2011 (12) TMI 353 - AT - Central Excise

Application for stay - Officers of the anti-evasion unit attached to Pune Central Excise visited the premises of the appellant in January 2008 and carried out a search - It was found that the appellant had also engaged in the working (on labour charge basis) on the materials supplied by the customers. It was further found that the appellant provided supervision, guidance for construction of greenhouse and carried out erection work as per the request of the clients - . The activity carried out by the appellant consisted of sale of materials in some cases, sale of materials and construction of greenhouse at the site to whom the material is sold, construction of greenhouse at the site with materials procured by the clients from the suppliers other than the appellant and maintenance of greenhouse - Held that the appellant is supplying various raw materials for the construction of greenhouse on payment of sales tax. These materials are procured by the appellant from the market and is not manufactured by the appellant - Once the greenhouse comes into existence, it is attached to the earth/foundation and becomes immovable goods and hence it cannot be said that the appellant has manufactured an excisable goods at the site - By merely supplying materials for the greenhouse, there is no evidence on record to show that what has been supplied is a greenhouse - unconditional waiver of pre-deposit granted.

Summary

Issues:
Appeal against order-in-original, Classification of goods, Liability for excise duty, Extended period for demand, Interpretation of tariff, Suppression of facts, Waiver of pre-deposit.

Classification of Goods:
The case involved a company engaged in manufacturing and clearance of materials for greenhouse construction without obtaining registration or paying Central Excise duty. The department classified the product under Chapter heading 94.06 of the Central Excise tariff. The appellant argued that they were primarily involved in selling materials and construction activities, not pre-fabricating greenhouses in their workshop. They contended that since the greenhouse became immovable property after erection, it was not excisable goods. The Tribunal agreed, citing precedents that cutting, drilling, bending materials did not constitute manufacturing and that the appellant had made a strong case for waiver of pre-deposit.

Liability for Excise Duty:
The Commissioner of Central Excise had issued a show-cause notice demanding excise duty for the period 2005-2008, which was confirmed along with interest and a penalty. The appellant argued that they had paid VAT/CST on materials sold and service tax for erection activities. They contended that the erection and commissioning of greenhouses did not constitute manufacturing excisable goods. The Tribunal found that the materials supplied were not manufactured by the appellant, and the erection activities did not amount to manufacturing excisable goods, granting a 100% waiver of pre-deposit.

Extended Period for Demand:
The appellant pleaded that the confirmation of demand beyond one year was not sustainable as they had not suppressed any facts. They argued that the absence of registration was due to a genuine belief that their product was not excisable. Citing various judicial pronouncements, the appellant contended that no penalty should be imposed. The Tribunal granted the waiver of pre-deposit, finding no evidence of suppression of facts and accepting the appellant's contentions regarding classification and interpretation of tariff.

Suppression of Facts:
The appellant argued that they had not suppressed any facts and that their belief in the non-liability for excise duty was genuine. They relied on judicial precedents to support their contention that no penalty should be imposed in cases of classification disputes. The Tribunal found in favor of the appellant, granting a 100% waiver of pre-deposit and staying the recovery of dues during the appeal process.

This detailed analysis of the judgment highlights the issues of classification of goods, liability for excise duty, extended period for demand, interpretation of tariff, suppression of facts, and the grant of waiver of pre-deposit by the Tribunal based on the arguments presented by the appellant and the department.