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2016 (4) TMI 625 - AT - Central ExciseManufacture - fabrication of saddles - whether the appellant or the fabricators are the manufacturer of the saddles? - Held that - Saddle is a common name known to the market and the fact that it is not brought and sold in the market could not in any manner diminish its capability of being marketable which is evident from the fact that the appellant themselves use the said saddle in the railway wagons for carrying HR coils, and for such use they consider it as marketable commodity and discharge duty accordingly. There is no doubt that the saddles are excisable goods and accordingly chargeable to duty. For fabrication of similar saddles, when fitted to the railway wagons, the appellant had considered themselves as manufacturer and discharged duty even though the said saddles were also fabricated in their own premises from the raw materials supplied by the Appellant to the fabricators against same terms and conditions except that in one case the saddles were fitted in the Railway wagons and in another it were grouted to earth but with the common objective to place the HR coils on the said saddles. Thus, the circumstances in their earlier case decided by this Tribunal earlier is quite different from the present one, therefore, the judgement delivered in connection with fabrication of ladders and staircases at site, would not be comparable to the facts of the present case, accordingly, not applicable. Therefore, we have no hesitation to hold that the appellant are the manufacturer of the saddles. Benefit of Notification NO.61/90-CE dated 20.03.1990 and Notification No.41/94-CE dated 01.03.1994 - Held that - The sole object for which saddles were fabricated was for its use in storage of the HR coils in the factory premises and grouting has been done by fixing with nuts and bolts only for the purpose of making it stationery, hence, such grouting cannot be considered as construction work. In the result, the appellant also failed to substantiate their claim on exemption from duty on the saddles under the above two Notifications. Invoked extended period - Held that - We find substance in the argument of the Revenue inasmuch as the appellant is required to disclose the true description of the goods and its classification would be determined on the basis of said declaration vis- -vis the entries of the respective chapter headings/sub-headings etc. The reverse is not true. Besides, we find that the saddles when manufactured and fitted to Railway wagons appropriate duty was paid but when used in the factory for same purpose treated as non dutiable without any valid reason. Therefore, we are of the view that the fact of manufacture and use of saddles in the factory premises were not disclosed in the respective classification list, therefore the claim of the appellant that all facts were within the knowledge of the department and no facts were suppressed cannot be sustained. Consequently, extended period of limitation is applicable to the facts and circumstances of the present case. Appellant are eligible to the Modvat credit, but, to ascertain the exact quantum of credit, it needs to be remitted to the Ld. Commissioner for verification/scrutiny. Since we have observed that the appellant are eligible to the MODVAT Credit on the duty paid inputs used in the manufacture of 240 no. of saddles and for determination of the exact amount of credit, the matter is remitted to the ld. Commissioner; thus, in our opinion, the penalty and fine be accordingly determined thereafter, but, in any case the respective amount cannot exceed the amount of fine and penalty imposed in the first order dated 16.02.1999.
Issues Involved:
1. Whether the fabrication of saddles is "manufacture" as defined under section 2(f) of the Central Excise Act, 1944. 2. Whether the appellant or the fabricators are the manufacturers of the saddles. 3. Whether the appellants are eligible for the benefit of Notification No. 61/90-CE dated 20.03.1990 and Notification No. 41/94-CE dated 01.03.1994. 4. Whether the appellants are eligible for the benefit of MODVAT Credit. 5. Whether the demands are barred by limitation. Issue-wise Detailed Analysis: 1. Fabrication of Saddles as "Manufacture": The Tribunal addressed whether the fabrication of saddles constitutes "manufacture" under section 2(f) of the Central Excise Act, 1944. It was established that the saddles were fabricated inside the appellant's factory premises by contractors using materials supplied by the appellant. The principle of marketability was applied, referencing the Supreme Court's decision in *A.P. State Electricity Board* and the Tribunal's decision in *Mahindra & Mahindra Ltd.*, which concluded that the capability of the goods to be bought and sold in the market suffices for marketability. The Tribunal found that saddles, known in the market and used by the appellant for transporting HR coils, are excisable goods. 2. Manufacturer of Saddles: The Tribunal considered whether the appellant or the fabricators were the manufacturers. The appellant argued that the fabricators, who performed the work under the appellant's supervision using materials supplied by the appellant, should be considered the manufacturers. The Tribunal, referencing *Raymond Ltd.* and *Maruti Udyog Ltd.*, held that the appellant, who controlled the fabrication process and supplied all necessary materials, were the actual manufacturers of the saddles. 3. Eligibility for Exemption Notifications: The Tribunal examined the appellant's claim for exemption under Notification Nos. 61/90-CE and 41/94-CE, which exempt goods fabricated at the site of construction work for use in such construction work. The Tribunal concluded that the saddles were fabricated for storage of HR coils and grouted to earth, which does not constitute construction work. Therefore, the appellant was not entitled to the exemption. 4. Eligibility for MODVAT Credit: The appellant contended that they should be allowed MODVAT Credit for the duty paid on inputs used in manufacturing the saddles. The Tribunal, citing *Formica India Division* and *Chemplast Sanmar Ltd.*, agreed that the appellant is eligible for MODVAT Credit. However, the exact quantum of credit needed verification and was remanded to the Commissioner for determination. 5. Limitation of Demands: The Tribunal addressed whether the demands were barred by limitation. For Appeal No. EA-351/04, it was found that the appellant did not specifically disclose the manufacture of saddles in their classification lists, justifying the invocation of the extended period of limitation. For Appeal No. EA-157/05, the Tribunal agreed with the appellant that a second show cause notice on the same issue invoking the extended period is barred by limitation, referencing the Supreme Court's decision in *Nizam Sugar Factory*. Conclusion: - Appeal No. E/351/04: Partly allowed for the admissibility of MODVAT Credit. The matter is remanded to the Commissioner for verification of the quantum of credit and redetermination of duty liability, fine, and penalty. - Appeal No. E/157/05: Allowed on the ground of limitation. Pronouncement: The judgment was pronounced in the open court on 24.02.2016.
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