2016 (9) TMI 886 - AT - Central Excise

Duty liability - import of cut size aluminium sheets and are subjecting the same to process like slitting, cutting, routing etc. to convert them into alucobond panels (cladding) - whether the above process amounts to manufacture of panels or not - Held that - it is found that the ld. Commissioner (Appeals) examined the excisability of the process undertaken by the respondent, elaborately. The respondent were making aluminium composite panels fixed to the exterior of the wall of the building. The impugned order categorically recorded, after apprising the facts of the case, that no excisable goods emerges due to the activity of the respondent. Moreover, the aluminium composite panel prepared at site were fixed to the building and becomes part of immovable property. No evidence has been brought forth by the Department that the imported panels after being subjected to drilling, bending etc., but before fixing in the wall were marketable as a new and distinct product. Even in the present appeal the grounds of appeal did not bring out the evidence in support of Revenue s claim regarding marketability of the product. It is an admitted fact that the composite aluminium panels are specially customised for use in the specific building and are made at site and as such there is no marketable commodity emerging. This fact has been categorically recorded in the impugned order. As we find no material evidence on the basic issue of emergence of new marketable product at site due to process undertaken by the respondent, we have no tenable reason to interfere with the impugned order. - Decided against the Revenue

Summary

Issues:
Whether the respondents are liable to Central Excise duty for converting aluminium sheets into alucobond panels.
Whether the processes carried out by the respondents amount to manufacture.
Whether the aluminium composite panels produced at the site are marketable products subject to Central Excise duty.

Analysis:
The appeal before the Appellate Tribunal CESTAT NEW DELHI concerned the liability of the respondents for Central Excise duty on converting aluminium sheets into alucobond panels through processes like slitting, cutting, and routing. The Revenue argued that the respondents should be taxed as they were manufacturing panels, which were recognizable as marketable products before installation. The Revenue cited a previous order where a Commissioner held a similar activity as manufacture since the items emerged before installation. However, the Tribunal noted that the Commissioner (Appeals) had thoroughly examined the excisability of the process and found that no excisable goods emerged from the respondents' activities. The Tribunal emphasized that the aluminium composite panels were customized for specific buildings, made on-site, and became part of the immovable property upon installation. There was no evidence presented by the Revenue to prove the marketability of the product before installation. The Tribunal concluded that without evidence of a new marketable product emerging, the appeal by the Revenue was rejected.

In the detailed analysis, the Tribunal highlighted the lack of material evidence supporting the Revenue's claim regarding the marketability of the product resulting from the processes undertaken by the respondents. The Tribunal emphasized the specific nature of the composite aluminium panels, which were custom-made for individual buildings and not intended for general market sale. The Tribunal noted that the Revenue's reliance on general case laws related to marketability was insufficient in the absence of concrete evidence in the present case. The Tribunal stressed the importance of establishing marketability on a case-by-case basis and concluded that without proof of a new marketable product arising from the processes, there was no basis to interfere with the decision of the Commissioner (Appeals). Consequently, the appeal filed by the Revenue was rejected by the Tribunal.