2024 (5) TMI 1047 - AT - Central Excise

Process amounting to manufacture or not - assembling of various parts and components of furniture imported in CKD condition and also procured indigenously, at the premises of the appellant or at the site of the customers - Furniture classifiable under CSH 9403 of CETA,1985, within the meaning of Section 2(f) of Central Excise Act, 1944 or not - extended period of limitation - imposition of penalties on the Appellant and the Director - Cum-tax value Cenvat credit is admissible if the process of assembly of furnitures is held to be excisable or not. Excisability - HELD THAT - On the facts whether the workstations installed at the site of the customers become immovable, hence not excisable, the Ld. Commissioner analysing the statements furnished by the Manager and the Supervisor of the appellant and the cross examination of the said witnesses and other evidence has categorically held that with minor damages and scratches, the workstations installed in the premises of the customer from the imported and indigenously procured parts and components could easily be shifted to other premises, hence, these furniture(work stations) are movable and accordingly excisable - the statements/depositions given by the witnesses before the Department have not been retracted, hence are reliable evidences. The witnesses also cross examined before the adjudicating authority. No contrary evidence has been placed by the Appellant to support their argument that after assembling and then fixing the workstations to the ground / floor at the customers premises, it becomes immovable; hence not excisable. This Tribunal also in the case of Leo Circuit Boards Pvt. Ltd. 2015 (5) TMI 659 - CESTAT MUMBAI more or less confronted with more or less a similar issue of excisability of assembly of Lottery Terminal out of CKD kit supplied by M/s. Pan India Network Infravest P. Ltd. By referring to the list of parts that have been assembled at the site of the customers, even though fully manufactured and cleared in CKD condition by the supplier and later assembled at the site, this Tribunal came to the conclusion that such assembly of different parts brought in CKD condition to bring into existence of Lottery Terminal, would result into manufacture . Classification of goods - HELD THAT - In the present case, undisputedly the entire parts and components of the furniture, workstations are not imported but certain indigenous parts and components are procured are also used in assembling the parts/ components of furnitures imported in CKD condition - assembly of parts and components of the furniture i.e. workstations in the premises of the customers would result into manufacture of excisable goods viz. furniture classifiable under CTH 9403 and attracts duty. Invocation of extended period of limitation - HELD THAT - There is merit in the argument of the appellant that on a bona fide belief that excise duty on assembly of furnitures at the site of the customers will not be payable as customs duty has already been paid at the time of its import in CKD condition albeit certain parts used were procured indigenously, excise duty was not discharged on assembly of the same - The judgment of the Hon ble Supreme Court in Craft Interiors Pvt. Ltd. s case 2006 (10) TMI 2 - SUPREME COURT was delivered in the year 2006 and the present demand is confirmed invoking suppression of facts for the period 2004 to 2006-07. In these circumstances, confirmation of duty invoking extended period of limitation cannot be sustained. Thus, the demand, by issuing show-cause notices from time to time, should be limited to the normal period of limitation. Penalty - HELD THAT - There are no substances in imposing penalty on the appellant for failure to discharge service tax on the assembled furniture during the relevant period. Penalty on Director - HELD THAT - There are no justification for imposition of penalty on the Director. Consequently, the appeals filed by the Director are allowed. Cum-duty benefit - CENVAT Credit - HELD THAT - In the event, the appellant had issued proper invoices indicating sale price of the goods and genuineness of which has not been disputed, the appellants are eligible for the benefit of cum-duty price in view of the amendment to Section 4 of the Central Excise Act, 1944 w.e.f. 14.05.2003 - Also, the appellants are entitled to avail cenvat credit on the inputs on production of evidences of payment of duty on the said inputs to the satisfaction of the adjudicating authority. The impugned orders are modified and the cases are remanded to the adjudicating authority to compute the demands with interest for the normal period of limitation only; also the benefit of cum-duty price and cenvat credit be allowed subject to production of necessary documents. As observed above, no penalty is imposable. Appeal disposed off.

Issues Involved:
1. Whether the assembly of various parts and components of furniture imported in CKD condition and procured indigenously results in 'manufacture' of 'Furniture' classifiable under CSH 9403 of CETA, 1985.
2. Whether the confirmation of demand by invoking the extended period of limitation is justified.
3. Whether the imposition of penalties on the Appellant and the Director is justified.
4. Whether cum-tax value and Cenvat credit are admissible if the process of assembly of furniture is held to be excisable.

Summary of Judgment:

Issue 1: Assembly as 'Manufacture'
The appellants are involved in importing furniture in CKD condition and procuring parts indigenously, which are then assembled either at their premises or at customer sites. The appellants argued that this assembly does not constitute 'manufacture' since the goods are already classified as furniture upon import. The Commissioner concluded that the assembly of these parts results in the manufacture of new excisable goods, as defined u/s 2(f) of the Central Excise Act, 1944. The Tribunal upheld the Commissioner's view, citing various judgments that support the classification of assembled parts as 'manufacture.'

Issue 2: Extended Period of Limitation
The appellants contended that there was no suppression of facts as they believed no excise duty was payable on assembled furniture due to the customs duty paid at import. The Tribunal found merit in this argument, noting that the demand should be limited to the normal period of limitation, as the bona fide belief negated the allegation of suppression of facts.

Issue 3: Imposition of Penalties
The Tribunal found no grounds for imposing penalties on the appellants or the Director, given the bona fide belief regarding the non-applicability of excise duty and the absence of suppression of facts. Consequently, the penalties were deemed unjustified.

Issue 4: Cum-tax Value and Cenvat Credit
The Tribunal ruled that the appellants are eligible for the benefit of cum-duty price and Cenvat credit on the inputs, provided they produce necessary documentation to substantiate the payment of duty on inputs. The adjudicating authority was directed to recompute the demands accordingly.

Conclusion
The appeals were partially allowed, remanding the matter to the adjudicating authority for recalculating the demands within the normal period of limitation and considering the cum-duty price and Cenvat credit benefits. The penalties on the appellants and the Director were annulled.

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