TaxTMI 
TaxTMI 
2026 (2) TMI 1003
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....s such activity both on its own account as well as on job-work basis for traders who supply raw material. 1.3 During the audit of the Appellant's accounts conducted in August 2012, it was noticed that in respect of job-work undertaken for three traders, the Appellant discharged Central Excise duty only on the job-work charges and not on the value inclusive of raw materials supplied by the traders. The Department alleged that the activity amounted to manufacture under Section 2(f) of the Central Excise Act, 1944 and that valuation ought to have been done in terms of Section 4 read with Rule 10A of the Central Excise Valuation Rules, 2000. 1.4 Accordingly, a Show Cause Notice dated 19.04.2016 was issued invoking the extended period under Section 11A(4) proposing recovery of duty of Rs.35,19,901/- for the period October 2011 to September 2012 along with interest and penalty under Section 11AC. 1.5 The Adjudicating Authority confirmed the demand, interest and imposed equivalent penalty holding that the activity amounted to manufacture and that suppression was established. The Commissioner (Appeals) upheld the Order-in-Original, leading to the present appeal before this Tribuna....
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....(P&H) b. Vardhman Industries Ltd. 2002 (147) ELT 560 (Tri.-Del.) c. Siddhartha Tubes Ltd. 2002 (149) ELT 200 (Tri.-Del.) d. Maharashtra Metal Industries 2004 (165) ELT 455 (Tri.-Mumbai) to argue that corrugation/profiling of sheets has been judicially recognised as manufacture. 4.3 It was further contended that the Appellant suppressed material facts by paying duty only on job-charges and that the extended period was rightly invoked. 5. We have carefully heard the submissions advanced by both sides, examined the appeal records in detail, considered the statutory provisions, and the case Laws cited. 6. Upon such comprehensive consideration, the following issues arise for our determination in this appeal as to: - i. Whether the activity undertaken by the Appellant amounts to "manufacture" under Section 2(f) of the Central Excise Act, 1944? ii. If manufacture is held to have taken place, whether valuation under Section 4 read with Rule 10A is applicable? iii. Whether the extended period of limitation under Section 11A (4) is invokable? iv. Whether imposition of penalty under Section 11AC and interest is sustainabl....
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....introduce ribs or corrugations; crimping enhances rigidity and functional performance; and cutting produces finished sheets of specified dimensions. The end product that emerges is not merely flat steel sheet but profiled roofing sheets possessing enhanced rigidity, structural strength, load-bearing capacity and functional suitability for roofing applications viz attributes absent in the flat sheets in coil form. 7.5 We also find merit in the reliance placed on Chapter Note 1(k) to Chapter 72, which clarifies that flat-rolled products may include corrugated or otherwise worked sheets only so long as they do not attain the character of articles of other headings. In the present case, the flat-rolled steel sheets supplied in coil form attain the character of roofing sheets classifiable under Chapter 73, specifically Heading 7308, after profiling and crimping. Colour-coated steel coils are traded as flat-rolled inputs under Chapter 72, whereas profiled roofing sheets are traded as finished construction articles under Chapter 73, clearly demonstrating a shift in tariff classification and commercial identity. 7.6 The Revenue has rightly relied upon the judgment of the Hon'ble Punj....
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.... 543 (P&H)], which was carried in appeal and affirmed by the Hon'ble Supreme Court as reported in 2003 (156) ELT A328 (SC), and the consistent line of Tribunal decisions following the said ratio, and having distinguished the judgments relied upon by the Appellant on facts, we unhesitatingly hold that the impugned activity amounts to "manufacture" within the meaning of Section 2(f) of the Central Excise Act, 1944. Applicability of Valuation under Section 4 of the Central Excise Act, 1944 read with Rule 10A of the Central Excise Valuation Rules, 2000 9.1 Having held that the activity undertaken by the Appellant amounts to manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944, the necessary legal consequence is that the Appellant is liable to discharge Central Excise duty on the manufactured goods. The next issue is the correct method of valuation. It is undisputed that the Appellant undertook manufacture on job-work basis using raw materials supplied by traders and cleared the finished profiled roofing sheets back to such suppliers for further sale. In such circumstances, valuation cannot be confined to job charges but must be determined in accordance w....
