2015 (2) TMI 696 - AT - Central Excise

Waiver of pre deposit - Excise duty liability on Fabrication of pipes - Held that - Appellants have admittedly fabricated the pipes in question. This fact is not being denied by them and it also stands admitted that after the decision of Larger Bench in the case of Mahindra & Mahindra Ltd 2005 (11) TMI 103 - CESTAT, NEW DELHI the fabrication of iron and steel structural has been held to be a manufacturing activity. However, they have submitted that such manufacturing was taking place out of the material supplied by M/s Simplex Infrastructure and as such appellants cannot be held to be manufacturer. We do not find any prima facie merits in the above contention of the appellant. It is well settled law that the one who manufactures is the manufacturer. Such manufacture may be out of the raw materials supplied by others and by using the machines and capital goods given by the principal manufacturers. As such, at this prima facie stage, we are of the view that the appellant have manufactured the pipes in question. Entire demand is not barred by limitation and the said question, being a mixed question of fact, can only be entertained at the disposal of the final appeal. Inasmuch as In the present case, by taking note of the contentions of both the sides including the fact of payment of duty by the appellant's sister concern at Vishakhapatnam we are of the view that a prima facie it may not be a case of demand being barred by limitations. - in case the demand is confirmed against them, they would be entitled to the benefit of the Cenvat Credit of duty paid on the steels. Though, such cenvat credit would be available only after verification of the invoices etc. but at this interim stage, we accept the appellant's statement that such credit would be to the tune of around 1.37 crores. We agree that the issue in the present appeal is determination of the appellants central excise duty Liability and not going into the fact of excess or less payment of Service Tax. After taking into account the prima facie merits, limitation and the availability of Cenvat Credit as also the fact that the appellant has not pleaded any financial hardship duly supported by the documentary evidences, we deem it fit to direct the M/s Kaakteeya Fabs Private Ltd. to deposit an amount of ₹ 50 lakhs within as period of 12 weeks from today. Partial stay granted.

Summary

Issues:
1. Liability to pay excise duty on fabricated pipes.
2. Applicability of Cenvat Credit.
3. Limitation period for raising demand.
4. Payment of Service Tax and its impact on excise duty liability.

Issue 1: Liability to pay excise duty on fabricated pipes:
The case involved a dispute regarding the liability of M/s Kaakateeya Fabric Pvt. Ltd. for the payment of excise duty on fabricated pipes. The Tribunal noted that the appellant had indeed fabricated the pipes in question, which was considered a manufacturing activity. The appellant argued that since they used materials supplied by another party, they should not be considered the manufacturer. However, the Tribunal held that the one who manufactures is the manufacturer, regardless of the source of raw materials or machinery. Therefore, the Tribunal found prima facie merit in holding the appellant liable for excise duty on the fabricated pipes.

Issue 2: Applicability of Cenvat Credit:
The appellant claimed entitlement to Cenvat Credit of duty paid on the steel items received from the principal manufacturer. The Tribunal acknowledged the appellant's claim for Cenvat Credit, estimating it to be around Rs. 1.37 crores. While the final verification of invoices was pending, the Tribunal accepted the appellant's statement regarding the potential credit amount.

Issue 3: Limitation period for raising demand:
Regarding the limitation period for raising the demand, the Tribunal found that the entire demand was not barred by limitation. The question of limitation was deemed a mixed question of fact, to be considered in the final appeal stage. The Tribunal considered factors such as the payment of duty by the appellant's sister concern to determine that prima facie, the demand might not be barred by limitations.

Issue 4: Payment of Service Tax and its impact on excise duty liability:
The appellant contended that since they had paid Service Tax on the entire contract value, there should be no additional liability for excise duty. However, the Tribunal clarified that the issue in the appeal was solely the determination of central excise duty liability, not the correctness of the Service Tax payment. The Tribunal directed the appellant to deposit Rs. 50 lakhs within 12 weeks, subject to which the pre-deposit of the balance duty amount and penalties would be waived during the appeal's pendency.

In conclusion, the Tribunal addressed the liability for excise duty on fabricated pipes, the applicability of Cenvat Credit, the limitation period for raising demands, and the impact of Service Tax payment on excise duty liability in a detailed and comprehensive manner, providing a balanced analysis of the legal issues involved in the case.