2001 (9) TMI 151 - AT - Central Excise

Summary

Issues involved:
The appeal questions whether the fabrication activity amounts to manufacture and if the extended period of limitation applies for demanding duty under Section 11A(1) of the Central Excise Act.

Fabrication Activity and Manufacture:
The appellant completed the fabrication work by February 1987, with final touches done by October 1988. The argument was made that the show cause notice issued in 1992 was beyond the 5-year limitation period. The appellant believed in good faith that their activity did not constitute manufacture, citing previous decisions. They emphasized that no new goods were created by cutting angles and channels, and the structures were immovable in nature. Various legal precedents were cited to support this argument.

Marketability and Duty Calculation:
The appellant contended that if the activity was considered manufacture, they should be allowed to claim Modvat credit on input duty paid. They also disputed the computation of duty, stating that not all steel supplied by ONGC was used in the manufacturing process. The argument was made that no penalty should be imposed due to the appellant's genuine belief that their activity did not amount to manufacture.

Supreme Court Decision and Limitation Period:
The respondent argued that identifiable goods were created and were marketable, citing a recent Supreme Court decision. They claimed that the show cause notice was issued within the 5-year period based on completion certificates. The respondent also asserted that the appellant failed to inform the department about the manufacturing activity, justifying the use of the extended limitation period and the imposition of penalties.

Judgment:
After considering both arguments, the Tribunal found merit in the appellant's submission. It was held that the appellant genuinely believed their fabrication work did not constitute manufacture, thus no facts were suppressed. Citing Supreme Court decisions, it was concluded that the extended limitation period was not applicable. Therefore, the demand for duty was time-barred under Section 11A(1) of the Central Excise Act. As a result, no penalty was imposed, following the precedent set in a previous Tribunal decision. The impugned order was set aside solely on the limitation aspect without delving into the merits of the case.