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2015 (9) TMI 515 - CESTAT CHENNAI

2015 (9) TMI 515 - CESTAT CHENNAI - 2016 (331) E.L.T. 504 (Tri. - Chennai) - Extended period of limitation - Manufacture - SSI Exemption - activities of drilling, punching holes, welding and bending etc. on job work basis - bonafide belief - appellant categorically stated inter alia that they are only job worker carried out fabrication and received labour charges and also stated that he was not aware that such fabrication undertaken by them would attract excise duty - Held that:- the appellants .....

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t and there was no suppression of facts with intent to evade non-payment of duty.

Hon'ble Supreme Court in the case of Uniworth Textile Ltd. Vs CCE (2013 (1) TMI 616 - SUPREME COURT) clearly ruled that mere non payment of duty is not equivalent to collusion or wilful suppression of facts and in order to invoke extended period specific and explicit allegation must be proved by the Revenue. In the present case, the adjudicating authority has not brought out any such allegation of suppre .....

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. 2. The brief facts of the case are that the appellants are a SSI unit engaged in the manufacture of scaffolding, shuttering and propping, items falling under Chapter sub-heading No.7308 of the First Schedule to the Central Excise Tariff Act, 1985. Based on the intelligence, the officers of Central Excise Commissionerate-II visited the appellant's unit and verified the records and also recorded statements. Accordingly, a show cause notice dt. 30.1.2008 was issued to the appellant demanding .....

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rials GI pipes, HR sheets supplied by various construction companies and carried out the activities of drilling, punching holes, welding and bending etc. on job work basis and returned to them and raised bills towards labour charges. It was alleged that the above activity amounts to manufacture and as per Section 2(f) of the Central Excise Act and excisable. The adjudicating authority in the impugned order partially confirmed the demand of ₹ 48,52,976/- and also imposed equal penalty under .....

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d by Commissioner and filed appeal on that portion of the order where the adjudicating authority dropped the proceedings on the value of clearances of ₹ 34,18,463/-, ₹ 2,17,56,220/- and ₹ 1,22,83,948/- for the year 2004-05, 2005-06, 2006-07 respectively which are excluded from the total value of clearances in respect of goods manufactured through sub-contractor M/s.Cutmax Engineering. 4. Heard both sides. The learned consultant appearing for the appellant submitted a written sy .....

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re" and no new commodity emerges out and there is no marketability since after fabrication it was returned to the principal supplier. There is no sale of goods. Even after drilling, threading, bending and welding, there is no change in the character of steel pipes and sheets which continue to remain as pipes and sheets. The department failed to establish the test of "manufacture". He relied various Supreme Court and Tribunal decisions holding the above activities are not amounting .....

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on. There is no suppression of facts or misdeclaration by the appellant to evade excise duty. He relied above decisions wherein it was held that the above activity of drilling and cutting and bending is not amounting to "manufacture". Therefore, they were under bonafide belief that the activity is not amounting to "manufacture". He further submitted that the officers visited the unit on 18.12.2006 and made detailed verification and also recorded statements. The proprietor of .....

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emand is hit by limitation. He further submits that mere ignorance of facts or law does not attract extended period. He further drew our attention to para-12 of the SCN at page 100 on the alleged suppression or misdeclaration and submits that no specific averments brought out by the department except making general statement. There is no mens rea and there is no criminal intent to evade payment of duty. There is no suppression and no penalty can be imposed. In support of limitation, he relied th .....

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llowing case laws on limitation issue :- (i) CCE Vs Pepsi Foods Ltd. 2010 (260) ELT 481 (SC) (ii) Jaiswal Steel Processing Vs CCE 2014 (306) ELT 159 (Chatis.) (iii) Dhillon Oil & Fats Pvt. Ltd. Vs CCE 2015 (316) ELT 242 (P&H) (iv) CCE Pune Vs TELCO Ltd. 2006 (204) ELT 83 (Tri.-Mumbai) (v) Raunaq International ltd. Vs CCE Surat 2001 (138) ELT 1009 (Tri.-Del) (vi) Aruna Industries Vishakhapatnam and Others 1986 (25) ELT 580 (Tribunal) (iv) Mahindra & Mahindra Ltd. Vs CCE Aurangabad 200 .....

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shown in para 23 of the impugned order is neither supported by any worksheet nor it has even a remote resemblance to the value exclusion claimed in the worksheet furnished by them. He submits that duty liability redetermined is not supported by duty calculation work sheet. In the absence of statistical worksheet demand of duty on the strength of assumed lump sum amount of value of clearances, demand is not sustainable in law. Therefore, the learned consultant pleaded for setting aside the order .....

