TMI Blog2022 (11) TMI 435X X X X Extracts X X X X X X X X Extracts X X X X ..... acture was not even argued before the tribunal in the that case and hence the order to that extent is sub silentio. Appellants have in the present case challenged the demand on the ground that activities undertaken by them do not amount to manufacture. From the perusal of the order of the tribunal in case of Jain Irrigation, it is evident that the said order has decided the issue of classification of the goods and has not decided the issue in respect of the manufacture. The order is totally silent on this aspect, which goes to the root of the matter i.e. whether the activities undertaken by the appellant would amount to manufacture or not. The issue of manufacture was not even argued before the tribunal in the that case and hence the order to that extent is sub silentio. Appellants have in the present case challenged the demand on the ground that activities undertaken by them do not amount to manufacture - the polyhouse/ green house is put up as elements to be assembled at site. It is therefore apparent that the claims of the appellants that they are just purchasing materials and selling the same that they merely collect bought out duty paid items and supply them is not correc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 Apr 09 to Oct 09 16.04.2010 36,76,543 36,76,543 E/630/12 Nov 09 to Mar 10 01.10.2010 23.1.2012 37,96,355 37,96,355 Apr 10 to Dec 10 31.03.2011 81,68,520 81,68,520 1.2 Since the issue involved in the two appeals is identical they are taken up for consideration please. Appeal No 1.3 By the impugned order in appeal No E/85046/2013 Commissioner Central Excise (Appeal) Pune has held as follows: I confirm and uphold the impugned Order in Original No P1/JC/52/CEX/2010 dated 15.11.2010 issued by the Joint Commissioner, Central Excise Pune 1 Commissionerate as just fair and legal. Consequently the appeals filed by the appellants is dismissed. Original authority has by his order in original held as follows: a) I confirm and order to recover the total Central excise duty amounting to Rs 57,87,905/- (Rupees Fifty Seven Lakhs eighty Seven Thousand Nine Hundred and Five only) ( Cenvat duty Rs 56,27,392/- + Ed cess Rs 1,12,540/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44 to be recovered from M/s. Sriroz Consultants Pvt. Ltd., Ambike Chal, Near Gram Panchayat Office, Chikhali Village, Pune District. 4. I order imposition of Penalty upon M/s. Sriroz Consultants Pvt. Ltd., Ambike Chal, Near Gram Panchayat Office, Chikhali Village, Pune District under Rules 25(1)(a) and 25(1)(c) of the Central Excise Rules, 2002, as detailed hereunder: i. Rs. 37,96,355/- (Rs. Thirty seven lakh Ninety six thousand three hundred and fifty five only) in respect of SCN dtd. 01.10.10 (ii) : ii. Rs. 81,68,520/- (Rs. Eighty one lakh sixty eight thousand five hundred and twenty only) in respect of SCN dtd. 31.03.2011; totaling to Rs. 1,19,64,875/- (Rupees One Crore Nineteen Lakhs Sixty Four Thousand Eight Hundred Seventy Five only) 5. I impose penalty of Rs. 5,000/- (Rupees Five Thousand only) in respect of SCN dtd 01.10.2010 Rs. 5000/- (Rs. Five thousand only) in respect of SCN dtd. 31.03.2011; (total Rs. 10,000/-) upon M/s. Sriroz Consultants Pvt. Ltd., Ambike Chal, Near Gram Panchayat Office, Chikhali-Village, Pune District under Rule 27 of the Central Excise Rules, 2002. 2.1 Appellant are engaged in the manufacture of Green Houses class ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w cause notices required the 'Noticee to show cause to the adjudicating authority, as to why: i. The activities carried out by them for various clients, during the period November 2009 to December 2010, should not be treated as amounting to manufacture of Green Houses falling under Chapter Heading No. 9406 of the First Schedule to the Central Excise Tariff Act, 1985; ii. Central Excise duty amounting to Rs. 1,19,64,875/- (Rs. 37,96,355/-for the period from November 2009 to March 2010 + Rs. 84,68,520/- for the period from April 2010 to December 2010) should not be demanded and recovered from them under the provisions of Section 11A(1) of the Central Excise Act, 1944; iii. Interest on the above Excise duty, should not be charged and recovered from them under Section 11AB of the Central Excise Act, 1944; iv. Penalty should not be imposed upon them under the provisions of Rule 25(1)(a) and 25(1)(c) of the Central Excise Rules, 2002; and v. Penalty should not be imposed upon them under Rule 27 of the Central Excise Rules, 2002 for not obtaining Registration under Section 6 of the Central Excise Act, 1944 read with Rule 9 of the Central Excise Rules, 2002. