2019 (5) TMI 448 - AT - Central Excise

Recovery of Central excise duty - green houses/poly houses assembled at the factory and thereafter cleared in knocked down condition for assembly at site - it was aleged that appellant had not discharged appropriate Central Excise duty for the period from April 2006 to March 2008 - extended period of limitation - penalty - HELD THAT - The green house/poly house was first manufactured and then cleared in knocked down condition for assembly at site. In these circumstances, excise duty is leviable for the clearances affected by the appellants. Further, it is noticed that the appellant had artificially split the price of the green house/poly house, as value of raw material and service charges relating to assembly at site. In such scenario invoking of extended period and imposition of penalty under Section 11AC of Central Excise Act, 1944 is clearly justified. The appellant be allowed to discharge 25% of the penalty imposed under Section 11AC of the Central Excise Act, 1944 subject to fulfillment of condition laid down there under - appeal allowed in part.

Summary

Issues involved:
- Appeal against Order-in-Appeal No.PI/RSK/229/2010 dated 12/11/2010 passed by the Commissioner of Central Excise (Appeals), Pune.
- Interpretation of whether the process of assembly of GI pipes resulting in poly houses/green houses at site amounts to manufacture.
- Dispute on excise duty payment for assembling green houses/poly houses at site.
- Justification of invoking extended period and penalty under Section 11AC of Central Excise Act, 1944.

Analysis:
1. The appeal was filed challenging the Order-in-Appeal passed by the Commissioner of Central Excise (Appeals), Pune, regarding the non-payment of appropriate Central Excise duty for the period from April 2006 to March 2008 on green houses/poly houses assembled at the factory and cleared in knocked down condition for assembly at site. The appellant contended that no excise duty was payable as the process carried out at the factory did not result in the manufacture of green houses/poly houses until assembled at the site. The issue revolved around whether the assembly process constituted manufacturing and if the extended period and penalty were justified.

2. The appellant argued that the basic raw materials used were GI pipes, cut to standard lengths, drilled with holes, and processed to be suitable for assembly at the site. They claimed that no excise duty was payable for this process, especially considering the interpretation of law regarding whether the assembly of GI pipes into poly houses/green houses at the site constituted manufacturing. On the other hand, the Revenue supported the findings of the Commissioner (Appeals) and cited a previous Tribunal order where it was established that the assembly process at the factory resulted in the manufacture of green houses/poly houses, justifying the extended period and penalty.

3. Upon reviewing the facts and arguments presented, the Tribunal found that the appellant received GI Pipes, processed them by cutting, drilling, bending, etc., and assembled them into poly houses/green houses at the factory before clearing them in knocked down condition for installation at the site. The Tribunal referred to a previous case where the appellant had claimed that since service tax was paid for installation at the site, excise duty was not applicable. However, it was established that the green house/poly house was first manufactured at the factory and then cleared for assembly at the site, making excise duty leviable for such clearances. The Tribunal also noted that the appellant had split the price of the green house/poly house to evade excise duty, justifying the extended period and penalty under Section 11AC of the Central Excise Act, 1944.

4. While upholding the imposition of penalty under Section 11AC, the Tribunal acknowledged that the appellant should be allowed to discharge 25% of the penalty imposed, subject to compliance with the provisions of the Act. Therefore, the impugned order was modified to permit the appellant to discharge 25% of the penalty imposed under Section 11AC of the Central Excise Act, 1944, upon fulfilling the specified conditions, resulting in the appeal being partially allowed in this regard.