2017 (1) TMI 602 - AT - Central Excise

Manufacture - sub-contract - erection and installation of storage system - Held that - The appellant cleared the angles channels on payment of duty as applicable to site of the customers thereafter with the help of the said angle, channel alongwith bought out items fabrication/ erection/ installation job was done by the sub contractor namely (a) M/s. S.M. Errection Service (b) M/s. Saibaba Erection Service.(c) M/s. Ali Bin Mohgammed Magrabi - If at all, the activity at site is amount to manufacture and if it is liable for duty, it should have been demanded from the manufacturer of storage system, the said activity carried out by sub contractor therefore appellant cannot be treated as manufacturer of storage system accordingly, duty should have been demanded if at all applicable, it is from the sub contractors - appeal allowed - decided in favor of appellant.

Summary

Issues:
Excise duty demand on fabrication/erection/installation of storage system at customer's site.

Analysis:
The appellant, engaged in manufacturing slotted angles and channels, faced a demand for duty on the expenditure related to the erection and installation of storage systems at the customer's site. The adjudicating authority upheld the demand, which was affirmed by the Commissioner(Appeals). The appellant argued that the fabrication/installation of storage systems at the site was not excisable goods as they were immovable once erected. They further contended that the entire fabrication/erection/installation work was outsourced to independent subcontractors, making them liable for any duty. Citing various judgments, the appellant emphasized that if duty was applicable, it should be demanded from the subcontractors who performed the on-site activities.

The Revenue, represented by the Superintendent(A.R.), supported the findings of the impugned order and referred to a Tribunal judgment in a similar case. After considering both sides' submissions and examining the records, the Tribunal found that the duty demand was based on the fabrication/erection/installation of storage systems at the customer's site. It was acknowledged that the manufacturing and on-site activities were distinct, with the appellant supplying the necessary components to subcontractors for the fabrication work. The Tribunal concluded that if duty was applicable to the on-site activities, it should be levied on the subcontractors who performed the work, not on the appellant as the manufacturer of the storage systems. Therefore, the duty demand against the appellant was deemed incorrect and illegal based on the specific circumstances of the case.

In the final judgment delivered on 20/12/2016, the Tribunal set aside the impugned order, allowing the appeal with any consequential relief as per the law.