2012 (10) TMI 824 - AT - Central Excise

Manufacture - movable versus immovable - marketability of goods - erection at the site manufacturing of trusses, purlins, bracings, crane girders Works contract - Held that - When a part of structure is prepared and disassembled, the members thereof will be angles, rods etc., prepared for use in such structure. These are not angles, or plates merely cut or drilled without reference to a particular structure. The later part of Heading 73.08 would apply to the members such as plates, rods, angles, etc., that are prepared for use in structures or their parts in their pre-assembled or disassembled state of an identifiable article of the types of the parts of structures covered under Heading 73.08. The goods manufactured by the assessee it is excisable and duty is leviable. Since this circular is issued in exercise of powers under Section 37B of the Act is binding and the legality and clarity is visible. there was a manufacture of excisable goods by M/s. Richardson & Cruddas Ltd. out of the raw materials supplied by the M/s. Ahmedabad Electricity Company Limited. The Board s circular clearly clarifies the excisability and marketability and removes the doubt regarding the excisability or dutiability of immovable properties in terms of Rule 2(a) of Rules of Interpretation of Central Excise Tariff. It also makes a clear distinction though the inputs, parts or components which are specified excisable products will remain dutiable and identifiable at the time of their clearance from the factory or place of manufacture. If the person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be.

Issues Involved:
1. Activities performed at site (embedded stretches or otherwise, immovable or otherwise)
2. Goods brought for making the structure (structure/goods distinguishable)
3. Distributiability thereof

Issue-wise Detailed Analysis:

1. Activities Performed at Site:
The core issue revolves around whether the activities performed at the site by the assessee, involving the fabrication of iron and steel structures, amount to "manufacture" under the Central Excise Act. The Tribunal examined the processes carried out by the assessee, which included cutting, drilling, welding, and bolting raw materials into structures like columns, beams, bracing, purlins, rafters, ties, and scanteling. The Tribunal emphasized that these activities resulted in new products with distinct commercial names, identities, and uses, thus qualifying as "manufacture". The Tribunal referenced the statement of Shri Ivon G. Jacob, who confirmed that the raw materials underwent significant transformation, resulting in identifiable and marketable goods.

2. Goods Brought for Making the Structure:
The Tribunal scrutinized whether the fabricated structures could be considered excisable goods. The assessee argued that the structures were immovable properties and thus not subject to excise duty. However, the Tribunal referred to various case laws, including the Larger Bench decision in Mahindra & Mahindra Ltd. v. CCE, which established that parts of structures like trusses, purlins, columns, beams, and girders, even in their movable state, are subject to excise duty under Heading 73.08 of the Central Excise Tariff. The Tribunal concluded that the fabricated items were distinct marketable commodities that existed before being permanently fixed in structures, thus making them excisable.

3. Distributiability Thereof:
The Tribunal addressed the marketability and distributiability of the fabricated structures. The assessee contended that the goods were not marketable as they were created at the work site and not known in the market as independent articles. The Tribunal, however, referred to the Supreme Court's judgment in A.P. State Electricity Board, which held that marketability is an essential ingredient for levy of excise duty, and goods need not be actually marketed to be considered marketable. The Tribunal found that the fabricated items were indeed marketable commodities, as evidenced by their transportation to the erection site and their distinct commercial identities.

Additional Considerations:
The Tribunal also considered the Board's Circular No. 154/26/99-CX.4, which clarified that components of turnkey projects, even if assembled or erected at site, are dutiable if they result in new products with distinct commercial identities before being assimilated into immovable property. The Tribunal emphasized that the fabricated items were excisable as they were identifiable and marketable before being permanently fixed in the structure.

Conclusion:
The Tribunal set aside the Order-in-Original of the Commissioner of Central Excise, Ahmedabad, which had dropped the proceedings against the assessee. The Tribunal allowed the appeal filed by the Revenue, concluding that the assessee had manufactured excisable goods from the raw materials supplied by the Ahmedabad Electricity Company Limited. The fabricated structures were deemed marketable commodities subject to excise duty, and the appeal by the Commissioner of Central Excise, Ahmedabad-II, was allowed in toto.

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