entities and without bringing in any evidence towards mutuality of interest and flow back of proceeds. These factors, combined with the fact that the other entities whose turnovers have been added to the turnover of the appellant, have not been made co-noticee and have not been given any opportunity to make their submissions, vitiate the proceedings. On these grounds we hold that the clubbing of the turnover and consequent denial of SSI benefit is illegal. On the same ground, we hold that the quantified demand based on the addition of the turnover of other entities with that of the appellant is illegal. Therefore, on these grounds the impugned order is set aside and the appeal stands allowed on merits. (b) The factual details prove that the appellants have cleared pre-fabricated structures falling under CET 73.08 and hence we reject the view of the ....
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....0 Cement PPC/OPC 53 grade in poly bagof 50 Kg each Make : "ACC/ Bags 80 Ambuja/ India Cement/ Birla/Ultra Tech/Lafarge" Noa 1025 PCC hollow black 400x200x200mm minimum strength 60KG/Sqom PCC shall conform to 18-456 TO0 NOS Non skid ceramic tiles of size 300x300x7mm Malle Somany Bell/Kajana/Jhonson/Onent/ Nitco 500 50mm thick Zig zag inter locking coloured tiles of size 140 mm x 200 5 White Cement of make ACC/Ambuja/ Birla/Shree Ultra/JK White Ltrs 12 mm as per sample approved. Kgs 2 Paint synthetic enamel 1st quality White Asian-Apcolite/ Berger-Luxol/ 7 Shalimar-Superlac/Nerolac - Goodlass) Ltrs 14 B Paint synthetic enamel 1st quality OG Asian-Apcolite/ Berger-Luxol/ Shalimar-Superlac/Nerolac - Goodlass) Lars 5 Red Lead Primer Make "Asian (Apcolite)/ Berger/ Shalimar. Lirs 5 Thinner Nitro Cellulose of Make Asian/ Nerolac/ Berger/ Shalimar Prefab double folding sleeping bunks with cushion of density 24 Kg/ Sat Cum, 35mm thick (Foam Sleepwell) with high end cloth cover. MS work shall conform to IS-800. Nos 11 12 Steel lockers with two locking arrangements of size 5%3'x19" Make "Godraj" Steel work shall con....
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....lia/Harsh/Kinjal/Alwyn/Finolex ISI marked Nos 35 Switch Piano type 5 Amp Make- Anchor/Plaza /Havells/ABB/Shalabh Nos 38 Switch socket combination 3 pin 5 and 15 Amps multipurpose Make- Anchor/Plaza /Havelis/ABB/Shalabh Nos 37 Switch socket combination 5 Amp 5 pin Make- Anchor/Plaza /Havells/ABB/Shalabh Nos 38 PVC elbow 20mm Make Berlia/Harsh/Kinjal/Alwyn/Finolex ISI marked Nos 30 Tape insulation 10 Mtr Make Steel Grip/ Anchor Roll 40 PVC switch board 7"x4" Make- Berlia/Harsh/Kinjal/Alwyn/Finolex ISI marked Nos 41 Exhaust fan 300mm sweep with louver shutter Make "Usha/Khaitan/ Havells/ Anchor/Polar/CG Nos 42 PVC Copper Cable PVC 1 Sqmm S/C with solid conductor for earth wire in green colour make Plaza/ Finalex/ Havelis/ Anchor/Polycab/Rallison. RM 43 PVC Copper Cable PVC 1.5 Sqmm S/C with solid conductor for earth RM wire in green colour make Plaza/ Finolex/ Havells/ Anchor/Polycab/Rallison. 44 PVC Copper Cable PVC 2.5 Sqmm S/C with multistrand conductor for power point make Plaza/ Finolex/ Havells/ Anchor/Polycab/Rallison. RM 45 PVC switch board 6"x4" Make- Berlia/Harsh/Kinjal/Alwyn/Finolex ISI marked Nos 46 LC Set comprising of the following ....
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....1 Mobile 98323-6 Dipak Kr. Chakrabarti M.I.E.(I), C.E.,F.I.V. sultant Chartered Engineer & Approved Valuer 107/1. Patel 1 (Opp to Netaji PO Pradhans Siligun - 73 Date: 02-12-2016 To Whom It May Concerned I have visited the factory of M/S R.K.Steel, Plot No. 208, 2" mile, Industrial Estate, Sevoke Road,Sillguri ,W.B 734001 on Dated 15-11-2016 and checked with the schedule of the Balance sheet showing list of machineries with Machines installed in the above factory. I find the following Machines are installed: 51. No Names of Machine Number Capable for Use 01 Chop Saw Machine 12 nos For Cutting the different type of MS Section 02 Kirlaskar & Crompton Motors 02 nos For Give the power to machine EO Motor 3 Phase (12.5 HP) 01 nos For Give the power to machine 04 Welding Machine 35 Amp 02 nos For joining the different type of MS Section Angle Grinder 05 nos For Finishing the different type of MS Section DS Drill Machine 06 nos To Make Holes in the different type of MS Section 07 Polisher Machine 01 nos To Paint the raw material 08 Pipe Bender 01 nos To Bend the pipe in Curved shape 09 Electric Installation To give the power supply to machine....
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....00.00 + 03 65 60 06-08-2010 2,54.317 12 1,800 00 60.444 12 06-08 2010 1 47.735.04 4,8/ 210.30 1:04/444:4 10-45-2010 11,800.00 1:475.00 ID:08-2930 111.063.84 1:46.782 84 1, 400.00 32. 133 33 11-08-2010 5.06.819.82 1.50:000.00 12-08-2010 15 48/422.30 71.21.4:30 21,000.00 101.111.31 12-066-2010 1.05.749 24 1280 7 13.01.741 31 4 450.00 52.307:59 14 16/08-2022 1.22.788 92 288:00 18/06/2011 7,75 001.34 18:05-2010 15,84515 2.88.454:36 1.08.395.74 1,150,00 75.000.00 1.48,566:50 8 400.00 1 94,444.40 1:17467.35 1.38,910:43 1,400 00 32.122 22 11:10/2010 96:151:42 1.02,798.58 1,050.00 25:000 09 01 10:2010 2,17.141.65 2.100.0 121633.67 1.66 141'22 2.750 00 01-10-1015 1.32.871:22 .01.395 46 87 391 33 U 1,59,751.59 2.07.159 57 4:430.0 33.288.89 01-10-2010 64551.89 01:15-2010 £22,407.69 26-10-3010 773.216.20 10.60,708.40 10.300.00 1,30.555 56 26-10-0010 1,17 467 35 1:33,510.42 1 4000 12/202:22 U 12.53,269.13 50 :30.77 21-10 2010 4,22,481.54 16.998 46 216-11-2010 3,62.140.00 4.99.198:46 1,250:00 115,88734 29-11....