2017 (12) TMI 1305 - AT - Central Excise

SSI exemption - works contract service - The fixtures assembled at the site were considered by the department as the manufactured goods and accordingly, the value of such fixtures were added to the assessable value of the furniture sold from the factory and the benefit of SSI Notification dated 01/03/2003 was denied to the appellant company - Held that - the fixtures erected at the customer s site cannot be considered as loose furniture, for the purpose of levy of Central Excise duty. Thus, the value of such fixtures cannot be included in the assessable value of loose furniture for the purpose of computation of the SSI threshold limit - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Central Excise duty demand confirmation
- Penalty imposition on the appellant company
- Personal penalty imposition on the Managing Director

Central Excise Duty Demand Confirmation:
The case involved the appellant company engaged in manufacturing wooden furniture and providing interior decorator services. The dispute arose when the department considered fixtures assembled at customer sites as manufactured goods, adding their value to the assessable value of furniture sold. The appellant argued that such fixtures were not subject to Central Excise duty as they had already discharged Service Tax liability under Works Contract Service. The department's contention was based on invoices showing removal of furniture from the factory in as-is condition, triggering Central Excise duty liability. The tribunal observed discrepancies in the department's case, noting statements from the Production Manager and Managing Director regarding Central Excise duty payments on specific items. It concluded that fixtures at customer sites should not be treated as loose furniture for Central Excise duty levy, as Service Tax had been paid on them separately.

Penalty Imposition on the Appellant Company:
The impugned order upheld Central Excise duty demand and imposed penalties on the appellant company. However, the tribunal found no merit in confirming the duty demand or penalties. It highlighted the department's failure to counter statements from company officials and prove non-payment of Service Tax on fixtures erected at customer sites. Consequently, the tribunal deemed the impugned order unsustainable in confirming the duty demand and penalties on the appellant company.

Personal Penalty Imposition on the Managing Director:
Additionally, a personal penalty of &8377; 2 Lakhs was imposed on the Managing Director of the appellant company. The tribunal, after setting aside the impugned order for confirming duty demand and penalties on the company, also found the personal penalty on the Managing Director not sustainable. Consequently, the appeals filed by the appellants were allowed, overturning the impugned order in its entirety.

In conclusion, the tribunal ruled in favor of the appellants, setting aside the impugned order that confirmed Central Excise duty demand, penalties on the company, and the personal penalty on the Managing Director. The decision was based on the discrepancy in the department's case regarding Central Excise duty payments and the separate discharge of Service Tax liability on fixtures assembled at customer sites.