TMI Blog2005 (4) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... company registered under the Companies Act, 1956, inter alia, engaged in civil engineering and building construction projects. Petitioner No. 2 is a share holder and director of the 1st petitioner-Company. 4. By a Memorandum of Agreement dated 24th July, 1986, the 1st petitioner entered into a contract with Bharat Petroleum Corporation Ltd. (BPCL) to construct LGP filling plant; whereunder the petitioners were to carry out, construct and complete the following major civil works, viz. : (i) Earth work i.e. excavation, filing foundation, plinth, etc.; (ii) Providing plain and re-enforced concrete; (iii) Masonry work; (iv) Finishing, printing and flooring to masonry surface and walls; (v) Doors and windows; (vi) Structural steel and allied works; (viii) Miscellaneous like fixing, A.C. rain water, down take pipes, 'RCC', 'Jalli', fan clamps, etc. With a view to execute the contract, the petitioners purchased duty paid steel, channels, angles plates, etc., from the Steel Authority of India Ltd. and other dealers and were brought to the construction site of the petitioners. At the site, the channels, angles plates, etc., were fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the show cause notice and imposed a penalty of Rs. 2 lacs on the 1st petitioner and Rs. 50,000/- on the 2nd petitioner. 10. So far as another writ petition bearing No. 4698/1989 is concerned, challenge is to the show cause notice issued by the Revenue calling upon them to show cause why their activities of erecting purlines, beams trusses at factory site should not be treated as structural articles falling under sub-heading No. 7308.90 of Schedule to the Tariff Act exigible to excise duty. 11. Being aggrieved by the order passed by the 3rd respondent in Writ Petition No. 3121/1989 and show cause notice issued to the petitioners in Writ Petition No. 4698/1989 both of them preferred these petitions under Article 226 of the Constitution of India, contending therein that they are not liable to pay excise duty under Heading 73.09 or otherwise, both prior to and after its amendment, since activity of cutting, drilling and welding steel items neither amounts to 'manufacture' nor results into producing 'goods' for the purposes of the Act and the Rules. Preliminary Objection Consideration : 12. At the outset, Shri Jetly, learned Counsel appearing for the Revenue raised prelimina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not be in the interest of justice to relegate the parties to alternate remedy at such a belated stage. Submissions : 16. Learned Counsel appearing for the respective petitioners urged that the action on the part of the respondents in purporting to levy excise duty on the so called 'structurals' and the consequent confirmation of the demand made by the 3rd respondent by the impugned orders impugned in Writ Petition No. 3121/89 is illegal, arbitrary and null and void. In support of this submission, various factual and legal contentions were raised during the course of hearing. Petitioners have also challenged constitutionality, validity and vires of Rule 73 of the Central Excise Rules, contending that it is ultra vires Articles 366 and 225 of the Constitution of India and Section 37 of the Act. 17. According to the petitioners, by using the said material in the construction of new buildings they neither manufactured any new or different articles, nor did they bring into existence any goods capable of being bought or sold in the market. The cutting, welding, and drilling work done at factory site to suit the plans and designs of the new buildings proposed in the project we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e permissible. 22. Shri Jetly further submitted that it would be necessary to appreciate that there is tariff entry under sub-heading 7308.09 which makes structurals exigible to excise duty; if it results in new identifiable marketable goods due to manufacture or carrying on other processes. According to him, this aspect has not been gone into either by this Court or by the Apex Court in any of the cited precedents. He thus submits, considering existence of tariff entry goods of the petitioner are liable to be treated as exigible to excisable duty. He placed reliance on the judgment of the Apex Court in the case of Collector of Customs v. Man Structurals Ltd., 2001 (130) E.L.T. 401 (S.C.) in support of his submission. Issue : 23. In view of the aforesaid rival contentions, the issue involved in the present case is: whether the fabrication of trusses, columns and purlines at site which became a part of immovable property are liable to excise duty under sub-heading 9308.90 of Tariff Act and/or the provisions of Central Excises and Salt Act, 1944. 24. Before embarking upon the rival submissions, it is necessary to consider relevant tariff entry applicable to the cases at hand. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are specified in the schedule, they are excisable goods but whether such goods can be subjected to duty would depend on whether they are produced or manufactured by the assessee. The expression "produced or manufactured" has been explained by this Court to mean that the goods so produced must satisfy the test of marketability. Consequently, it is always open to an assessee to prove that even though the goods were excisable goods, they could not be subjected to duty as they were not produced or manufactured by it or if they had been produced or manufactured, they were not marketed or capable of being marketed. 27. Similarly, in the case of Union of India v. Delhi Cloth General Mills Co. Ltd. reported in 1997 (92) E.L.T. 315, Apex Court held that the commodity which is sought to be made liable to duty must be marketable in the condition in which it emerges and not a commodity that may require further processing or packing to be made marketable. 28. In the case of Collector of Central Excise v. Ambalal Sarabhai Enterprises reported in 1989 (43) E.L.T. 214. Apex Court held on interpretation of Section 3 that the duty of excise is on the manufacture of goods and for an article t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Addl. Collector of Central Excise, Nagpur, 2003 (162) E.L.T. 105 (Bom.) as to whether fabrication by contractors of steel structures, factory shed including roofing and cladding, at site, using raw materials supplied by the principal amounts to manufacture. This Court held that fabricated material at site was not liable to excise duty since it was neither done in the factory nor the goods produced were marketable. While taking this view, this Court has also approved the view taken by the Tribunal in Aruna Industries referred to hereinabove. 31. A view similar to above has also been taken by another Division Bench of this Court in the case of Gannon Dunkley Co. Ltd. v. Union of India, 2003 (156) E.L.T. 467 (Bom.) reiterating earlier view taken by this Court in Tata Engineering and Locomotive Co. Ltd., 1997 (89) E.L.T. 463 (Bom.). Similar view has also been taken by the Madhya Pradesh High Court and the Karnataka High Court in the cases of Bajaj Tempo Ltd., 1997 (35) E.L.T. 212 (M.P.), and Thungabhadra Steel Products Ltd. v. Union of India, 1998 (98) E.L.T. 334 (Kar.). 32. The Apex Court in the case of Quality Steel Tubes (P) Ltd. v. Collector, 1995 (75) E.L.T. 17 (S.C.) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking the view that it was 'manufacturing' or 'producing' excisable goods, which fell within the applicable Tariff entry in a well considered judgment in the CEGAT held that, in the first place, the activity of fabrication of the raw material indicated that it did not amount to manufacture and it was merely an act of fabrication or facilitation of the iron rods, angles, channels and so on for being fitted into the structure that was being built. While taking this view, the Division Bench relied upon judgment of Aruna Industries referred to above. The Division Bench reached to the conclusions reading as under : "Having considered the matter from all these aspects, we are satisfied that, the cases of the petitioners before us fall within the matrix exactly similar to the one in Aruna Industries and had the assessing similar to the one in Aruna Industries and had the assessing authorities applied their minds carefully to the judgment in Aruna Industries case, there would not have been any difficulty in arriving at the correct decision. Having not done so, there is an error. We are, therefore, of the view that in both the cases, fabrication of structurals at the site of the princip ..... X X X X Extracts X X X X X X X X Extracts X X X X
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