2018 (4) TMI 661 - AT - Central Excise

Excisability - pipe used for erection, installation and laying of pipeline - whether the respondent has manufactured pipe and whether the same is excisable and liable for duty? - Held that - the pipe is manufactured which is movable, hence marketable and subsequent to the manufacture, it is taken to the site where the pipe has to be laid down and that the laying process is carried out - the respondent has carried out the manufacturing of pipe which is excisable. CENVAT credit - input used in the manufacture of pipe - Held that - no verification of the input invoices has been carried out - the duty payable, if any, by the respondent cannot be taken as cenvat credit by MSEB - this fact has not been verified before coming to the conclusion on the aspect of revenue neutrality by the learned Commissioner. Appeal allowed by way of remand.

Summary

Issues:
1. Whether the manufacturing of 1600 mm diameter MS pipes is excisable and liable for duty.
2. Verification of cenvat credit available to the respondent.
3. Consideration of revenue neutrality in the case.

Analysis:
1. The main issue in this case was whether the respondent's manufacturing of 1600 mm diameter MS pipes was excisable and liable for duty. The department contended that the pipes were movable goods and therefore excisable. The Tribunal observed that the respondent had indeed manufactured the pipes, which were movable and marketable, distinct from the immovable activity of laying the pipes. The Tribunal found that the manufacturing activity rendered the pipes excisable, contrary to the department's argument.

2. Regarding the cenvat credit available to the respondent, the Tribunal noted that there was no verification of the input invoices for the manufacturing process. Additionally, the argument of revenue neutrality, based on MSEB potentially availing cenvat credit if duty was payable, was deemed unconvincing. The Tribunal highlighted that MSEB was not a typical service provider or manufacturer, questioning the assumption of revenue neutrality without proper verification.

3. The issue of revenue neutrality and the duty payable potentially being cenvatable to MSEB was a significant aspect of the case. The Tribunal emphasized the lack of verification on this point, suggesting that the matter needed to be reconsidered afresh. Consequently, the Tribunal set aside the original order and remanded the case to the adjudicating authority for a fresh decision, with all issues left open for further examination. The appeal was disposed of through remand for a comprehensive reassessment.