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the adjudicating authority has not given findings on all the submissions made by the appellants. The entire proceedings are based on assumptions and presumptions and the duty liability has been calculated solely on the basis of sales amount, as shown in balance sheet after deducting amount of second sale and resale of materials without verifying the relevant documents such as invoices, works orders etc. In some cases only trading has been done by the appellants on which Central Excise duty cannot be demanded. The appellants are not engaged in manufacture of Greenhouses . The materials namely pipes, nuts, bolts etc. supplied by the appellants, are not parts/elements of greenhousel poly house. The said goods are not even bought together by the appellants. In many cases, the appellants only undertake erection work and the material are supplied by their customers. Therefore, it is incorrect to suggest and hold that the appellants have manufactured pre fabricated buildings. Even the Department admits that, the bought out items are delivered to the customer's site directly. The activity of cutting, bending etc does not amount to manufacture of parts of greenhouse/poly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... immovable property and hence, not excisable. Triveni Engineering Indus. Ltd. [2000 (120) ELT 273 (S.C.)] Shapoorji Pallonji Co. [2005 (192) ELT 92 (Bom.)] Virdi Brothers 2007 (207) ELT 321 (S.C.) Larsen Toubro Ltd. [2009 (243) ELT 662 (Bom.)] Jeetex Engineering Ltd. [2001 (130) ELT 801 (T.)] Silson India Pvt. Ltd. [2005 (194) ELT 37 (T.)] Jupiter Enterprises [2014 (314) ELT 301 (T.)] In case, if the activity amounts to manufacture, then the appellants are eligible for credit on the inputs. Siddhartha Tubes Ltd. [2006 (193) ELT 3 (S.C.)] CCE Vs. Mahavir Aluminium Ltd. [2007 (212) ELT 3 (S.C.) ] While computing the differential duty demand in the show cause notices, Respondent incorrectly included labour charges, Value Added Tax, export turnover on which excise duty cannot be levied in the present case. benefit of cum-duty benefit must be granted to the appellants as the appellants have not recovered any excise duty from the farmers. Therefore, sale price of the materials should be treated as cum-duty. Kindly refer: Meghdoot Gramoudyog Sewa Sansthan [2014 (312) ELT 699 (T.)] Hi-Line Pens Ltd. [2017 (5) GSTL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tubes they are cleared along with some other bought out items to the customer's site for erection of greenhouse/polyhouse. In other words, the polyhouse/green house is put up and dispatched from manufacturing premises as set of elements to be assembled at site and also major elements such as gloss/polyfilm sheets which are required for use in the ceiling as well as wall of the green houses. It so happens value of bought out items is much more than that of the goods fabricated within the factory. The learned adjudicating authority has arrived at his conclusions on the basis of the invoices of various transactions submitted by the appellants and on the basis of the statement given by the MD of the company. MD in his statement stated that It is apparent that the claims of the appellants that they are just purchasing materials and selling the same that they merely collect bought out duty paid items and supply them does not stand scrutiny. It is further confirmed from perusal of copies of sample purchase orders which were handed over by the Appellant during the course of adjudication proceedings; they themselves have admitted that they undertake cutting and bending of the Pi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g activity and that they do not have any manufacturing activity at their Chikali store/ godown. (ii) They did cutting and bending of the Pipes Tubes inside the store and dispatched the same to the Purchaser's address. (iii) In addition to this activity they were involved in TRADING also and they were trading pipes of various sizes, and, other materials of various kinds from there. (iv) Their activity was to supply the pipes/tubes as per the Orders placed by the Customers who were generally farmers. (v) Green House was not only poly structure but it had so many other parts / components, Soil and various Equipments for maintaining the required environment of the plant / Crop (vi) Green House has a specific entry under CH 9406 of the First Schedule to the CETA, 1985 w.e.f. 1.3.2005. The green house is covered under the generic heading Prefabricated Buildings . Theirs was not the prefabricated buildings, and hence they were not liable for taking the Registration and paying the duty thereon. Mere entry in the Tariff did not make any goods excisable. They were not manufacturing any type of prefabricated buildings falling under CH 9406 of CET. Similarly t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... customers, invoice raised thereof, sale tax payment details etc. had not been verified and scrutinized before the issuance of SCN. The Service Tax paid by them was also not taken into consideration. The duty liability was calculated solely on the basis of sales amount furnished by them which was impermissible in law. The process by which such products are obtained was amounting to manufacture in terms of Section 2(f) of the Act and that the product which had emerged was marketable, was not established 23. in this regard I find that: A. Section 2(f) of the Central Excise Act, 1944 defines manufacture as manufacture includes any process, - (i) incidental or ancillary to the completion of a manufactured product; (ii) which is specified in relation to any goods in the section or Chapter notes of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture; or (ill) ............................................................................... and the word manufacturer shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (vi) If any goods installed at site (example paper making machine) are capable of being sold or shifted as such after removal from the base and without dismantling into its