2014 (2) TMI 774 - HC - Central Excise

Waiver of pre-deposit - Extended period of limitation - Excisability of structures - manufacturing aluminum sliding windows & aluminum doors - SSI exemption - Items were directly comes to the site where the structure was erected and glass was fixed - Applicant contended that aluminum assembly of Glazing Systems, the glazing is of glass which comes into existence at site and it is immovable property - The appellant also submitted that in any case credit to the extent of an amount of ₹ 28.42 lacs which they could have taken in respect of duty paid on the inputs but not taken as according to them the system was not excisable goods. - Tribunal ordered pre-deposit of ₹ 1.23 crores after granting benefit of extended period of limitation. Held that - During the hearing on a specific query we were informed that the amount of ₹ 28.42 lacs paid on inputs has not been taken as cenvat credit. This was to avail benefit of a composition scheme in respect of service tax payable on works contract has as one of its conditions not to take cenvat credit on inputs. Therefore, permitting the appellant to take cenvat credit would mean they are disentitled to the benefit of service tax composition scheme which has already been availed. Therefore, the credit of ₹ 28.42 lacs cannot at this stage be taken into consideration for the purposes of determining the amounts to be deposited for the purpose of pre deposit. All these issues would be gone into at the final hearing of the appeal. No reason at this stage to interfere with the order of the Tribunal. - the time to deposit the further sum of ₹ 50 lacs as directed by the impugned order for the purpose of hearing the appellant s appeal on merits is extended - Decided partly in favour of assessee.

Summary

Issues:
Challenge to order under Section 35G of the Central Excise Act 1944 for deposit, classification of activity as manufacture, applicability of duty demand, pre-deposit requirement under Section 35F, interpretation of immovable property, relevance of case laws, credit for duty paid on inputs, composition scheme impact on cenvat credit.

Analysis:
1. Challenge to Tribunal's Order: The appellant challenged the Tribunal's order directing a further deposit of Rs.50 lakhs under Section 35G of the Central Excise Act 1944. The Tribunal required the deposit for hearing the appeal on merits, based on a duty demand of Rs.4.48 crores confirmed by the Commissioner of Central Excise.

2. Classification of Activity as Manufacture: The appellant argued that the activity of Aluminum Assembly of glazing of glass system results in immovable property at the site, not goods. However, the Commissioner held the system chargeable to excise duty, leading to the duty demand and penalty confirmation for the period 2004-05 to 2009-10.

3. Pre-Deposit Requirement under Section 35F: The appellant applied under the proviso to Section 35F to dispense with pre-deposit of duty, interest, and penalty for the appeal. The Tribunal, while not applying the extended period of limitation, directed a further deposit of Rs.50 lakhs for the appeal to be heard on merits.

4. Interpretation of Immovable Property: The appellant contended that the system becomes immovable property at the site, thus not subject to excise duty. Citing relevant case laws, the appellant argued against the requirement of deposit and urged for a hearing on merits.

5. Impact of Case Laws and Adjudication Order: The revenue argued that the system is manufactured by the appellant and removed in a disassembled condition to the site, making it taxable under Rule 2(a) of the Tariff Act 1985. The Tribunal considered the applicability of case laws and the adjudication order in determining the duty demand and pre-deposit requirements.

6. Credit for Duty Paid on Inputs: The appellant claimed credit for duty paid on inputs amounting to Rs.28.42 lakhs, which they did not take due to the belief that the system was not excisable goods. However, the Tribunal noted that this credit could not be considered at the pre-deposit stage due to the composition scheme's impact on cenvat credit.

7. Final Decision: The High Court dismissed the appeal, upholding the Tribunal's order for the further deposit of Rs.50 lakhs. The time for deposit was extended, and all issues, including the classification of the activity, applicability of case laws, and credit for duty paid on inputs, would be addressed at the final hearing.