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2017 (2) TMI 672 - AT - Central ExciseManufacture - production of goods like tower parts, structures, GT Line, V cross arms, HT/LT line materials - Whether subjecting the MS Angles, Channels, Plates etc. to the process of to cutting to the required size, drilling holes, riveting, welding etc. to fabricate HT Lines , 11KV V Cross Arms , 11KV top Clamps , DC-8 Centre , U Clamps , Four Pin Arms etc. which are used as parts of Transmission Tower, amounts to manufacture and would attract central excise duty? - appellant contested that they procured duty paid MS Channels, MS Plates and MS Angles and the processes undertaken by them does not amount to manufacture. Held that - the appellant is undertaking the process of cutting of channels, plates and angles and subjecting them to hole with the purpose of putting the same to use. The Tribunal s order in appellant s own case EXECUTIVE ENGINEER, FABRICATION WORKSHOP MPSEB Versus COMMR. OF C. EX., BHOPAL 2004 (7) TMI 228 - CESTAT, NEW DELHI is on the same issue as to whether the activity of the appellant of producing transformed structures from MS Rods, MS Channels etc. amounts to manufacture. The Tribunal held that there is no activity of manufacture attracting excise liability. The process of fabrication of columns, purlines etc. by cutting, drilling, punching and welding does not amount to manufacture - the appellants are held not liable for Central Excise duty - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Whether the processes undertaken by the appellant amount to manufacture. 2. Classification of the final product under the Central Excise Tariff. 3. Applicability of excise duty on the final product. 4. Limitation and validity of the show cause notices. 5. Marketability of the final product. 6. Binding nature of previous judgments and their applicability. Issue-wise Detailed Analysis: 1. Whether the processes undertaken by the appellant amount to manufacture: The appellant argued that the processes they undertook (cutting, drilling, punching, bending, welding) on duty-paid MS Channels, MS Plates, and MS Angles did not amount to manufacture. The appellant cited various decisions, including Karnataka Electricity Board Vs. CCE Bangalore and Tansi Engineering Works Vs. CCE, which held that such processes do not result in the creation of a new commodity known to the market. The original adjudicating authority agreed, stating that the processes did not bring any change in the raw materials that could be treated as new, distinct commodities. However, the Commissioner (Appeals) reversed this decision, asserting that the processes resulted in the emergence of new identifiable products, thus amounting to manufacture. 2. Classification of the final product under the Central Excise Tariff: The Revenue classified the final products under chapter heading 7308.90 of the Central Excise Tariff, which covers structures and parts of structures of iron or steel. The Commissioner (Appeals) upheld this classification, stating that the raw materials were converted into parts of transmission towers, which are covered under Chapter 73 and are excisable. 3. Applicability of excise duty on the final product: The Additional Commissioner initially vacated the show cause notices, holding that the processes did not amount to manufacture, and thus, the final products were not excisable. However, the Commissioner (Appeals) reversed this decision, holding that the final products were excisable as they were new identifiable products resulting from the manufacturing processes. 4. Limitation and validity of the show cause notices: The appellant contested the demand on the ground of limitation, arguing that the show cause notices were issued beyond the permissible period. However, this issue was not the primary focus of the final judgment and was overshadowed by the substantive issue of whether the processes amounted to manufacture. 5. Marketability of the final product: The Commissioner (Appeals) held that the parts of transmission towers were marketable and thus excisable. The Tribunal, in previous cases like Elecon Engineering Co. Ltd. Vs. CCE, Chandigarh, had held that fabricated items like columns and purlines, which were assembled at the work site, did not amount to manufacture and were not excisable. The Supreme Court upheld this view, stating that the process did not result in a new product known to the market. 6. Binding nature of previous judgments and their applicability: The Tribunal had to consider various precedents, including the larger Bench decision in Mahindra & Mahindra Ltd. vs. CCE, which held that similar processes amounted to manufacture. However, the Tribunal also had to consider the Supreme Court's affirmation of decisions like Aruna Industries and Wainganga Sahkari S. Karkhana Ltd., which held that such processes did not amount to manufacture. The Tribunal ultimately followed the Supreme Court's decisions, which were binding and provided that the processes did not amount to manufacture. Separate Judgments Delivered by the Judges: - Member (Judicial): Held that the processes undertaken by the appellant did not amount to manufacture, based on the Supreme Court's affirmation of similar cases. Thus, the final products were not excisable. - Member (Technical): Disagreed, holding that the processes resulted in new identifiable products, which were excisable under Chapter 73.08 of the Central Excise Tariff. Final Decision by Third Member: The third member, B. Ravichandran, resolved the difference of opinion by siding with the Member (Judicial). The processes undertaken by the appellant did not amount to manufacture, and thus, the final products were not liable for Central Excise duty. The decision was based on the binding nature of the Supreme Court's rulings in similar cases. Conclusion: The Tribunal, by majority, held that the appellant's processes did not amount to manufacture, and the final products were not excisable. The appeal was allowed, providing consequential relief to the appellant.
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