2006 (6) TMI 27 - AT - Central Excise

Central Excise Placing of a sticker on tower showing brand name of appellant will not render appellant as a manufacturer of tower and such tower got manufactured by job worker and directly supplied to appellant - Towers erected at sight which are affixed to earth structure - Not excisable

Issues Involved:
1. Classification of the activity as trading or manufacturing.
2. Determination of the manufacturer for Central Excise purposes.
3. Applicability of Central Excise duty on the lighting towers.
4. Legality of the show cause notice and procedural fairness.
5. Excisability of goods assembled and installed at site.

Detailed Analysis:

1. Classification of the Activity as Trading or Manufacturing:
The appellants contended that their activity was purely trading. However, the Commissioner concluded that the activities were covered under the definition of manufacture. The Commissioner noted that the appellants procured orders, got tower structures fabricated, and attached essential lighting components, thereby manufacturing the final product classified under Heading No. 85.43. The Commissioner also observed that the appellants' invoices, transportation documents, and packing slips indicated that the goods were received by customers under the appellants' cover, and the appellants assembled the components at the site.

2. Determination of the Manufacturer for Central Excise Purposes:
The Tribunal emphasized that M/s. Telekrit Electricals (Nagpur) Pvt. Ltd. had been previously accepted as a manufacturer of such lighting towers. The Tribunal held that since these manufacturers were recognized as independent manufacturers, the appellants, who were traders, could not be considered manufacturers. The Tribunal referenced the Apex Court's decision in Ujagar Prints, which established that job workers are the manufacturers even if raw materials are supplied by traders.

3. Applicability of Central Excise Duty on the Lighting Towers:
The Commissioner argued that the lighting towers were not immovable property and could be dismantled and reassembled, making them excisable. However, the Tribunal found that the lighting towers, once assembled and installed at the site, became immovable property and were not subject to Central Excise duty. The Tribunal relied on previous rulings, including the Central Coalfields Ltd. and Aruna Industries cases, which held that such towers embedded into the earth were not leviable to duty.

4. Legality of the Show Cause Notice and Procedural Fairness:
The Tribunal noted that M/s. Orbit and M/s. Telekrit were not given an opportunity to substantiate their identity as independent manufacturers during the issuance of the show cause notice. This procedural lapse rendered the Commissioner's findings biased and void. The Tribunal emphasized the need for fairness and adherence to procedural requirements in the issuance of show cause notices.

5. Excisability of Goods Assembled and Installed at Site:
The Tribunal reiterated the settled position that goods assembled and installed at the site, which become immovable property, are not excisable. The Tribunal referenced the TTG and Triveni Engineering Industries cases and the CBEC Circular No. 58/1/2002-CX, which supported this view. The Tribunal concluded that the lighting towers, once installed and embedded to earth, were not movable and thus not subject to Central Excise duty.

Conclusion:
The Tribunal set aside the duty demand and penalties imposed on the appellants. The appeals were allowed, and the Tribunal held that the appellants could not be considered manufacturers under the Central Excise Act, 1944. The lighting towers, once installed at the site, were deemed immovable property and not subject to excise duty.

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