1995 (5) TMI 39 - HC - Central Excise

Summary

Issues:
Challenge to show cause notices issued by Additional Collector, Central Excise regarding construction of sheds and imposition of Excise Duty.

Analysis:
The appeals were filed against the order of a learned Single Judge quashing show cause notices issued by the Additional Collector, Central Excise, regarding the construction of sheds in factories by the respondents. The appellants argued that the construction of sheds amounted to manufacturing under Section 2(f) of the Act, justifying the imposition of Excise Duty. They also contended that the articles used in the construction were covered under Chapter 73 of the Central Excise Tariff Act, 1985. However, the learned Single Judge held that the activity did not constitute manufacturing and therefore the show cause notices were quashed.

The appellants further argued that the construction of sheds with certain materials constituted manufacturing under the Act and should attract Excise Duty. They relied on previous court decisions to support their position. In response, the respondents' counsel cited a Supreme Court judgment stating that the construction of sheds, which remained within the factory premises and were not intended for sale, did not amount to manufacturing of goods.

The Supreme Court set two criteria for levying duty under the Act: the article must be marketable or capable of being brought to market. It was established that goods attached to the earth and immovable did not meet these criteria and therefore were not subject to Central Excise duty. The respondents' counsel referred to previous judgments to argue that show cause notices could be challenged if issued without authority of law.

The court found the appellants' arguments to be unfounded, emphasizing that the construction of sheds that were not intended for sale did not meet the criteria for levying Central Excise duty. The court upheld the decision of the learned Single Judge to quash the show cause notices, concluding that there was no basis for interference in the appeals. The appeals were dismissed, and the order of the Single Judge was maintained.

In conclusion, the court affirmed the decision to quash the show cause notices, ruling that the construction of sheds within factory premises did not constitute manufacturing under the Act, and therefore did not warrant the imposition of Central Excise duty.