components/parts, the goods would be considered to be movable and thus excisable. The mere fact that the goods, though being capable of being sold or shifted without dismantling, are actually dismantled into their components/parts for ease of transportation etc., they will not cease to be dutiable merely because they are transported in dismantled condition. Rule2(a) of the Rules for the Interpretation of Central Excise Tariff will be attracted as the guiding factor is capability of being marketed in the original form and not whether it is actually dismantled or not, into its components. Each case will therefore have to be decided keeping in view the facts and circumstances, particularly whether it is practically possible (considering the size and nature of the goods, the existence of appropriate transport by air, water, land for such size, capability of goods to move on self propulsion -ships- etc.) to remove and sell the goods as they are, without dismantling into their components. If the goods are incap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hemselves agreed that they do undertake cutting and bending of the Pipes Tubes which are then supplied by them. They also further supply Polythene, Polyfilm, Curtain Rings, Pulley and Locking Wire as evidenced by these documents. Further, I also find that some of these documents contain description of the work to be undertaken by the 'Noticee' like Supply of material for your Agriculture shade (Nursery) and 1. Marking layout of the plots 2. Civil foundations on site me with your material, 3. Assembly of nursery shade, 4. Fixing of polythene shadenet on the shade . 28. It is therefore apparent that the claims by the 'Noticee' that (i) they just Cut and bend Pipes Tubes, that (ii) they are just purchasing materials and selling the same, that (iii) they merely collect bought out duty paid items and supply them does not stand scrutiny. The activity indicated on the documents as stated in sub para E above, clearly proves that it is for the assembly of shades in nurseries which are nothing but Green Houses which as indicated in the impugned show cause notices are structures made of pipes grounded to the civil foundation and covered with polythene cover, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the factory premises away from the site of construction would be brought to the site for their use in erecting the structure. The frames pre fabricated and brought at the site and frames fabricated the site of erection both are goods manufactured. There will be variety of parts of structures of iron and steel that can be fabricated either at the site or at some factory premises away from the site. The iron and steel raw material, such as angles, plates, tubes, etc., are used in making part of structures and they acquired a distinctly different shape to suit the structural design. For example, if iron or steel angles and plates are cut to make a steel table or chair which can be dismantled, it cannot be said that there are no goods manufactured because the iron and steel angles or plates remain such angles and plates though of different sizes, and merely holes are punched and screws fitted. Unlike in liquid mixtures, the raw material of iron and steel or wood will retain their identity, but it is precisely their being cut, and designed, punched and fitted to make an article commercially known that involves manufacture of an article distinct from the angles, sheets, tubes etc. used i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure will run counter to the legislative intent to impose excise duty on such excisable goods at a stage when they have a separate identity as marketable goods anterior to their being permanently fixed in the immovable structure. The part of structures which were first fabricated on the ground and thereafter were used in the designed structure which was erected by permanently fixing them in such structures, all these had acquired their identity before they were so permanently fixed and as observed above, they are well known in the market as separate commodities. Their state of being movables, being parts of structures fabricated for the purpose of being used in the erection of a structure, came to an end only after they were permanently fixed in the structure. The liability to pay duty, that had arisen at the time when they were manufactured as parts of structures had however, crystallised, 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f providing desired environment for growth of plant. Poly House is a prefabricated building for use as green house and the activity taken up by the poly house / green manufacturers precisely answers to the definition of Green House as stipulated under Ch. 94.06 of CETA, 1985 read with corresponding heading of HSN. As such, the activity taken up by the poly house / green manufacturers attracts Central Excise Duty as specified under Ch. 9406 00 11 of CETA 1985. This letter further went on to state that prefabrication of poly house which is, at times, cleared in partially assembled condition or cut to size (beams, joints, etc) attracts Central Excise duty. Post erection status of the goods is not excisable, as whole structure being fixed to earth. 