2018 (8) TMI 402 - AT - Central Excise

Time limitation - Business Auxiliary Service - Zinc Coating or galvanization - Job-work - since the principal-manufacturer not discharging any duty, appellant, being job-worker is called upon to pay the duty - Held that - Undisputedly the appellant was registered under the Service Tax and was discharging service tax liability accordingly. In such a scenario, it cannot be said that the Revenue was not aware of the appellants activities - When the appellant approached the Service Tax Department for registration, it disclosed every activity undertaken by them and if the Revenue was of the view that the process undertaken by the appellant is not covered under the category of Business Auxiliary Service and amounts to manufacture, they were under an obligation to advice accordingly. Further, the central excise duty stands confirmed against them without taking into account the service tax deposited by them which accordingly to the Revenue itself was not required to be paid - there are no reasons to invoke the extended period of limitation, in the absence of any positive evidence to reflect upon the appellant s mala fide and accordingly the demand is set aside on the plea of limitation. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the activity of zinc coating or galvanization undertaken by the appellant amounts to manufacture, making them liable to pay excise duty.
2. Whether the demand raised against the appellant is within the limitation period.

Analysis:

Issue 1:
The appellant, engaged in job work of galvanization of pipes, treated the service as 'Business Auxiliary Service' and paid service tax. However, the Revenue contended that galvanization constitutes manufacture, making the appellant liable to pay excise duty. The appellant argued that galvanization does not result in a new commodity and only enhances material utility. The Original Adjudicating Authority upheld the demand and penalty, which was affirmed by the Commissioner (Appeals), leading to the present appeal.

Issue 2:
Regarding the limitation period, it was found that the appellant was registered under Service Tax and was compliant with service tax obligations. The Commissioner (Appeals) held that galvanization amounts to manufacture, and the appellant's registration with the Service Tax Department was a camouflage to evade Central Excise Duty. However, the Appellate Authority disagreed, noting that the appellant disclosed all activities during registration and the Revenue accepted service tax payments without objection. The demand was set aside due to lack of evidence of malafide intent, and the appeals were allowed with consequential relief to the appellant.