2017 (4) TMI 844 - AT - Central Excise

Excisability - chimney - appellant claim that chimney is not excisable goods and is immovable structure - job-work - IEF have manufactured various parts of Fume Extraction System on job work basis for KTMS and job work challan were raised by IEF - Held that - IEF has manufactured the goods in their factory premises on job work basis as per the design given by KTMS. From these facts it is apparent that the goods have in fact been manufactured and marketed by IEF and thus the marketability of the goods is established. Since the manufacture and marketability of the goods is established the excise liability follows - demand upheld. Imposition of penalty on KTMS - Held that - no specific role of KTMS has been identified in the impugned order. The only ground on which penalty has been issued is KTMS should have been aware that there is excise liability. This is insufficient for imposition of penalty - penalty set aside. Appeal disposed off - decided partly in favor o appellant.

Summary

Issues: Central excise duty demand on parts supplied by one company to another for manufacturing a Fume Extraction System, determination of excisability of chimney shells, imposition of penalties on the companies.

In this case, M/s. Isha Engg. & Fabricators (IEF) and M/s. KTMS Engg. Pvt. Ltd. were involved in manufacturing articles of iron and steel, specifically parts of a Fume Extraction System. A demand for central excise duty was initially dropped by the adjudicating authority but was later confirmed by the Commissioner (Appeals), along with penalties. The main argument presented was regarding the excisability of the chimney shells manufactured by IEF, with reference to previous tribunal decisions and CBEC circulars. The Tribunal noted that IEF manufactured the parts on a job work basis in their factory, following designs provided by KTMS, and subsequently supplied them to Bharat Forge Ltd. Unlike previous cases where goods were not marketable, in this instance, the goods were manufactured and marketed by IEF, establishing their marketability and thus excise liability. Consequently, the appeal of IEF was dismissed. On the other hand, regarding KTMS, the Tribunal found that no specific role was identified in the order, and the penalty imposed was deemed insufficient as mere awareness of excise liability was not enough for penalty imposition. Therefore, the penalty on KTMS was set aside, and their appeal was allowed. The judgment was pronounced on 23/03/2017 by the Tribunal.