2005 (11) TMI 103 - AT - Central Excise

Excisability - Manufactures fabricated steel structures and parts - Exemption to the goods manufactured otherwise than in a factory as defined in Section 2(m) of the Factories Act - test of Marketability - whether structures or parts of structures and other articles made of iron or steel for use in structures were classifiable under Heading 73.08 of the Central Excise Tariff - HELD THAT - The liability to pay duty that had arisen at the time when they were manufactured as parts of structures had however crystalised and it was possible to ascertain the same even after they got fixed by referring to the quantities of the raw material that went into making them for the purpose of ascertaining their value. Therefore any enquiry into the raw material used was only for the purpose of ascertaining the value of the parts of the structures which were already fabricated at the site and was not an enquiry for imposing excise duty on the raw material i.e. members such as angles plates etc. It was an enquiry to ascertain the value of the parts of the structures which were fabricated such as trusses ladders doors windows columns beams rafters glazing frames crane girders hoppers bracings gable runners platform hand-rails gratings rails walk-ways stairs gutter supports ladders railings etc. We have already noted the contractual terms and the relevant statements which clearly indicate that the parts of the structure were first fabricated on the ground and thereafter they were used for erecting the designed structures. In our opinion all these parts of structures which were fabricated were distinct marketable commodities the existence of which was brought about by the process of manufacture as defined in section 2(f) of the Act. These were not simply members such as angles etc. with holes or cut to a different size but the process was undertaken to bring them into a particular commercially known shapes and assemble them for that purpose as per the designs and having fabricated them to use them for permanently fixing them in the structures which were to be erected as per the design under the works contracts. Commodities whose marketability is restricted to a small number of persons whose area of sale is limited which can be preserved only for a short time which can be brought to market only in strictly limited quantities at anyone time or whose price are subject to fluctuations etc. may all retain some degree of marketability within certain limits but they are not capable of circulating freely. Moreover commodities that must be specially fitted to the need of the consumer to the usable at all are not saleable in equal degree in the hands of every owner. Thus the concept of marketability in the context of marketability of parts of steel structures of the above nature falling under Heading 73.08 cannot be viewed through a hawker s eye. Hawking in its traditional sense where the hawker moves with the goods screaming for the attention of potential customers cannot be applied to the marketability of such structures or parts of structures unless the concept of hawking itself is widened to include E-hawking . The customer in the context of such product is the person who places the order for fabrication of such parts of structure to be raised by entrusting the contract to the manufacturer of such structurals or by itself engages workers on job basis to get them manufactured. Such customers provide adequate marketability to the movable structures and parts of structures falling under heading 73.08 which remain excisable goods until they are permanently fixed to become part of some immovable structure. Therefore in our opinion all the above items fall under Heading 73.08 are marketable commodities. When a part of structure is prepared and disassembled the members thereof will be angles rods etc. prepared for use in such structure. These are not angles or plates merely cut or drilled without reference to a particular structure. The later part of Heading 73.08 would apply to the members such as plates rods angles etc. that are prepared for use in structures or their parts in their pre-assembled or disassembled state of an identifiable article of the types of the parts of structures covered under Heading 73.08. We are unable to accept any of the contentions raised on behalf of the appellants and we answer the question referred to us as under - (i) The immovable iron and steel structures not being goods will not fall under Heading 73.08 of the Excise Tariff. (ii) The structures or parts thereof mentioned in the parenthesis of Heading 73.08 illustrating parts of structures namely bridges and bridges-sections lock-gates towers lattice masts roofs roofing frameworks doors and windows and their frames and thresholds for doors shutters balustrades pillars and columns as well as parts of structures such as trusses purlins columns beams rafters glazing frames crane girders hoppers bracings gable runners platforms hand-rails grating rails walk-ways stairs gutters supports ladders gantries railings portals pushings round surged inserts drop-boxes windties framework partitions north light glazing sliding frames and the like articles in their movable state will be subject to excise duty under Heading 73.08 notwithstanding their getting permanently fixed in the structures. (iii) The plates rods angles shapes sections tubes and the like prepared for use in structures of the types covered under the Heading 73.08 as aforesaid will also be excisable goods subject to duty in their pre-assembled or disassembled state. The reference stands disposed of accordingly. The appeals will now be placed before the appropriate Division Bench for disposal.

Summary

Issues Involved:
1. Whether the making of structures and parts of structures of the types illustrated in Heading 73.08 of iron or steel amounts to manufacture of excisable goods.
2. Whether the making of plates, rods, angles, shapes, sections, tubes, and the like, as articles prepared for use in structures of iron or steel, amounts to manufacture of excisable goods classifiable under Heading 73.08.

Detailed Analysis:

1. Whether the making of structures and parts of structures of the types illustrated in Heading 73.08 of iron or steel amounts to manufacture of excisable goods:

The Tribunal was tasked with determining whether the fabrication of parts of structures such as trusses, purlins, columns, beams, etc., constituted the manufacture of excisable goods under Heading 73.08 of the Central Excise Tariff. The Tribunal noted that the Supreme Court, in its remand order, emphasized the need to determine whether the fabricated goods were new, identifiable goods produced as a result of manufacturing processes and whether they were marketable. The Tribunal found that the fabricated parts of structures, such as trusses and purlins, were distinct marketable commodities with a separate identity from the raw materials used in their fabrication. The Tribunal held that these parts of structures were excisable goods subject to duty under Heading 73.08, notwithstanding their eventual use in constructing immovable structures.

2. Whether the making of plates, rods, angles, shapes, sections, tubes, and the like, as articles prepared for use in structures of iron or steel, amounts to manufacture of excisable goods classifiable under Heading 73.08:

The Tribunal also examined whether the preparation of articles such as plates, rods, angles, shapes, sections, and tubes for use in structures amounted to the manufacture of excisable goods. The Tribunal referred to the explanatory notes to Heading 73.08, which indicate that the heading covers complete or incomplete metal structures and parts of structures, including those prepared for use in structures. The Tribunal concluded that the preparation of these articles for use in structures resulted in new, identifiable goods that were marketable and, therefore, excisable under Heading 73.08. The Tribunal emphasized that even if these articles were not marketed, their preparation for use in structures provided sufficient evidence of their marketability.

Conclusion:

The Tribunal answered the reference by holding that:
1. Immovable iron and steel structures are not excisable under Heading 73.08.
2. Structures or parts thereof, such as trusses, purlins, columns, beams, rafters, glazing frames, crane girders, hoppers, bracings, gable runners, platforms, hand-rails, grating rails, walk-ways, stairs, gutter supports, ladders, gantries, railings, portals, pushings, round surged, inserts, drop-boxes, windties, framework partitions, north light glazing, sliding frames, and similar articles in their movable state, are excisable under Heading 73.08.
3. Plates, rods, angles, shapes, sections, tubes, and the like, prepared for use in structures of the types covered under Heading 73.08, are excisable in their pre-assembled or disassembled state.

The reference was disposed of accordingly, and the appeals were to be placed before the appropriate Division Bench for disposal.