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Savira Industries, Commissioner of Central Excise Versus Commissioner of Central Excise, Savira Industries

2015 (9) TMI 515 - CESTAT 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 genuinely believed that mere cutting, bending, welding of steel rods/sheets n .....

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uty.

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 suppression of facts. - Demand set aside. - Appeal Nos. E/294/2009, E/364/2009 & E/ .....

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ed 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 excise duty of ₹ 1,25,98,225/- on the scaffolding equipments manufactur .....

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ied 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 Section 11AC and along with interest. Assessee filed appeal against the conf .....

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udicating 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 synopsis and reiterated the same. He explained the nature of the fabrication ca .....

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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 to 'manufacture'. He relied the following citations :- (i) CCE Vs De .....

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ade 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 the company clearly made in his statement that they are genuinely under the b .....

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r 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 the following decisions :- (i) Uniworth Textiles Ltd. Vs CCE 2013 (288) ELT 161 .....

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0) 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 2006 (201) ELT 27 (Tri.-Del.) (v) CCE Vs Kay Kay Press Metal Corporation 2013 (2 .....

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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 both on limitation as well as on merits. 5. On the other hand, Ld. A.R for th .....

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ption 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 invoked as there is suppression of facts. He relied on the following decisions :- .....

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ere 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 Vs S.R. Tissues Pvt. Ltd. 2005 (186) ELT 385 (SC) 7. We have carefully conside .....

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re 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 "manufacture" as per Section 2(f) of the Central Excise Act and are e .....

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r 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 proviso to Section 11A of Central Excise Act. It is pertinent to see that neither i .....

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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 under bonafide belief based on the following Tribunal decisions such activity .....

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ved 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 is enough justification in favour of the appellant and there was no suppressi .....

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rs. 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 in allowing the Appeal filed by the assessee on the question of limitation on .....

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res. 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 Commissioner of Excise issued show cause notice in March, 2003 calling upon the .....

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onfirmed 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 March, 2003, which was for the period 1998-2000 and thus it was time barred. Th .....

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g 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, is barred. As such, irrespective of the fact as to whether the appellants them .....

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he 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 views of the Hon ble Supreme Court, the extended period of 5 years cannot be invo .....

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as 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 discussed above." The ratio of the Hon'ble High Court order is squarely app .....

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