2006 (6) TMI 25 - AT - Central Excise

Central Excise Goods manufactured at a distance of 1.5 kms away from site of construction to be treated as manufactured at site and entitled for exemption Demand set aside

Summary

Issues Involved:
- Challenge to Order-in-Original regarding excisability of goods and duty demand
- Applicability of extended period of limitation under Section 11A
- Claim for exemption under Notification No. 5/99-CE
- Interpretation of the expression "site" for goods manufactured at construction site
- Imposition of penalty and interest without evidence of culpable mental state

Analysis:

Challenge to Order-in-Original and Duty Demand:
The appeal was filed against Order-in-Original No.18/2003-04-RP, where the appellant, a Civil, Structural, and Marine Contractor, was accused of manufacturing excisable goods without paying Central Excise duty. The Adjudicating Authority demanded duty and imposed penalties, which the appellant strongly contested.

Extended Period of Limitation under Section 11A:
The appellant argued that the extended period of limitation was not applicable as the Department had prior knowledge of the facts for over 15 years. Referring to previous orders and case laws, the appellant claimed that the show cause notice was time-barred and that the proviso to Section 11A could not be invoked.

Claim for Exemption under Notification No. 5/99-CE:
The appellant contended that even if considered a manufacturer, they were entitled to exemption under Notification No. 5/99-CE for goods manufactured at the construction site for use in construction work. This argument was supported by judicial decisions and a liberal interpretation of the term "site" as per relevant case laws and circulars.

Interpretation of the Expression "Site" for Goods Manufactured at Construction Site:
The Tribunal examined the manufacturing location of the goods and the applicability of exemptions based on the interpretation of the term "site." Citing precedents and circulars, it was concluded that the impugned goods were indeed manufactured at the site allocated by the buyer and used in construction work, making them eligible for exemption.

Imposition of Penalty and Interest without Evidence of Culpable Mental State:
The appellant challenged the legality of the penalties imposed, arguing that the impugned order lacked evidence of a culpable mental state to warrant such penalties. The Tribunal found the penalties unwarranted and set aside the impugned order, allowing the appeal with consequential relief.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the demand for duty, penalties, and interest. The judgment highlighted the importance of proper application of laws, interpretation of terms, and the necessity of evidence to justify penalties in excise duty cases.