2018 (7) TMI 989 - AT - Central Excise

Clandestine removal - The allegation of the Department is that the appellants have manufactured and cleared structures (iron and steel) falling under CETSH 73089090 and accessories falling under CETSH 87089000 to the customers, such as M/s. Hyundai Motors India Ltd, without paying excise duty - Penalties - Held that - In the present case, it is not clear as to how much portion of the demand would relate to structures that are fabricated/erected at the site of the customer - The argument of the Revenue that if such structurals, parts, etc., are fabricated at the site also as per design and requirement of customer and though attached to the earth would be excisable, cannot be accepted fully - if the goods are fabricated at site according to design of customer, forming a whole structure, will not be dutiable as clarified by Board Circular. Whereas in the case of structurals which have been prefabricated at the premises of the respondent and brought to the site may attract duty. These aspects have to be examined. Penalties - Held that - The appellant has paid up ₹ 11.50 lakhs on being pointed out and also that the issue is an interpretational one and was mired in litigation - the penalties cannot sustain and, therefore, this part of the order does not require interference. The matter is remanded for reconsidering the demand of duty - appeal allowed by way of remand.

Summary

Issues:
Departmental appeal against setting aside of excise duty demand on steel structures and accessories manufactured and cleared without payment of duty.

Analysis:
The case involved the Department appealing against the setting aside of a demand for excise duty on steel structures and accessories manufactured and cleared without payment of duty. The respondents were engaged in steel fabrication works and erection/commissioning at factory sites. The Department alleged that the structures and accessories were cleared without paying excise duty, even though the items were fabricated and brought to the customer's site. The respondents argued that the fabricated items became integral parts of immovable property and, therefore, were not subject to excise duty. The Commissioner (Appeals) relied on a CBEC Circular stating that items attached to earth and not capable of being dismantled without damage were not excisable goods. However, the Tribunal found discrepancies in the records regarding whether the demand was solely on structures fabricated at the site. The Tribunal referred to precedents and circulars to analyze the issue. It was noted that prefabricated structures brought to the site might attract duty, while those fabricated at the site according to customer design might not. The matter was remanded to the adjudicating authority for reconsideration, considering the interpretations and precedents discussed. The penalties imposed were deemed unsustainable due to the interpretational nature of the issue.

This detailed analysis of the judgment showcases the complexities involved in determining the excisability of steel structures and accessories based on fabrication location and design specifications. The Tribunal's decision to remand the case for further consideration highlights the importance of thorough examination and adherence to legal principles in excise duty matters.