33. I further find that in view of the aforesaid findings, the culpability of the 'Noticee' regarding the their failure to get themselves registered under Section 6 of the Central Excise Act, 1944 read with Rule 9 of the Central Excise Rules, 2002 in spite of being engaged in manufacture of Green House', and their clearance without following procedures prescribed under the Act' and the Rules clearly stands confirmed, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en houses , visited the factory premises on 11-12-2014 and carried out verification of the record. After scrutiny of the record resumed during the visit, and recording the statements of various personnel including Sh. Vijay Singhvi, Factory Manager and Authorised Signatory and Sh. D.I. Desarda, Sr. Vice President (Taxation), Department issued show cause notice dated 15-11-2016. After the due process of adjudication the impugned order came to be passed in which the adjudicating authority held that the appellant has manufactured and supplied green houses in ready to assemble condition to Rajasthan Horticulture Development Society, Directorate of Horticulture, Jaipur. The Central Excise duty on such goods to the extent of Rs. 3,20,99,394/- was demanded along with interest and penalty of equal amount. Penalty was also imposed to the extent of Rs. 50 lakhs on Sh. D.I. Desarda, Sr. V.P. (Taxation) and Rs. 10 lakhs on Sh. Vijay Singhvi, Factory Manager and A.S. under Rule 26 of the Central Excise Rules, 2002. Aggrieved by the impugned order, appeals have been filed by the assessee as well as the other company employees who have been penalised. 3 . . 4 . 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8424 89 20 --- Industrial bellows .. 8424 89 90 --- Other 8424 90 00 - Parts . 9406 Pre-fabricated buildings 9406 00 - pre-fabricated buildings --- Green houses : 9406 00 11 --- Green house - in ready to assemble sets .. 9406 00 19 --- Other .. ---- Other .. 9406 00 91 --- Pre-fabricated housing material .. 9406 00 92 - Pre-fabricated construction for cold storage .. 9406 00 93 - Silos for storing ensilage .. 9406 00 99 - Other . The appellant has claimed the benefit of Notification No. 12/2012, dated 17-3-2012 (Sl. No. 242). Such benefit is available for parts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the pre-fabricated buildings. 10 . The claim of the appellant before the adjudicating authority as well as in appeal is that only some of the components of the green houses has been fabricated in the appellant s factory and cleared to the depot. Hence, other bought out items are received by the appellant in their depots. Finally, it is claimed that all the components are assembled at site where it become immovable property. Hence, it has been submitted that the appellant, at the most should be required to pay excise duty only on the components fabricated within the factory. 11 . The investigation undertaken by the Department has established that the facts are different. Sh. V. Singhvi, Factory Manager and A.S. has admitted in his statement that all components required for the green houses are transported to the designated site in ready to assemble conditions. The Department has also established that the appellant has deliberately issued invoices for supply in two parts - one for the items fabricated in their factory and the other for the bought out items (commercial invoice). 12. The tariff entry 9406 00 11 covers the green houses in ready to assemble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s it is evident from the finding recorded by this Tribunal. Further this Tribunal have also allowed the Cenvat Credit on the inputs/input services as applicable. Further directed that the appellant-company shall be entitled to cum duty benefit. In this view of the matter we are convinced that there is an error on the part of this Tribunal in not deciding the issue of limitation. Under the facts and circumstances we appreciate the error on record. Further considering the facts and circumstances and the rival .contentions we hold that the issue involved, as held by this Tribunal in the Final Order is simply of classification and/or interpretation. Accordingly, we hold that the extended period of limitation is not available to revenue and accordingly the demand shall be limited to normal period of limitation only. 3. Further we also find that there is no discussion with regard to penalty imposed on the appellant-company. In view of the facts and circumstances we allow this ground and hold that no penalty is imposable on company under Section 11AC of the Central Excise Act. The Ld. Counsel have relied on following case laws:- a. For error on face of record, COMMISSIONER OF C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these two appellants and further allow their appeals, setting aside the penalties imposed on them. Accordingly the appeals of Vijay Singhvi and D.I. Desarda stand allowed with consequential benefits. 4.6 Thus we find that the order of tribunal as rectified by the order referred above has allowed the relief to the extent of setting aside the demand made by invoking the extended period of limitation, allowing the benefit of cum duty price and the CENVAT credit as admissible in respect of the goods on which the duty has been sought to be demanded. Orders also set aside the penalty imposed under Section 11 AC on the company and also the penalties imposed on the employees of the company. It is the submission of revenue that the issue is squarely covered by the said decision and if we have to hold that this order to be squarely applicable to the facts of present case these benefits as have been claimed by the appellants in the present case needs to be allowed. 