TaxTMI 
TaxTMI 
2026 (3) TMI 740
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....e awarded contract for execution of Rural Load Management System (RLMS), in Chikmagalur Division of Shimoga on a turnkey basis including supply of all equipment, material, testing and commissioning. The scope of work includes providing Rural Load Management unit consisting of programmable logic controller, moulded case miniature circuit breaker (MCCB), miniature circuit breaker (MCB), transformers, energy meter and others. As per the information gathered by the Preventive unit, investigation was taken up and consequently, a SCN was issued alleging that the appellant is manufacturing and clearing assembled RLMUs without payment of central excise duty and without following central excise procedures. Thereafter Adjudication authority as per the impugned order held that the activity of assembly of the RLMUs amounts to manufacture and confirmed demand with interest and also imposed penalty under various provisions of Central Excise Act, 1944. Further, penalty was also imposed on the Co-appellant. Aggrieved by said order, present appeals are filed. 4. When the appeals came up for hearing, the Learned Counsel for the Appellant draws our attention to the finding in the impugned order an....
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....s. This assembling work has been done by the laborers of M/s. Surabhi Electricals at the premises of M/s. L&T Ltd., ECC Division, RLMS Mescom Project (CKM Site Store), MRM Compound, Near Check post, Kadur. They have supervised the work done by M/s. Surabhi Electricals. They have also stated that M/s Surabhi Electricals have assembled 772 numbers of 25/63 KVA RLMS Units. 6. The Learned Counsel also draws our attention to the statement recorded on 15.03.2011 from M/s. SAR Engineering Services and to a specific question, it is stated that since 01.04.2010, the contract of assembly of RLMS Unit is done by M/s. SAR Engineering Services, Bangalore. This assembling work has been done by their labourers at the premises of M/s. L&T Ltd., ECC Division, RLMS Mescom Project (CKM Site Store), MRM Compound, Near Checkpost, Kadur. M/s. SAR Engineering Services assembled 408 numbers of 25 KVA RLMS Units and 314 numbers of 63 KVA RLMS Units. Learned counsel further submits that similar activities were carried out by M/s. Eagle Electricals, Kadur and alleging that the activity carried out by M/s. Eagle Electricals as manufacturing, proceedings were initiated and Adjudication authority as per the ....
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....e raw material supplier or a dummy, then the job worker will be treated to be the manufacturer and also in the Circular No. 58/1/2002- CX dated 15.01.2002 it is clarified that the turn key projects like Steel Plants, Cement plants, Power plants etc., involving supply of large number of components, machinery, equipments, pipes and tubes etc., for their assembly /installation /erection /integration /inter-connectivity on foundation /civil structure etc. at site, will not be considered as excisable goods for imposition of central excise duty the components, however, would be dutiable in the normal course. 7. Learned Counsel further submits that the case records reveal that the Audit Section of Mangalore Central Excise Commissionerate have made a reference to the Headquarters Preventive Section of Mangalore Central Excise Commissionerate vide letter dated 02.03.2010 informing that the activities undertaken by M/s. Eagle Electricals for supply of RLMUs to M/s. L & T appeared to amount to manufacture of excisable goods and that Central Excise duty was not paid on the same. On the basis of the said reference the Headquarters Preventive Section of Mangalore Central Excise Commissionerat....
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....o the demand of duty mentioned above. The proposal to impose penalty on M/s. L&T, Shri. Subodhchandra Shetty and Shri Satish Sangameswaram under Rule 26 of the Central Excise Rules, 2002 also do not sustain as the same is dependent on the demand of duty on 7048 RLMUS. 8. As regards marketability of the goods, the Learned Counsel draws our attention to the judgment of Hon'ble Supreme Court in the matter of Hindustan Zinc Ltd Vs. CCE, 2005(181) 170 (SC) wherein it held that the Department had not proved capability of marketability and thereby the goods were not excisable. In the present case the assembly had been done as per the specification of M/s. Mescom and without all the components i.e. RLM box, modem, PLC etc., RLM is not capable of performing the specific function of regulating the electricity. This fact was confirmed by Shri. J Stalin Babu, Manager M/s L & T, in his statement dated 25.10.2010. 9. In this regard, the Learned Counsel submits that the activity of assembling of duty paid components viz. Energy Meter. GSM Modem, Power Contactor, MCB, MCCB and PLC into the duty paid Rural Load Management Unit pre-fitted with panel accessories viz. wires, bus bars, insulators....
