2011 (12) TMI 166 - HC - Central Excise

Manufacture of prefabricated structural components‟ - supplied to the Delhi Metro Rail Corporation Limited(DMRC) - production is unique in nature and utility thereof is restricted to the location for which they are designed and not at any other place - exemption under Notification dated 17.02.2011 Held that - Said Notification stipulates goods to be manufactured at site and to be used in construction work at such site. In present case, there is no dispute that the goods supplied are used in construction work at site. Insofar as first ingredient is concerned, Circular No. 456/22/99 CX dated 18.5.1999 clarifies that expression site should not be given restrictive meaning and would include any premises made available to the manufacturer of goods falling under the Central Excise Tariff Act. Therefore, both the conditions stipulated in the Notification dated 17.2.2011 stand satisfied. The assessee, for the supplies made, were entitled to exemption under the said notification. - Decided in favor of assessee.

Summary

Issues:
1. Liability to pay excise duty for supply of prefabricated structural components without registration certificate.
2. Challenge to orders demanding duty and penalty.
3. Vires of Notification No. 21/2006 dated 1.3.2006 under Section 5A of the Central Excise Act, 1944.

Issue 1: Liability to pay excise duty without registration certificate
The petitioners, engaged in manufacturing prefabricated structural components for the Delhi Metro Rail Corporation Limited, supplied goods without a registration certificate under the Central Excise Act, 1944. A show cause notice was issued for removal of goods without payment of excise duty. The adjudicating authority held the petitioners liable to pay duty, imposed interest and penalties. The petitioners challenged these orders, arguing that their unique production was intended for specific locations and not for general use. However, similar cases where manufacturers supplied similar components were granted exemption from excise duty based on Notification No. 01/2011-CE(N.T.) dated 17.02.2011. The Tribunal upheld this exemption, stating that the goods were manufactured at the site of construction for use in construction work, meeting the conditions of the notification.

Issue 2: Challenge to orders demanding duty and penalty
The petitioners sought to quash the orders demanding duty and penalty. Despite the availability of an appeal remedy, the High Court entertained the writ petitions due to the challenge against the vires of Notification No. 21/2006. However, the Court found that the issue was already settled in similar cases where the Tribunal upheld the exemption under Notification No. 01/2011-CE(N.T.). As the legal position was clear in favor of the petitioners, the Court set aside the adjudication order, stating that no question of law arose in the instant cases, and the appeals were dismissed.

Issue 3: Vires of Notification No. 21/2006
While the petitioners challenged the vires of Notification No. 21/2006, the High Court did not delve into its validity as the issue was resolved based on the exemption granted under Notification No. 01/2011-CE(N.T.). The Court found that the conditions stipulated in the Circular dated 17.2.2011 were satisfied by the respondents, entitling them to exemption under the notification. Consequently, the writ petitions were allowed, and the adjudication order was set aside based on the settled legal position in favor of the petitioners.

In conclusion, the High Court ruled in favor of the petitioners, setting aside the orders demanding duty and penalty for supplying prefabricated structural components without a registration certificate. The exemption under Notification No. 01/2011-CE(N.T.) dated 17.02.2011 was upheld, establishing that the goods were manufactured at the site of construction for use in construction work, thereby absolving the petitioners from excise duty liability.