2013 (6) TMI 175 - HC - Central Excise

Fabrication (Manufacturing) at site - fabrication of trusses, columns, purlins and roofing sections - whether or not amount to manufacture of any standard product which was marketable. - held that - It is not in dispute that the contract for fabrication of power project has been awarded by the petitioner-company to M/s. Amarnath Aggarwal Construction (Pvt.) Limited, Panchkula. The petitioner-company had provided steel, trusses, angles, channels and other raw material. The contractor has carried out the fabrication job on job charge basis. The fabrication was carried out by the contractor at site under the supervision of Site Manager (Erection) of the petitioner-company. The job work undertaken by the contractor does not fit in the term manufacture which is normally associated with movables, i.e. articles and goods and is never connected with the fabrication of the structure embedded in earth. There has, thus, not been any manufacture or production at the site except fabrication carried out by the contractor. In other words, the petitioner- company is not manufacturing any item and is not covered under Section 2(f) of 1944 Act which defines manufacture . Therefore, no excise duty is leviable under Section 3 of the 1944 Act. - Show Cause notice quashed - decided in favor of assessee.

Summary

Issues:
Challenge to notice dated 13-9-1990 regarding excise duty on steel structures.

Analysis:
The petitioner, a government undertaking, was awarded a contract by Punjab State Electricity Board for fabrication work, which was subcontracted to another company. The Central Excise Preventive Staff issued a show cause notice for non-payment of excise duty on steel structures. The petitioner argued that the fabrication work did not amount to manufacturing under the Central Excise Rules. The petitioner contended that the work done was not covered under the definition of 'manufacture' as per the 1944 Act. The petitioner also cited a government notification exempting goods fabricated at the construction site from excise duty.

The respondent, in the written statement, claimed that the petitioner's activity constituted manufacturing and was subject to excise duty. The respondent disputed the petitioner's eligibility for the exemption notification issued by the government.

After considering the arguments, the court found merit in the petitioner's contentions. The court referred to the definition of 'manufacture' under the 1944 Act, emphasizing that the petitioner's activities did not fall under the definition. The court noted that the fabrication work carried out by the subcontractor at the construction site did not constitute manufacturing as traditionally understood for excise duty purposes.

The court highlighted the legislative approval of the petitioner's interpretation by referencing a government notification exempting goods fabricated at the construction site from excise duty. The court concluded that the show cause notice issued to the petitioner was beyond jurisdiction as no excise duty was leviable on the petitioner's activities. Consequently, the court allowed the petition and quashed the notice dated 13-9-1990.