2008 (7) TMI 818 - AT - Central Excise

Summary

Issues:
1. Whether the assembly of a crane amounts to manufacture.
2. Time limitation for issuing a demand notice.

Analysis:

Issue 1:
The case involved a dispute regarding whether the assembly of a crane by the first respondent at the premises of the second respondent constituted manufacturing. The original authority had demanded a sum from the first respondent and imposed penalties on both respondents. The Commissioner (Appeals) ruled in favor of the parties on both merits and time bar. The Department argued that the crane assembly was completed after the receipt of a grab bucket, invoking an extended time limit for duty payment. They relied on precedents to establish the crane's excisability. However, the Tribunal found that the crane assembly was completed in September 1987, rejecting the Department's argument that it was finished only in January 1988 after receiving the grab bucket. The Tribunal deemed the crane excisable and accepted the respondent's claim that it was completed before the grab bucket's receipt. Moreover, they noted that the Department should have noticed the crane structure during factory visits from 1987 to 1992, rendering the demand time-barred. Consequently, the Tribunal upheld the Commissioner (Appeals)' decision that the demand was time-barred and rejected the Department's appeals.

Issue 2:
The second issue pertained to the time limitation for issuing a demand notice. The Tribunal determined that the show cause notice issued on 28-10-1992 was beyond the permissible time limit due to the crane assembly being completed in September 1987. They highlighted that the Department had opportunities to observe the crane's construction during factory visits between 1987 and 1992, indicating that the demand was time-barred. Therefore, the Tribunal upheld the Commissioner (Appeals)' decision that the demand was time-barred and rejected the Department's appeals.

In conclusion, the Tribunal ruled in favor of the respondents, holding that the assembly of the crane did not amount to manufacture and that the demand notice was time-barred. The decision emphasized the completion date of the crane assembly and the Department's failure to notice the structure during factory visits, leading to the rejection of the Department's appeals.