2015 (10) TMI 1198 - AT - Central Excise

Waiver of pre deposit - whether the activity of the appellant installation of signaling system at site is manufacture of excisable goods and would be attract excise duty, is a question of interpretation - Held that - Activity of the appellant no excisable goods come into existence. Moreover, it is also not disputed that similar show cause notices issued by jurisdictional Additional Commissioner, Bangalore, Ahmedabad and Mysore have been dropped by the concerned Additional Commissioners. We are also convinced with the contention that the elements required for invocation of extended period under proviso to section 11A(1) are absent in this case. Prima facie, the show case notice dated 31.10.2012 for demand of duty issued for the period October, 2007 to December, 2009 is therefore time barred - requirement of pre-deposit of duty demand, interest and penalty is waived for hearing of the appeal and recovery thereof is stayed. - Stay granted.

Summary

Issues:
Whether the activity of installing signaling systems at the railway stations amounts to the manufacture of excisable goods attracting excise duty.

Analysis:
The case involved the appellant engaged in manufacturing and supplying railway signaling equipment to Indian Railways. The dispute arose when the department claimed that the appellant had manufactured signaling systems at the site, making them liable to pay central excise duty. The Commissioner confirmed a duty demand against the appellant, along with interest and penalties. The appellant contended that no excisable goods emerged at the site as they only installed the systems after procuring duty-paid components. They argued that the activity fell under services, subject to service tax, not excise duty. The appellant highlighted that similar show cause notices for other stations had been dropped, indicating that their activity did not amount to manufacturing excisable goods.

During the hearing, the appellant's counsel emphasized that the activity of erection, installation, and commissioning of signaling systems was a service, not manufacturing. They pointed out that the appellant was already paying service tax on the amounts received. The counsel argued that the demand was time-barred, citing the absence of elements for invoking the extended period under the relevant provision. The appellant sought a waiver of pre-deposit of duty, interest, and penalty for the appeal hearing, which was opposed by the Departmental Representative reiterating the Commissioner's findings.

In its judgment, the Tribunal noted that the core issue was whether the appellant's activity constituted the manufacture of excisable goods. The Tribunal found that no excisable goods came into existence through the appellant's activity of installing signaling systems. It was also observed that similar show cause notices issued by other jurisdictional Additional Commissioners had been dropped. Consequently, the Tribunal held that the demand for duty issued for a specific period was time-barred. As a result, the Tribunal waived the pre-deposit requirement for duty, interest, and penalty, staying the recovery for the appeal hearing.