2024 (9) TMI 114 - AT - Central Excise

Time Limitation - appellant are manufacturer of goods or not - Department has arrived at the conclusion that the appellant is the manufacturer because they have claimed to be so while accepting the bid and tender supplied by the Electricity Boards - HELD THAT - From the records, there is no other evidence culled out by the department to suggest that the appellant were in effect manufacturers of such electrical items and the same was produced by them in the factory. Admittedly, the Electricity Boards were treating the appellant as manufacturers based on the terms of the contract and tender. It is evident from records that manufacture of the goods had taken place at premises other than that of the appellant, largely at the job workers premises. Under the circumstances when manufacture takes place at a premises of a job worker, then he stepps into the shoes of the manufacturer in terms of section 2 (f) of the Central Excise Act, 1944. The very issue had come up for consideration in the case of Comet Technocom Pvt.Ltd. Ors. v. CCE ST, Kolkata-II 2018 (12) TMI 1771 - CESTAT KOLKATA , wherein the Bench held ' it would be evident that in the present case, the job workers of the assessee company were independent contractors/manufacturers and hence, the assessee company and/or its directors cannot be saddled with any liability of payment of excise duty and/or consequential penalty with respect to the goods so manufactured by the said job workers.' It is therefore evident from the factual position in the present matter that the appellant noticee cannot be taken to be manufacturers, merely for so stating to their suppliers, without in effect being able to establish any manufacturing activity at their end. Certainly no claim for duty can thus be fastened onto them. The order of the lower authority is set aside and the appeal filed is allowed both on merits and on limitation.

Summary

Issues:
1. Whether the appellant can be considered a manufacturer and held liable for Central Excise duty.
2. Whether the show cause notice issued to the appellant is barred by limitation.

Analysis:
1. The appellant, a proprietorship firm, procured machineries for manufacturing hardware fittings. The appellant disputed being classified as a manufacturer, as they got goods manufactured from job workers and did not exceed the SSI exemption limit. The department alleged the appellant declared themselves as manufacturers in bid documents and embossed goods with their name, implying manufacturing. The Tribunal noted the appellant's compliance with contract conditions and buyer satisfaction but emphasized the need for actual manufacturing to establish liability. The Tribunal cited precedents where similar demands were set aside, emphasizing that a trader cannot be equated with a manufacturer.

2. The appellant contested the show cause notice on grounds of limitation, arguing that the notice covered periods prior to its issuance. They claimed the department had knowledge of facts from earlier investigations. The appellant maintained they were not required to register or pay Central Excise duty during the relevant periods due to low clearances. The Tribunal agreed with the appellant, highlighting that mere declarations in bid documents do not establish manufacturing liability. Citing legal precedents, the Tribunal held that excise duty is on manufacture, not sale, and ruled in favor of the appellant, setting aside the lower authority's order and allowing the appeal on merits and limitation.

Conclusion:
The Tribunal concluded that the appellant could not be considered a manufacturer solely based on bid declarations and upheld the appellant's argument regarding limitation. The order of the lower authority was set aside, and the appeal was allowed, entitling the appellant to any consequential relief.