2018 (6) TMI 863 - AT - Central Excise

Manufacture - activity of fabrication of storage tanks of various capacities - Held that - From the nature of the work in the appellant s factory, it is evident that the appellant has undertaken the activity of manufacture i.e. activity of converting steel sheets into the form of storage tanks. Storage tank is commodity which is liable for payment of excise duty under CETH 73090090 of the Central Excise Tariff. Consequently, the liability of excise duty on the tanks fabricated by the appellant is established and hence the same is sustained. It is also argued that such storage tanks are embedded to the earth and hence no duty is payable - Held that - Liability for excise duty is to be determined on the basis of the activity carried out in the appellant s factory and not on the basis of the use of such products after clearance from the factory. Inasmuch as the storage tanks have arisen in the factory of the appellant, the liability for payment of excise duty gets fastened on the appellant. The arguments regarding the tanks being not marketable is also to be discarded since the tanks are in fact procured by the customer i.e. IOCL/ HPCL even though in the form of job work contract. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Condonation of delay in filing appeals
2. Liability of excise duty on fabricated storage tanks
3. Applicability of excise duty on tanks embedded in the ground
4. Marketability of the storage tanks

Condonation of Delay:
The appeals were filed with applications for condonation of a ten-day delay, which was granted by the Tribunal. Both parties consented to proceed with the appeals on merit after the delay was condoned.

Liability of Excise Duty on Fabricated Storage Tanks:
The appellant fabricated storage tanks using steel sheets supplied by IOCL and HPCL, as per specific tenders. The Department alleged that this activity amounted to manufacturing under Section 2(f) of the Central Excise Act, 1944. The adjudicating authority upheld the demand for excise duty, considering the fabrication process as manufacturing. The Tribunal agreed, stating that the tanks fell under the Central Excise Tariff and upheld the liability for excise duty.

Applicability of Excise Duty on Tanks Embedded in the Ground:
The appellant argued that since the storage tanks were installed underground after fabrication, they should not be subject to excise duty. However, the Tribunal held that the liability for excise duty is based on the manufacturing activity in the factory, not the tanks' use post-clearance. Therefore, the tanks being embedded in the ground did not exempt them from excise duty.

Marketability of the Storage Tanks:
The appellant contended that the tanks were not marketable as they were supplied to IOCL/HPCL based on specific orders. The Tribunal rejected this argument, emphasizing that the tanks were procured by the customers, even under job work contracts. As a result, the Tribunal upheld the impugned order, concluding that the fabricated storage tanks were liable for excise duty. The appeals were dismissed accordingly.