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2019 (5) TMI 1430 - AT - Central ExciseProcess amounting to manufacture or not - fabrication and installation of Retail Visual Identity Elements (RVI) at the petrol pumps different companies - demand of central excise duty alongwith penalties - Extended period of limitation - scope of SCN - HELD THAT - The Appellants were issued two show cause notices in which Central Excise duty in which the Appellants were considered as manufacturers of branded goods (RVIs) for M/S IOCL. The first show cause notice was issued under extended period of limitation. Though in various show cause notices the Appellants were considered manufacturers of the RVIs but no evidence were bought on record as to in which manufacturing premises of the Appellants the said RVIs were manufactured. In reply to the show cause notice the Appellants furnished documents in their support establishing that the entire work of fabrication of RVI elements were got done from the various job workers. The Commissioner in his order has though conceded that the Appellants are liable to pay Central Excise duty even though they did not have any manufacturing premises, as the onus to prove the principal to principal relationship between them and the jobs worker were upon them which have not been fulfilled by them. Scope of SCN - HELD THAT - We do not find the findings of Commissioner to be legal, as the Commissioner was legally bound to confine his findings with respect to charges levelled in the show cause notices. As we have already noted that in the show cause notices proceeded on the allegations that it is the Appellants who had manufactured the RVI elements. Hence the Commissioner could not travel beyond the scope of the allegations levelled in the show cause notices. Whether the Appellants could be considered as a manufacturer of the goods in terms of Section 2(f) of the Central Excise Act 1944? - HELD THAT - The Appellants have brought sufficient evidence on record that the job workers were independently fabricating the various components on RVI elements. The Appellants were issuing TDS certificates to all the job workers. Some of the job workers were even registered with the service tax department. Further, it has also been accepted by the Commissioner that the Appellant were not having manufacturing premises - the job workers were fabricating the components of RVI independently and hence they are to be considered the actual manufacturers in terms of Section 2(f) of the Central Excise Act - We agree with the submissions of the Ld. Counsels that the status of the Appellant is that of supplier of raw material to various job workers who had actually manufactured the goods. Double taxation - HELD THAT - We agree with the submission of the Ld Counsel that on the same activity department can t demand tax twice. We take note of the fact that the some of the Appellants were registered with service tax department under the category of work contract service - once the activities of the Appellants have been held to be falling under the works contract service under the Finance Act, 1994 and hence central excise duty cannot be demanded or confirmed treating the same activity to be a manufacturing activity, that too for the same period. Whether the Commissioner could rely upon the statements of four witnesses? - HELD THAT - The Commissioner has relied upon their statements to come to the conclusions that the RVI items were in fully manufactured condition in the factory of the vendor itself. According to these statements completed RVI elements were transported to the sites and erected/installed with the help of nuts, bolts and screws. Fabrication work involving welding was not permitted at site - the Commissioner has erred in relying upon the statements of four witnesses which were not tested on cross examination. Whether the RVI elements which were cleared from the units of the job workers in fully manufactured conditions and became subject to payment of excise duty or whether the various components became integral part of the building/fascia or in other words the final RVI elements came in to existence at site only? - HELD THAT - The RVI elements were dispatched as components from the workshops of the job workers and not in fully manufactured condition, and RVI elements came into existence only as a part of permanent structure at site only. In any event we have already held that the Appellants can t be treated as a manufacturer of RVI elements in terms of section 2(f) of the Act. Extended period of limitation - HELD THAT - It is not a case where the department could invoke extended period of limitation due to various reasons. Firstly the Appellants were registered with the service tax department in respect of works contract service w.e.f 6.10.2007. Secondly, the Appellants were not having any manufacturing unit but for a few and were getting the components of RVI fabricated on job works basis. Thirdly, we have already held that fully manufactured RVI elements came into existence at site only - All these facts are sufficient to come to a definite conclusion that there is no willful suppression or misstatement of facts by the Appellants. Hence extended period of limitation is not available to the department. The impugned orders are not sustainable and so is the case for imposition of penalties on the appellants - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Whether the fabrication and installation of Retail Visual Identity Elements (RVI) amounts to manufacture under Section 2(f) of the Central Excise Act, 1944. 2. Whether the appellants can be considered as manufacturers when the actual fabrication was done by job workers. 3. Whether the demands are time-barred and if the extended period of limitation is applicable. 4. Whether the reliance on statements of witnesses who were not cross-examined is valid. 5. Whether the RVI elements are goods subject to excise duty or part of permanent structures at the site. Detailed Analysis: 1. Fabrication and Installation of RVI as Manufacture: The Revenue contended that the fabrication and installation of RVI elements at petrol pumps constituted manufacture under Section 2(f) of the Central Excise Act, 1944, and demanded excise duty. The appellants argued that the RVI elements were not manufactured by them but by independent job workers, and the elements were assembled at the site, becoming part of permanent structures. The Tribunal found that the elements were dispatched in component form and assembled at the site, thus not constituting manufacture as per the Central Excise Act. 2. Appellants as Manufacturers: The appellants provided evidence that job workers independently fabricated the RVI components, and they issued TDS certificates to these job workers. The Tribunal noted that the appellants did not have manufacturing premises and relied on cross-examination of witnesses, which confirmed that job workers were the actual manufacturers. The Tribunal held that the appellants were suppliers of raw materials, and job workers were the actual manufacturers, aligning with precedents such as Ujagar Prints v. Union of India and others. 3. Time-Barred Demands and Extended Period of Limitation: The appellants argued that the demands were time-barred as there was no deliberate concealment of information. They were registered with the service tax department and regularly paid service tax under works contract service. The Tribunal agreed, noting that the appellants' activities were known to the department, and there was no willful suppression or misstatement of facts. Therefore, the extended period of limitation was not applicable. 4. Reliance on Witness Statements: The Tribunal found that the Commissioner relied on statements of witnesses who did not appear for cross-examination, violating Section 9D of the Central Excise Act, which mandates examination by the adjudicating authority. Citing cases like Ambica International v. Union of India, the Tribunal held that reliance on such statements without cross-examination was erroneous. 5. RVI Elements as Goods or Permanent Structures: The Tribunal examined whether the RVI elements were goods subject to excise duty or became part of permanent structures at the site. The appellants provided an RTI reply from IOCL, clarifying that RVI elements were dispatched as components and assembled at the site, becoming integral parts of the building/fascia. The Tribunal concluded that the RVI elements were not goods but part of permanent structures, thus not subject to excise duty. Conclusion: The Tribunal set aside the impugned orders, holding that the appellants were not manufacturers of the RVI elements, the demands were time-barred, and the reliance on unexamined witness statements was invalid. The appeals were allowed, and penalties were not imposed on the appellants.
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