2005 (12) TMI 382 - AT - Central Excise

Summary

Issues:
1. Classification of parts of structure under Central Excise Tariff
2. Manufacturer of parts of structures
3. Time-barred demand
4. Suppression of facts to evade payment of duty
5. Registration for manufacture of parts of structures

Classification of parts of structure under Central Excise Tariff:
The judgment pertains to the classification of parts of structure under the Central Excise Tariff. The demand was confirmed and penalty imposed on the grounds that the parts are classifiable under Heading 73.08. The Larger Bench of the Tribunal had previously decided in favor of the Revenue in a similar case. The appellants argued that they are not the manufacturers of the parts of structures but rather entered into contracts with sub-contractors for fabrication. The terms of the agreements indicated that the sub-contractors were responsible for manufacturing the parts as per designs provided by the appellants. The Tribunal found that based on the terms and conditions of the contracts, the sub-contractors were indeed the manufacturers, leading to the demand being deemed unsustainable.

Manufacturer of parts of structures:
The appellants contended that they were not the manufacturers of the parts of structures for which duty was demanded. They had engaged sub-contractors for fabrication work, and the responsibility for manufacturing the goods in question rested with the sub-contractors. The terms of the contracts clearly outlined that the sub-contractors were to procure tools, machinery, and other items required for fabrication. Payment terms also indicated that the sub-contractors were responsible for the quality and completion of the work. The Tribunal ruled in favor of the appellants, setting aside the demand and penalties, as it was established that the sub-contractors, not the appellants, were the manufacturers of the goods.

Time-barred demand and Suppression of facts:
The appellants argued that the demand for duty was time-barred as the show-cause notice was issued after a significant delay from the period in question. They contended that there was no suppression of facts on their part, as the Revenue Department only requested license registration for manufacture of parts of structures after the demand period. The Tribunal did not delve into the issue of limitation as the appeal was allowed on other grounds, indicating that the demand was unsustainable based on the manufacturing arrangement with the sub-contractors.

Registration for manufacture of parts of structures:
The Revenue asserted that the appellants were the manufacturers of the goods based on the terms and conditions of the contract, and the sub-contractors were considered hired labor. The fact that the appellants applied for registration for manufacturing the parts of structures was highlighted as evidence supporting the Revenue's contention. However, the Tribunal found that the terms of the contracts clearly established the sub-contractors as the manufacturers, and the demand and penalties were set aside based on this finding.

In conclusion, the judgment addressed the classification of parts of structures under the Central Excise Tariff, the manufacturing arrangement between the appellants and sub-contractors, the time-barred demand, suppression of facts, and the registration for manufacture of parts of structures. The Tribunal ruled in favor of the appellants, setting aside the demand and penalties as it was established that the sub-contractors were the actual manufacturers of the goods in question.