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er chapter 72 whereas the manufactured items have a different name and description and classifiable under chapter 73.08. The adjudicating authority has rightly held that above activities amount to "manufacture". On the Revenue's appeal, he reiterated the grounds of appeal and submits that value of APS units and Props in respect of work carried out through sub-contractor M/s.Cutmax Engineering are to be included in the value of the appellant and extended period has been rightly invo .....

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ue of goods done by the sub-contractor. He also submits that no proceedings were initiated against the said sub-contractor and no SCN has been issued to M/s.Cut Max Engineering. Regarding department arguments that both raw material and finished goods are figuring in separate tariff headings, he submits that merely an item falling under two different chapter headings cannot be termed as the process amounting to "manufacture". In this regard, he relied on the following decisions :- CCE V .....

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the appellants on job work basis where the duty paid steel pipes and sheets are supplied by the construction firms and same are returned to them after fabrication and they received only labour charges. The details of description of the items and usage are dealt by the Commissioner in detail at para 17 & 18 of OIO. The appellants carried out threading, punching/drilling holes, welding, bending on steel tubes and steel sheets. The adjudicating authority held that these activities amounts to &q .....

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hit by limitation, whether extended period invoked is justifiable and whether the suppression of facts proved beyond doubt so as to invoke the longer period. 9. On perusal of records, SCN, we find the officers on gathering intelligence visited the appellant fabrication unit on 18.12.2006; verified the records and also recorded statements from the proprietor and the SCN was issued on 30.01.2008 covering the period of three Financial years from 2004-05 to 2006-07 (upto 12/2006) by invoking provis .....

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ietor of the firm dt. 18.12.2006 and 15.10.2007 which is brought out at para-3 (a) to (i) of SCN wherein he categorically stated inter alia that they are only job worker carried out fabrication and received labour charges and also stated that he was not aware that such fabrication undertaken by them would attract excise duty. Further, in their reply to SCN they submitted before adjudication authority it was stated that they have not suppressed any facts with intention to evade duty as they were .....

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Tri.) In view of the above Tribunal decisions, the appellants genuinely believed that mere cutting, bending, welding of steel rods/sheets not amount to 'manufacture' and held no new commodity emerged out and there is merit in appellant's justification. It is pertinent to state that the dutiability of structurals and parts thereof was held in favour of Revenue only by the Tribunal's Larger Bench decision in the case of Mahindra & Mahindra Ltd. Vs CCE (supra). Therefore, there .....

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harge of suppression of facts not sustainable and set aside the impugned orders. 11. The Hon'ble High Court of Gujarat on identical issue of limitation in CCE Vs Kay Kay Press Metal Corporation (supra) upheld the Tribunal order and dismissed the Revenue appeals. The High Court order is reproduced as under :- "1.1 The appeal was admitted for consideration of the following substantial question of law formulated by this court. Whether the Tribunal below committed substantial error of law i .....

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he assessee was engaged in manufacturing of fabricated iron and steel structures. The Unit used to undertake processes such as cutting, bending, punching with the help of machines available in the factory. The Excise Officers visited the factory premises on 31-3-2000 on the basis of specific information that respondent had been manufacturing the excisable goods without obtaining registration and had thereby indulged into the evasion of duty. On the basis of material gathered during visit, the Co .....

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ice culminated into order dated 20-5-2004 by the adjudicating authority who confirmed the demand of excise duty for ₹ 41,04,217/-. It also imposed the penalty of equivalent amount under Section 11AC of the Central Excise Act, 1944 as well as the penalty of ₹ 5,00,000/- and ₹ 10,000/- and further ordered for payment of interest. 2.3 The assessee preferred an appeal before the Income Tax Appellate Tribunal (Appeals). The Tribunal considered that show cause notice was issued in Ma .....

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there are divergent views, many of which are in favour of the assessee holding the field, no suppression or mis-statement can be attributed to the assessee, to entertain the same belief. As admittedly, in the present case, judgment prior to Larger Bench in the case of Mahindra & Mahindra Ltd., were lying that the processes allegedly adopted by the appellant did not amount to manufacture, we are of the view that the demand raised beyond the period of limitation, by invoking extended period, i .....

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ement on the part of the assessee for not paying excise duty because during the period in question, various decisions of the Tribunal were to the effect that the activity of cutting, bending, bunching of plats or channels in which the assessee was engaged, did not amount to manufacturing activity. In Continental Foundation Jt. Venture v. CCE, Chandigarh, 2007 (216) E.L.T. 177 (S.C.), Apex Court observed that when there was bona fide doubt as to non-excisability of the goods due to divergent view .....

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ee, a positive act has to be established. 4. In view of the above, no error was committed by the Tribunal in dismissing the appeal. It was not possible to countenance the contention of the learned counsel for the appellant that there was a suppression of facts and payment of duty was intentionally evaded by the assessee. 5. For the foregoing reasons, the question formulated is accordingly answered in negative in favour of the assessee. The appeal is dismissed being devoid of any merit as discuss .....

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