2005 (6) TMI 10 - AT - Central Excise

Summary

Issues Involved:
1. Classification of fabricated structures.
2. Excisability and marketability of fabricated structures.
3. Time-bar under Section 11A.
4. Imposition of penalty.
5. Exemption under Notification No. 197/87.

Issue-wise Detailed Analysis:

1. Classification of Fabricated Structures:
The Commissioner classified the structures fabricated by M/s. AFCONS under sub-heading 7308.90. The Revenue contended that the dock gates should be classified under 8486.00 and 8907.00, respectively. The Tribunal noted that the Commissioner's order had inconsistencies regarding the classification and excisability of these items, as he agreed with the earlier order classifying the items under 7308.90 but later concluded that they are not goods and hence non-excisable.

2. Excisability and Marketability of Fabricated Structures:
The Tribunal analyzed whether the processes of cutting, welding, and drilling carried out by M/s. AFCONS amounted to manufacture. It referred to various case laws, including Aruna Industries and Thungabhadra Steel Products Ltd., which held that such fabrication activities do not amount to manufacture and the resultant structures are not marketable goods. The Tribunal concluded that the fabricated items, including the submarine dock roof structure and gantry beam rail, became immoveable property and could not be considered goods. The Tribunal also noted that the Commissioner failed to provide a finding on the marketability of these items.

3. Time-bar under Section 11A:
M/s. AFCONS contended that the demand for the period up to January 1988 was time-barred, as the Show Cause Notice (SCN) was issued on 5-1-89. However, since the Tribunal allowed the appeal on merits, it did not delve into the issue of limitation.

4. Imposition of Penalty:
The Revenue argued that no penalty was imposed on M/s. AFCONS or the individuals involved, despite the Commissioner confirming the demand. The Tribunal did not address this issue separately, as it quashed the entire demand on merits.

5. Exemption under Notification No. 197/87:
M/s. AFCONS claimed exemption under Notification No. 197/87, which provides exemption to goods manufactured by a factory belonging to the Central Government and intended for use by any department of the said Government. The Tribunal noted that the Commissioner did not consider this contention. However, since the Tribunal allowed the appeal on the ground that the fabricated items were not goods, it did not specifically address the exemption issue.

Conclusion:
The Tribunal held that the items fabricated by M/s. AFCONS are not goods as they are not marketable and have become part of immoveable structures. Consequently, the demand raised by the Revenue was quashed, and the appeals filed by both the Revenue and M/s. AFCONS were dismissed. The Tribunal set aside the Order-in-Original, concluding that the fabricated structures were not excisable.