4.7 From the perusal of the order of the tribunal in case of Jain Irrigation, it is evident that the said order has decided the issue of classification of the goods and has not decided the issue in respect of the manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ans. I am aware that the item, 'Greenhouse is classifiable under the chapter subheading 94060011 of the Central Excise Tariff Act, 1944. However, as per my opinion, we supply some of the elements of the structure used for agricultural purpose, which is known as polyhouse. In true sense, greenhouse can never be manufactured inside any factory/godown. These are independent parts cut and bent to the required size and sent to the site for erection purpose. On the site, after land development, the pit is excavated and the pipes are fixed with the help of concrete, on which the structure is erected uprightly. Some of the materials like polythene, aluminium sections, angles, etc. are used on site without any modification being carried on them. They are bought out items. Actually, a greenhouse comes into existence only after the setting up of irrigation system, bed preparations, fumigation and plantation, and it becomes an immovable property, which cannot be dismantled, shifted or sold as a commodity. Before these processes, it is only a protective shelter. The greenhouse cannot be dismantled without complete damage to the polythene cover, shade net, gutters and nuts/ bolts. Our con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... polyhouse will be damaged polythene and shade nets will be torn. The damaged structure will only fetch scrap value. We carry out erection/assembly only for Government establishments, where we supply the material and carry out the erection/assembly also. In other cases, we only supply material without any process. Q8. Do you have anything more to say? Ans. I want to reiterate that our activity is merely sale of raw material, which is second sale, which is out of Central Excise ambit. Some of the so-called processes do not fall under the definition of excisability. The polyhouse cannot be fabricated or made at our location and it comes into existence at the customers' premises/land. The polyhouse is not a pre-fabricated building. It cannot be assembled or be in a ready to assemble state anywhere outside the customers' premises. The smallest polyhouse measures 560 square meter, i.e. 6030 square feet. Such a structure cannot be assembled anywhere outside the agricultural land and needs to be assembled at the erection site only. Moreover, I feel the assembly and erection is a process of making the polyhouse ready and will not attract service tax. 4.9 We also take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, GI pipes, GP sheets, aluminium sections, polythene sheets, shading nets, from various traders. In their workshop, process of cutting, bending, drilling and pressing of pipes as per required shapes and sizes were carried out, and thereafter, these pipes were transferred to the site of the customer where the Greenhouse/Polyhouse were erected and commissioned. He has contended that at the site, besides assembly of various parts of Greenhouse/Polyhouse, they also undertake laying down of foundation, fabrication, erection, polythene shed/net fitting, cutters of required length, etc. He has further contended that in some cases the customers provide the entire material and the assessee- appellant only supervise the work of erection and commissioning of the fabricated material at site. He has further contended that for the period 2006-2007 and 2007-08 the show cause notice was issued to them for recovery of service tax on the labour charges received towards erection and commissioning of Greenhouse/Polyhouse at various sites belonging to the customers. It is his contention that since their activity does not result into manufacture of excisable goods viz. Greenhouse / Polyhouse and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cleared the same in knocked down condition to the site for assembly where ultimately the Greenhouse/Polyhouse were erected. The assessee-appellant, on the other hand, claimed that they have carried out only the job of erection and commissioning for which service tax has been discharged by them on the bought out materials, subjected to processes which does not amount to manufacture. Therefore, the allegation of the department that the greenhouse/poly house were assembled at site resulting into manufacture of excisable goods falling under chapter-sub-heading 9406 0019 of Central Excise Tariff Act, 1985 is unsustainable. From the records, we find that separate show cause notices were issued to the appellant, for the same period, demanding service tax on the activity of erection and commissioning of Greenhouse and Polyhouse at site and the same was confirmed on adjudication. The appellant has admitted and service tax discharged along with interest on the said activity of erection and commissioning of Greenhouse/Polyhouse at site. From the records it is not clear whether the service tax was paid on separate activities or it is a part of assembling of Greenhouse/ Polyhouse at site out o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
