2015 (12) TMI 1392 - AT - Central Excise

Duty demand - Manufacture - Whether the activity of the appellant installation of signaling system at site is manufacture of excisable goods and would be attract excise duty - Held that - activity of the appellant no excisable goods come into existence. Moreover, it is also not disputed that similar show cause notices issued by jurisdictional Additional Commissioner, Bangalore, Ahmedabad and Mysore have been dropped by the concerned Additional Commissioners. We are also convinced with the contention that the elements required for invocation of extended period under proviso to section 11A(1) are absent in this case. Prima facie, the show case notice dated 31.10.2012 for demand of duty issued for the period October, 2007 to December, 2009 is therefore time barred. - stay granted.

Summary

Issues:
Whether the activity of installing signaling systems at the site amounts to manufacturing excisable goods attracting excise duty, and if the demand raised by the show cause notice is time-barred.

Analysis:

Manufacture of Excisable Goods:
The case involved the appellant engaged in manufacturing and supplying railway signaling equipment to Indian Railways. The appellant prepared station-specific designs, procured duty-paid components, and installed the signaling systems at railway stations. The Department contended that the appellant manufactured signaling systems at the site, falling under a specific sub-heading of the Central Excise Tariff Act, making them liable to pay central excise duty. The Commissioner confirmed a duty demand against the appellant, along with interest and penalties. However, the appellant argued that no excisable goods emerged at the site, emphasizing that the activity of erection, installation, and commissioning constituted a service subject to service tax. The appellant highlighted similar instances where show cause notices for other stations were dropped, indicating that the activity did not amount to manufacturing excisable goods. The Tribunal noted that no excisable goods came into existence through the appellant's activity, and similar show cause notices issued by other jurisdictions were dropped. Consequently, the Tribunal held that the activity did not attract excise duty as no excisable goods were produced.

Limitation Period for Demand:
The Tribunal also considered the limitation period for the demand raised in the show cause notice. The appellant argued that the demand for duty for a specific period was time-barred as the elements required for invoking the extended period under the relevant provision were absent. The Tribunal agreed with this contention, stating that the show cause notice for the duty demand issued for the mentioned period was indeed time-barred. As a result, the Tribunal waived the requirement of pre-deposit of duty demand, interest, and penalty for the appeal hearing and stayed the recovery process. This decision was based on the finding that the demand for duty was beyond the permissible limitation period.

In conclusion, the Tribunal ruled in favor of the appellant, determining that the activity of installing signaling systems did not amount to manufacturing excisable goods attracting excise duty. Additionally, the Tribunal found the demand raised in the show cause notice to be time-barred, leading to the waiver of pre-deposit requirements and a stay on the recovery process for duty, interest, and penalties.