2018 (11) TMI 1032 - AT - Central Excise

Manufacture or not - manufacture of Greenhouse / Polyhouse taking place or not - case of appellant is that they have carried out only the job of erection and commissioning for which service tax has been discharged by them on the bought out materials, subjected to processes which does not amount to manufacture. Held that - Separate SCNs were issued to the appellant, for the same period, demanding service tax on the activity of erection and commissioning of Greenhouse and Polyhouse at site and the same was confirmed on adjudication. The appellant has admitted and service tax discharged along with interest on the said activity of erection and commissioning of Greenhouse/Polyhouse at site - From the records it is not clear whether the service tax was paid on separate activities or it is a part of assembling of Greenhouse/ Polyhouse at site out of the fabricated item cleared from their factory. It is prudent to remand the matter to the adjudicating authority - appeal allowed by way of remand.

Issues:
1. Classification of manufactured goods under Central Excise Tariff Act, 1985
2. Liability to pay duty on manufactured goods
3. Assessment of service tax on erection and commissioning charges

Classification of manufactured goods under Central Excise Tariff Act, 1985:
The case involved two appeals filed by the Revenue and the assessee against the same order-in-original passed by the Commissioner of Central Excise. The dispute revolved around whether the assessee had manufactured "Greenhouse"/"Polyhouse" during the relevant period and whether it attracted classification under tariff item 9406 0019 of the Central Excise Tariff Act, 1985. The Revenue alleged that the assessee received raw materials at their factory, processed them, and cleared the Greenhouse/Polyhouse in knocked down condition for assembly at the site. On the other hand, the assessee claimed they only undertook the job of erection and commissioning, for which they had already paid service tax on the bought-out materials. The Tribunal found that separate show cause notices were issued for demanding service tax on erection and commissioning activities, which were confirmed on adjudication. As the records did not clearly indicate whether service tax was paid separately for different activities or as part of assembling at the site, the matter was remanded to the adjudicating authority for further scrutiny.

Liability to pay duty on manufactured goods:
The Revenue contended that the assessee, despite being engaged in the manufacture of Greenhouse/Polyhouse, failed to pay appropriate excise duty during the relevant period. They highlighted that the assessee issued two invoices, one for material value and the other for labor costs related to erection and commissioning, which were raised simultaneously for clearance of Greenhouse/Polyhouse. The Revenue argued that the goods fell under Chapter sub-heading 9406 0019 of the Central Excise Tariff Act, 1985, making them liable for duty. The Tribunal observed the lack of clarity in the records regarding the payment of service tax on items procured by customers or on pre-fabricated items assembled at the site. Consequently, the matter was suggested to be remanded for further investigation by the adjudicating authority.

Assessment of service tax on erection and commissioning charges:
The assessee's Chartered Accountant argued that the activity of erection and commissioning did not amount to the manufacture of excisable goods, as they had already paid service tax on these services. He explained the various processes involved in assembling Greenhouse/Polyhouse at the customer's site and emphasized that the service tax liability was confirmed subsequent to the impugned order. The Revenue's Authorized Representative raised concerns about the clarity regarding the payment of service tax on procured items or pre-fabricated materials assembled at the site. He proposed remanding the matter for a detailed examination by the adjudicating authority to determine the facts accurately. The Tribunal, considering the discrepancies in the records, set aside the impugned order and remanded the case for denovo adjudication, ensuring a fair hearing for the appellant-assessee. Additionally, the Revenue's appeal on penalty was also remanded to the adjudicating authority since the main issue was referred back for further assessment.

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