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.... raised for the sale of the RLMU by the appellant the moot question that arise for consideration is whether there was a sale of the socalled RLMU within the meaning of Section 2 (g) of the Central Excise Act to subject the goods to duty of excise at all. For the same reason the valuation of the so-called RLMU done by the respondent taking the ex-works value indicated in the tender document as the value of the RLMU arising at the transformer site as the transaction value in terms of Section 14 of the Central Excise Act is highly improper. 13. As regards invoking extended period of limitation, Learned Counsel submits that the whole issue only hinges on the correct interpretation of the term manufacture, Manufacturer, Marketability and goods which are pure questions of law meaning susceptible to different interpretation covered by plethora of judicial pronouncements giving out different views whether the invocation of the extended period of time and imposition of the mandatory penalty is justified on the only allegation that the appellant had suppressed the fact of manufacture and removed the goods in contravention of the provisions of the Central Excise Rules without alleging or b....
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....T 413 (Guj.) (iv) Ashok Leyland Ltd. Vs. Collector of Central Excise - 1993 (68) ELT 65 (Mad.) (v) Gujarat Electricity Board Vs. Collector of C. Ex., Vadodara - 1997 (93) ELT 418 (Tribunal) (vi) Blue Star Ltd. Vs. Collector of Central Excise, Madurai - 1999 (107) ELT 609 (Tribunal) (vii) Tansi Vs. Collector of Central Excise, Trichy - 1999 (111) ELT 645 (Tribunal) (viii) Chief Engineer (IRR.), PWD Vs. Commissioner of C. Ex., Madras - 2000 (115) ELT 789 (Tribunal) (ix) Tamil Nadu Electricity Board Vs. Commissioner of C. Ex., Coimbatore - 2001 (133) ELT 639 (Tri. - Del.) (x) Collector of C. Ex., Trichy Vs. Tamilnadu Electricity Board - 2001 (134) ELT 91 (Tri. - Chennai) (xi) Kartik Telecomptrols (P) Ltd. Vs. Commissioner of C. Ex., Delhi - I - 2002 (141) ELT 800 (Tri. - Del.) (xii) Circular No. 49/90-CX.8 dated 23 Jul 1990 (xiii) Circular No. 56/56/94-CX dated 14 Sep 1994 (xiv) Circular No. 58/1/2002-CX dated 15 Jan 2002 (xv) Circular No. 643/34/2002-CX dated 01 Jul 2002 (xvi) Collr. Of C. Ex., Coimbatore Vs. Dynaspede Integrated Systems P. Ltd. - 1997 (89) ELT 193 (Tr....
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....rtaken the activity of assembling of various components into the RLMU boxes as mentioned above which amounts to manufacture. Thus, we find that job worker M/s. Eagle Electricals, Kadur are considered as the manufacturers of the assembled RLMUs in terms of Section 2(f) of the Central Excise Act, 1944, and benefit of exemption under Notification No. 214/86-CE dated 25/03/1986 also denied to them for non-observance of the procedure and nonfulfillment of the conditions prescribed under the said Notification. Further, we find that as per the Circular No. 56/56/94-CX dated 14.09.94, in cases where the goods are manufactured by a job worker out of raw materials received from a person or a manufacturer and where the relationship between the raw material supplier and the job worker is on principal to principal basis, the job worker will be the actual manufacturer. Thus, if it is found that the job worker is an independent entity and carries out the manufacturing activities independently and is not an agent, of the raw material supplier or a dummy, then the job worker will be treated to be the manufacturer. Further as per the Circular No. 58/1/2002- CX dated 15.01.2002, turnkey projects like....