2006 (4) TMI 18 - AT - Central Excise

Central Excise Manufacture - Fabrication and erection Appellant under bona fide belief that parts of structures such as beams, trusses and purlins are not chargeable to excise duty (2) Evidence (3) Demand (4) Limitation

Issues Involved:
1. Determination of the manufacturer responsible for excise duty.
2. Excisability and classification of fabricated steel structures.
3. Applicability of the extended period of limitation under Section 11A of the Central Excise Act.
4. Allegations of suppression of facts and intent to evade duty.

Detailed Analysis:

1. Determination of the Manufacturer Responsible for Excise Duty:
The appellants, M/s. Mahindra & Mahindra Ltd., argued that they were not the manufacturer of the goods in dispute. They contended that the contract for the manufacture of the goods was given to M/s. New Bharat Builders (Bombay) Pvt. Ltd., who actually fabricated the goods on a job work basis. The Tribunal found that M/s. New Bharat Builders (Bombay) Pvt. Ltd. carried out the manufacturing operations with their own employees and job workers, thus they were the real manufacturers liable for the payment of duty.

2. Excisability and Classification of Fabricated Steel Structures:
The Tribunal examined whether the fabricated steel structures, such as purlins, beams, trusses, and columns, were excisable. The appellants argued that these items were not liable to duty based on previous Tribunal decisions, such as Aruna Industries, which held that such fabrication did not amount to manufacture. However, the Larger Bench of the Tribunal in Order No. M/537-51/2005 [2005 (190) E.L.T. 301 (Tri-LB)] held that after 1-3-88, the Tariff Entry under Heading 73.08 was modified to include these items, making them excisable. The Tribunal concluded that the items in dispute were excisable post-1-3-88 but not prior to this date.

3. Applicability of the Extended Period of Limitation under Section 11A of the Central Excise Act:
The appellants argued that the demand was time-barred as the excisability of the items was in doubt, and they were under the bona fide belief that the goods were not excisable. The Tribunal agreed, citing multiple decisions, including Jaiprakash Industries v. CCE, Chandigarh and Cosmic Dye Chemical v. Collector of Central Excise, which held that the extended period of limitation could not be invoked without evidence of fraud, collusion, or wilful misstatement. Since the appellants had informed the department about their activities and there was no intent to evade duty, the extended period was not applicable.

4. Allegations of Suppression of Facts and Intent to Evade Duty:
The Tribunal found that the appellants had communicated with the Central Excise Department regarding their activities and had a bona fide belief, supported by previous Tribunal decisions, that their activities did not constitute manufacture. Therefore, there was no suppression of facts or intent to evade duty. The Tribunal held that the demands were raised after the expiry of the normal period of six months, making them time-barred.

Conclusion:
The Tribunal set aside the order of the adjudicating authority in respect of both M/s. Mahindra & Mahindra Ltd. and M/s. Amar Singh & Company, allowing their appeals on the grounds that the demands were time-barred and there was no suppression of facts or intent to evade duty. The judgment emphasized the importance of clear communication with the excise authorities and the reliance on prevailing legal interpretations at the time of the disputed activities.

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