2010 (6) TMI 390 - AT - Central Excise

MS streetlight tabular poles Excisability - appellants manufactured a new marketable product namely MS street light tubular poles which is different from pipes and tubes Excisable Penalty - appellants suppressed the fact of manufacture and have manipulated invoices suppressing the actual value and the length of the poles - liable to penal action - imposition of penalty

Summary

Issues:
Department demanding duty on MS street light tubular poles; Contention regarding value of base plates and brackets; Allegations of showing lesser length of poles and raising invoices only for labor charges; Whether activities amount to manufacture of a new item; Comparison with cited decisions; Distinction between poles made by welding/joining of pipes and MS street light tubular poles; Finding of authorities below on the manufacturing process; Whether the manufactured poles are a new marketable commodity different from pipes; Suppression and clearance of excisable goods; Under-valuation of excisable goods; Bona fide intentions of the assessee; Classification of product under Heading 7326.90; Liability to penal action; Reduction of penalty amount under Rule 173Q of Central Excise Rules, 1944.

Analysis:
The judgment by the Appellate Tribunal CESTAT, CHENNAI involved a case where the Department issued a show-cause notice demanding duty on MS street light tubular poles manufactured and cleared by the appellants without payment of duty. The Department alleged that the appellants did not include the value of base plates and brackets attached to the poles, showed lesser length of the poles, and raised invoices only for labor charges, treating the finished goods as non-excisable. The appellant argued that their activities did not amount to the manufacture of a new item, citing legal precedents to support their stance.

The learned Advocate for the appellant referred to previous decisions where it was held that joining one pipe into another for making a pole does not result in the manufacture of a new product, hence no duty is payable on such poles. However, the Department contended that the poles in question were different as they had base plates and brackets attached for holding street lights, making them a distinct marketable commodity. The authorities below found that the manufactured poles were separate from pipes and subject to excise duty.

After considering submissions from both sides, the Tribunal found that the MS street light tubular poles manufactured by the appellants were indeed a new marketable product different from pipes. The Tribunal upheld the duty demanded, classifying the product under a specific heading. Additionally, the appellants were found liable for penal action due to suppression of manufacturing facts and manipulation of invoices. Despite this, the penalty amount was reduced considering the circumstances and the provision under Rule 173Q of the Central Excise Rules, 1944.

In conclusion, the Tribunal partially allowed the appeal by reducing the penalty amount imposed on the appellants. The judgment highlighted the importance of accurately classifying manufactured products for excise duty purposes and penalizing instances of suppression and under-valuation in the excise regime.