2020 (7) TMI 317 - AT - Central Excise

Valuation - manufacturing / construction at site - Benefit of exemption - pre-fabricated canopies supplied by the appellant to oil companies - Department is of the view that the transaction value of the pre-fabricated canopies/structures should be taken by deducting the cost of erection, installation and commissioning of these canopies - benefit of N/N. 8/1996-CE dated 23 July 1996 and Notification No. 12/2012-CE dated 17 March 2012 - Cenvat credit on all the inputs which have gone in manufacture of both dutiable as well as non-dutiable goods - HELD THAT - The appellant is having an independent manufacturing unit at Bhopal where the appellant is carrying out fabrication and manufacturing activity. The pre-fabricated structures classifiable under Central Excise Tariff Heading 73089010 are being taken in the CKD/SKD condition to different locations all over India. Manufacturing is the primary work undertaken at the factory of the appellant and the pre-fabricated structures are only erected, installed and commissioned at the site of the various petrol pumps. Applicability of the Notification No. 12/2012-CE - HELD THAT - The construction work of a road or flyover is being primarily undertaken at the site and only some components, blocks are manufactured by the contractor at different site. In that case the benefit of the Notification No. 12/2012-CE is available. However, in case of the appellant, the primary activity is of manufacturing and fabrication and then only goods are being taken for assembly, erection or commissioning at a given petrol pump. We are of the view that by no stretch of imagination, the benefit of Notification No. 12/2012-CE can be extended to a manufacturing activity which is being undertaken at a factory and thereafter the fully manufactured pre-fabricated structures are taken in the form of the CKD/SKD condition for installation at the given site.pplicability of the Notification No. 12/2012-CE is concerned, the construction work of a road or flyover is being primarily undertaken at the site and only some components, blocks are manufactured by the contractor at different site. In that case the benefit of the Notification No. 12/2012-CE is available. However, in case of the appellant, the primary activity is of manufacturing and fabrication and then only goods are being taken for assembly, erection or commissioning at a given petrol pump - By no stretch of imagination, the benefit of Notification No. 12/2012-CE can be extended to a manufacturing activity which is being undertaken at a factory and thereafter the fully manufactured pre-fabricated structures are taken in the form of the CKD/SKD condition for installation at the given site. Cenvat credit on all the inputs which have gone in manufacture of both dutiable as well as non-dutiable goods - HELD THAT - It is seen that the Adjudicating Authority has gone in detail on this subject and the impugned order has discussed in the financial statement of the company and it is only after a meticulous perusal of the trial balance and other financial details that the Adjudicating Authority reached conclusion that the respondent/assessee had maintained a separate record with regard to inputs which have gone in the manufacture of non-taxable goods/services. The Department has not adduced any concrete evidence to contradict the findings given by the Adjudicating Authority. There is, therefore, no substance in the appeal filed by the Department. Appeal allowed in part.

Summary

Issues Involved:
1. Valuation of pre-fabricated canopies and applicability of exemption notifications.
2. Reversal of Cenvat credit under Rule 6(3)(1) of the Cenvat Credit Rules, 2004.

Detailed Analysis:

Issue 1: Valuation of Pre-fabricated Canopies and Applicability of Exemption Notifications
The Department contended that the appellant cleared canopies in knocked-down condition, comprising structural parts manufactured at the factory and bought-out items, for assembly and erection at petrol pump sites. It argued that the transaction value should exclude the cost of erection, installation, and commissioning, and that the appellant wrongly availed benefits under Notification No. 8/1996-CE and Notification No. 12/2012-CE.

The Tribunal remanded the matter for fresh adjudication, noting conflicting views in the adjudicating authority's order regarding the maintenance of separate accounts for inputs used in dutiable and non-dutiable goods. Upon re-adjudication, the Commissioner confirmed the demand for Central Excise Duty and denied the benefit of the exemption notifications, stating that the primary activity was manufacturing at the factory, and the goods were only assembled and erected at the site. The Tribunal upheld this view, stating that the benefit of Notification No. 12/2012-CE could not extend to manufacturing activities undertaken at a factory.

Issue 2: Reversal of Cenvat Credit Under Rule 6(3)(1)
The Department alleged that the appellant availed Cenvat credit on inputs used for both dutiable and non-dutiable goods without maintaining separate accounts, necessitating reversal of credit under Rule 6(3)(1). The Tribunal initially found conflicting statements in the adjudicating authority’s order regarding the maintenance of separate accounts and remanded the matter for fresh adjudication.

Upon re-adjudication, the Commissioner dropped the demand for reversal of Cenvat credit, concluding that the appellant maintained separate records for inputs used in non-taxable goods/services. The Department appealed, arguing that the adjudicating authority erred in concluding that separate records were maintained based on trial balance and financial statements. The Tribunal dismissed the Department's appeal, finding no concrete evidence to contradict the adjudicating authority's findings.

Conclusion:
The Tribunal dismissed both the appellant's and the Department's appeals. It upheld the denial of exemption benefits under Notification No. 12/2012-CE for the appellant, confirming the central excise duty demand. It also upheld the adjudicating authority's decision to drop the demand for reversal of Cenvat credit, finding no substantive evidence from the Department to challenge the appellant's maintenance of separate records for inputs used in non-taxable goods/services.