2005 (10) TMI 10 - AT - Central Excise

Manufacture (1) fabrication at site and embedded to earth (2) fabrication of tanks from bits and pieces or plates (3) Cutting of pipes (4) Job work in the premises of material supplier

Summary

Issues Involved:
1. Liability of excise duty on 'specials' fabricated for the pipe-laying project.
2. Marketability and classification of various fabricated items.
3. Manufacture and duty liability for items fabricated by job workers.
4. Double taxation on certain items.
5. Limitation period for issuing show cause notices.
6. Penalty and interest under Sections 11AC and 11AB of the Central Excise Act.

Detailed Analysis:

1. Liability of Excise Duty on 'Specials':
The primary issue was whether the appellants were liable to pay excise duty on certain transmission pipeline appurtenances described as 'specials'. The appellants contended that these 'specials' were fabricated exclusively as per the designs and specifications provided in the contract with BWSSB and were not marketable. The tribunal held that the 'specials' were not marketable as they were fabricated for specific use in the pipe-laying project and could not be sold in the market. Therefore, they were not liable to excise duty.

2. Marketability and Classification:
The tribunal applied the test of marketability as prescribed by the Apex Court, notably in Moti Laminates Pvt. Ltd. v. CCE, and found that the 'specials' fabricated at Jakkasandra and Tataguni were not marketable. The items like ring girders, cones, reducers, and mitre bends were specifically designed for the project and could not be marketed to anyone else. Hence, they were not excisable goods. The tribunal also noted that the adjudicating authority had wrongly presumed that these items were fully fabricated at the yards, whereas they were actually fabricated at the project site.

3. Manufacture and Duty Liability for Items Fabricated by Job Workers:
The tribunal found that the items fabricated by job workers were not liable for excise duty on the appellants. The adjudicating authority had wrongly held the appellants liable without considering various judicial decisions that establish that the job worker is responsible for paying the duty. The tribunal cited the Ujagar Prints case to support this finding.

4. Double Taxation:
The tribunal observed instances of double taxation, particularly on items like steel pipes and reducers. The adjudicating authority had charged duty on the same items under different classifications, leading to double taxation. The tribunal set aside these demands.

5. Limitation Period for Issuing Show Cause Notices:
The tribunal found that the demands were barred by limitation as no fraud, willful misstatement, or suppression of facts with intent to evade duty was established. The demands related to the period from August 2000 to July 2002, and the show cause notices were issued beyond the permissible period. The tribunal cited the Tamilnadu Housing Board and other cases to conclude that the extended period under Section 11A(1) was not warranted.

6. Penalty and Interest under Sections 11AC and 11AB:
Since no duty demands were confirmed, the tribunal held that penalties under Section 11AC and interest under Section 11AB could not be upheld. The penalties imposed on the General Manager, Manager Executive, and Project Manager under Rule 26 of the Central Excise Rules, 2002, were also set aside.

Conclusion:
The tribunal set aside the order of the adjudicating authority and allowed the appeals. The tribunal found that the 'specials' fabricated for the pipe-laying project were not marketable and hence not excisable. The demands were also barred by limitation, and no penalties or interest could be imposed.