2001 (9) TMI 372 - AT - Central Excise

Summary

Issues:
1. Whether the steel structurals fabricated and erected are chargeable to duty of Excise.
2. Whether the demand of duty is hit by the time limit specified in Section 11A(1) of the Central Excise Act.

Analysis:

Issue 1: Chargeability of Excise Duty
The appeal filed by M/s. Bharat Industrial Works raised the question of whether the steel structurals fabricated and erected by them are subject to the duty of Excise. The Appellant argued that the process they undertook, which involved cutting raw materials, punching holes, and welding, did not amount to manufacturing. They contended that the loose parts were assembled on-site into a shed, and therefore, did not fall under the purview of excise duty. The Appellant also highlighted that they had received duty-paid raw materials from the client and that the activities undertaken did not constitute manufacturing. The Appellant relied on a previous adjudication order by the Deputy Collector, which had dropped proceedings against them for similar activities. The Tribunal considered these arguments and found merit in the Appellant's submissions that there was no suppression of facts on their part, as the Department was aware of the fabrication and erection work. The Tribunal noted that the Appellant had a bona fide belief, supported by the previous adjudication order, that their activities did not attract excise duty. Therefore, on the issue of chargeability of excise duty, the Tribunal ruled in favor of the Appellant.

Issue 2: Time Limit for Demand of Duty
The second issue revolved around whether the demand of duty was within the time limit specified in Section 11A(1) of the Central Excise Act. The Appellant argued that the duty demand for the period from 1-3-1986 to 6-3-1989 was beyond the six-month period specified in Section 11A(1). They contended that the extended period of limitation was not applicable as the Department was aware of their activities, as evidenced by the previous adjudication order. The Department, however, argued that the Appellant had not informed them about the activities undertaken and had not obtained a Central Excise license, thus making the extended period of limitation applicable. The Tribunal considered both sides' arguments and held that since there was no suppression of facts and the Appellant had a genuine belief that their activities did not attract excise duty, the demand was time-barred. Citing relevant case law, the Tribunal emphasized that mere failure or negligence to take a license or classify goods correctly does not necessarily imply deliberate suppression to evade duty. Therefore, the Tribunal allowed the appeal solely on the grounds of the time limit without delving into the merits of the case.

In conclusion, the Appellate Tribunal ruled in favor of M/s. Bharat Industrial Works, holding that the steel structurals fabricated and erected by them were not chargeable to excise duty, and the demand of duty was time-barred under Section 11A(1) of the Central Excise Act.