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....settled by the Hon'ble Supreme Court in Ujagar Prints v. Union of India [1989 (39) ELT 493 (SC)], wherein it was held that assessable value must include the value of raw materials supplied by the customer in addition to job charges. Rule 10A merely codifies this principle and provides a clear statutory mechanism for valuation. 9.6 We note that the Appellant's plea that valuation should be confined only to job charges is therefore contrary to both statutory provisions and settled law. Acceptance of such a plea would defeat the very object of Rule 10A and lead to systematic undervaluation of excisable goods manufactured on job-work basis. The Department has rightly adopted the value at which the goods were sold by the traders to independent buyers, which represents the true assessable value under Section 4 read with Rule 10A. 9.7 In view of the above discussion, we hold that once manufacture is established, valuation of the goods cleared by the Appellant on job-work basis is correctly governed by Section 4 of the Central Excise Act, 1944 read with Rule 10A of the Central Excise Valuation Rules, 2000. The valuation methodology adopted by the Department, based on the sale price o....
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....ial part of the assessable value. 10.3 We find that the Appellant did not disclose in the ER-1 returns or in any other statutory document that it was undertaking manufacture on job-work basis for traders and that valuation was being adopted only on job charges, contrary to the mandate of Section 4 read with Rule 10A of the Central Excise Valuation Rules, 2000. Such nondisclosure of the true nature of valuation adopted is a material omission which directly impacted the determination of correct assessable value and duty liability. 10.4 We find that invocation of the extended period under Section 11A(4) and imposition of penalty under Section 11AC are fully justified on the peculiar and admitted facts of the present case. The Appellant was admittedly manufacturing identical profiled roofing sheets on its own account and clearing the same on payment of Central Excise duty, while simultaneously undertaking the very same manufacturing activity on job-work basis for traders, but discharging duty only on job-charges. This dual mode of operation clearly establishes that the Appellant was fully aware of the excisability of the product and the manufacturing nature of the process. Having....
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....ing in short-payment of duty despite being aware of legal requirements, intent to evade duty can be legitimately inferred. 10.8 We further note that the Appellant neither sought any clarification from the Department. The continued practice of paying duty only on job charges, despite manufacturing a distinct excisable product, reflects conscious disregard of statutory provisions rather than an interpretational dispute. Such conduct squarely falls within the ambit of suppression of facts with intent to evade payment of duty. 10.9 In view of the foregoing facts and circumstances, we hold that the Appellant suppressed material facts relating to valuation with intent to evade payment of duty. Accordingly, invocation of the extended period of limitation under Section 11A(4) of the Central Excise Act, 1944 is legally sustainable. 10.10 On the issue of limitation, the Tribunal in Premier Roofing and Building Systems Pvt. Ltd 2024 (8) TMI 1328 - CESTAT CHENNAI sustained invocation of the extended period under Section 11A(4), observing that payment of duty only on job charges, without proper disclosure of the true assessable value of the goods cleared, amounted to suppression of ....
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....xcise Act, 1944 is fully justified and sustainable. The penalty imposed by the adjudicating authority, as upheld by the Commissioner (Appeals), calls for no interference. 11.6 In light of the detailed findings recorded above Paragraphs, we hold that: - i. The extended period of limitation under Section 11A(4) of the Central Excise Act, 1944 has been rightly invoked in this case; and ii. The imposition of penalty under Section 11AC of the Central Excise Act, 1944 is legally valid and sustainable. Accordingly, the findings of the lower authorities on limitation and penalty are upheld in toto. 12. In view of the detailed findings and conclusions recorded hereinabove, we pass the following order: - i. We hold that the activity undertaken by the Appellant, namely conversion of colour-coated / galvanised steel sheets in coil form into profiled roofing sheets by processes such as de-coiling, roll-forming, profiling, crimping and cutting, amounts to "manufacture" within the meaning of Section 2(f) of the Central Excise Act, 1944. ii. We further hold that valuation of the goods so manufactured and cleared on job-work basis is correctly governed b....