2015 (6) TMI 950 - AT - Central Excise

Manufacturing activity or not - installation and erection or heavy storage racks at the premises of its clients - Immovable goods - Held that - The appellant although was principal manufacturer of manufactured rack components, that having been embedded to earth upon welding to fulfill contractual obligation and such racks became inseparable without causing damage thereto when detachment is contemplated, that rules out appellant s liability under Central Excise Act, 1944. Appellant was not mere supplier of goods. It had concurrent liability of embedding the supplied goods duly to earth to call the same as heavy storage racks. - Not liable to duty of excise - Decided in favour of assessee.

Summary

Issues: Whether the appellant is liable to pay excise duty on heavy storage racks installed at clients' premises which were manufactured by job workers and assembled on-site.

Analysis:
1. The appellant argued that they were not manufacturers as the heavy storage racks only came into existence upon assembly and welding at the client's site. They contended that the racks, once embedded to earth, became immovable goods, thus exempt from excise duty. This argument was supported by a previous Tribunal decision.

2. The Revenue, however, claimed that the appellant was the principal manufacturer, indirectly producing the goods through job workers. They argued that the racks were cleared as independent movable goods and were therefore liable for duty upon clearance.

3. The Tribunal examined the evidence and found that the nature of the goods was not properly appreciated by the adjudicating authority. The appellant's submission that the racks were immovable property only when affixed to earth was uncontroverted.

4. It was noted that there was no evidence of the appellant intending to evade duty by clearing goods in piecemeal. The welded components were necessary for the racks to function as heavy storage units, indicating their immovable nature.

5. The Tribunal concluded that the appellant, by fulfilling contractual obligations and embedding the racks to earth, was not merely a supplier but a manufacturer of immovable goods. Therefore, they were not liable under the Central Excise Act, and the appeal was allowed, subject to verification of deposit particulars for any consequential relief.