1998 (8) TMI 347 - HC - Central Excise

Issues Involved:
1. Eligibility of certain structural materials and fixtures for excise duty.
2. Whether the articles qualify as excisable goods.
3. Whether the fabrication activities amount to manufacturing.
4. Whether the demand for excise duty is barred by time.
5. Liability for payment of excise duty - petitioner or contractors.

Issue-wise Detailed Analysis:

1. Eligibility of Certain Structural Materials and Fixtures for Excise Duty:
The dispute centers on whether structural materials and fixtures such as Columns, Braces, Trusses, Purlins, Ducts, Chutes, Hoppers, Bins, Walkways, Staircases, hand railings, and platforms forged from duty-paid iron/steel plates, angles, channels, and girders supplied by the petitioner for the erection and installation of Sinter Plant No. 2 are subject to excise duty. The Collector, Central Excise, confirmed the demand for Rs. 3,55,81,610.71 and imposed a penalty of Rs. 10 lacs, directing interest at 18.5% if unpaid after one month.

2. Whether the Articles Qualify as Excisable Goods:
The petitioner argued that the fabricated articles must be movable and marketable to qualify as excisable goods. The structural materials and fixtures were specifically designed for the Sinter Plant No. 2 and could not be sold in the market as commercially known commodities. The Collector's order confusingly suggested that the Sinter Plant itself, an immovable structure, was subject to excise duty, which is contrary to established law.

3. Whether the Fabrication Activities Amount to Manufacturing:
The petitioner contended that the fabrication activities did not involve any manufacturing process as defined under Section 2(f) of the Central Excise Act. The activities were limited to modifying, sizing, shaping, and fitting duty-paid materials supplied by the petitioner. The Collector's reference to techniques like PERT and CPM, which relate to time schedules, was irrelevant to determining whether a manufacturing process occurred.

4. Whether the Demand for Excise Duty is Barred by Time:
The petitioner also argued that the demand was barred by time under Section 11A of the Central Excise Act. However, the judgment did not delve deeply into this issue due to the unsatisfactory nature of the Collector's order.

5. Liability for Payment of Excise Duty - Petitioner or Contractors:
The petitioner claimed that the contractors, being independent entities, were the manufacturers of any excisable goods and thus liable for the duty. The Collector's order failed to adequately address this issue, instead suggesting that the setting up of the Sinter Plant was the taxing event and incorrectly holding the petitioner liable.

Conclusion:
The Court found the Collector's order unsatisfactory and confusing, lacking proper structure and clarity. The impugned order was set aside, and the matter was remitted to the Collector for a fresh order after hearing the petitioner, in accordance with law and the observations made in the judgment. The Court emphasized that any party aggrieved by the Collector's new order should seek relief before the appellate forum as provided under Section 35B of the Central Excise Act. The writ petition was allowed to the extent indicated, with no order as to costs.

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