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2019 (5) TMI 1430 - AT - Central ExciseProcess amounting to manufacture or not - fabrication and installation of Retail Visual Identity Elements (RVI) at the petrol pumps different companies - demand of central excise duty alongwith penalties - Extended period of limitation - scope of SCN - HELD THAT:- The Appellants were issued two show cause notices in which Central Excise duty in which the Appellants were considered as manufacturers of branded goods (RVIs) for M/S IOCL. The first show cause notice was issued under extended period of limitation. Though in various show cause notices the Appellants were considered manufacturers of the RVIs but no evidence were bought on record as to in which manufacturing premises of the Appellants the said RVIs were manufactured. In reply to the show cause notice the Appellants furnished documents in their support establishing that the entire work of fabrication of RVI elements were got done from the various job workers. The Commissioner in his order has though conceded that the Appellants are liable to pay Central Excise duty even though they did not have any manufacturing premises, as the onus to prove the principal to principal relationship between them and the jobs worker were upon them which have not been fulfilled by them. Scope of SCN - HELD THAT:- We do not find the findings of Commissioner to be legal, as the Commissioner was legally bound to confine his findings with respect to charges levelled in the show cause notices. As we have already noted that in the show cause notices proceeded on the allegations that it is the Appellants who had manufactured the RVI elements. Hence the Commissioner could not travel beyond the scope of the allegations levelled in the show cause notices. Whether the Appellants could be considered as a manufacturer of the goods in terms of Section 2(f) of the Central Excise Act 1944? - HELD THAT:- The Appellants have brought sufficient evidence on record that the job workers were independently fabricating the various components on RVI elements. The Appellants were issuing TDS certificates to all the job workers. Some of the job workers were even registered with the service tax department. Further, it has also been accepted by the Commissioner that the Appellant were not having manufacturing premises - the job workers were fabricating the components of RVI independently and hence they are to be considered the actual manufacturers in terms of Section 2(f) of the Central Excise Act - We agree with the submissions of the Ld. Counsels that the status of the Appellant is that of supplier of raw material to various job workers who had actually manufactured the goods. Double taxation - HELD THAT:- We agree with the submission of the Ld Counsel that on the same activity department can’t demand tax twice. We take note of the fact that the some of the Appellants were registered with service tax department under the category of work contract service - once the activities of the Appellants have been held to be falling under the works contract service under the Finance Act, 1994 and hence central excise duty cannot be demanded or confirmed treating the same activity to be a manufacturing activity, that too for the same period. Whether the Commissioner could rely upon the statements of four witnesses? - HELD THAT:- The Commissioner has relied upon their statements to come to the conclusions that the RVI items were in fully manufactured condition in the factory of the vendor itself. According to these statements completed RVI elements were transported to the sites and erected/installed with the help of nuts, bolts and screws. Fabrication work involving welding was not permitted at site - the Commissioner has erred in relying upon the statements of four witnesses which were not tested on cross examination. Whether the RVI elements which were cleared from the units of the job workers in fully manufactured conditions and became subject to payment of excise duty or whether the various components became integral part of the building/fascia or in other words the final RVI elements came in to existence at site only? - HELD THAT:- The RVI elements were dispatched as components from the workshops of the job workers and not in fully manufactured condition, and RVI elements came into existence only as a part of permanent structure at site only. In any event we have already held that the Appellants can’t be treated as a manufacturer of RVI elements in terms of section 2(f) of the Act. Extended period of limitation - HELD THAT:- It is not a case where the department could invoke extended period of limitation due to various reasons. Firstly the Appellants were registered with the service tax department in respect of works contract service w.e.f 6.10.2007. Secondly, the Appellants were not having any manufacturing unit but for a few and were getting the components of RVI fabricated on job works basis. Thirdly, we have already held that fully manufactured RVI elements came into existence at site only - All these facts are sufficient to come to a definite conclusion that there is no willful suppression or misstatement of facts by the Appellants. Hence extended period of limitation is not available to the department. The impugned orders are not sustainable and so is the case for imposition of penalties on the appellants - appeal allowed - decided in favor of appellant.
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