2008 (12) TMI 576 - AT - Central Excise

Summary

Issues involved: Determination of whether the fabrication activities of the assessee amount to manufacture for the purpose of central excise duty liability, and whether the demand raised by the department is barred by limitation.

Summary:
The case involved an SSI unit engaged in manufacturing structural fabrication items falling under sub-heading 7308.90. The department alleged that the appellants had exceeded the prescribed ceiling limits and suppressed the fact of supply of raw materials by their customers, intending to evade duty payment. A show-cause notice was issued demanding duty and proposing penalties. The Additional Commissioner confirmed the duty demand but dropped it on the value of steel windows, imposing penalties. The Commissioner (Appeals) accepted the contention that the fabrication activities did not amount to manufacture based on a Tribunal decision and dropped the demand without addressing the limitation argument. The Revenue appealed to the Tribunal against the dropping of the demand and the setting aside of penalties.

Upon hearing both sides, the Tribunal considered the question of whether the fabrication activities constituted manufacture. While the Revenue relied on a decision holding such activities as manufacture, the Tribunal found that the demand for the period in question was raised in 1997, and based on previous Tribunal decisions, the assessees could not be deemed to have suppressed facts with intent to evade duty. Consequently, the Tribunal held that the demand was barred by limitation and rejected the department's appeal on this ground.

This judgment highlights the importance of considering the limitation period for raising demands in central excise cases and the interpretation of whether certain activities amount to manufacture for duty liability purposes.