2025 (4) TMI 755 - AT - Central Excise

Levy of excise duty - manufacture or not - works related to Installation of structural Glazing Aluminium Doors Aluminium Partitions and office interiors - HELD THAT - It is an admitted fact that upon fabrication the impugned items become a part of civil construction. In such a situation it is not sustainable to hold that there is a marketable new product emerging in between. Similarly if the goods installed at site are capable of being sold or shifted as such after removal from the base then the goods would be considered to be movable and excisable. In the present appeal the department has no case that the goods installed/structure erected can be shifted or dismantled to be movable property and therefore are excisable to duty. Further they cannot be shifted or disassembled without causing damage to the components/ parts. Even as per the counsel it is has been rightly pointed out that if the curtain wall/AWs cladding are pulled down or dismantled it would result into scrap only. Considering the above facts and circumstances the activity of Installation of Structural Glazing work Aluminium Doors Aluminium Partitions and Office Interiors cannot be considered as manufacturing to confirm demand of duty along with interest and impose penalties. Conclusion - The appellant s activities do not constitute manufacture under Section 2(f) of the Central Excise Act as they did not result in a new distinct and marketable product. The installations were deemed part of immovable property. The impugned order is not sustainable hence liable to be set aside - Appeal allowed.

Summary

ISSUES PRESENTED and CONSIDERED

The primary issue considered in the appeal is whether the activities undertaken by the appellant, specifically the installation of structural glazing, aluminium doors, aluminium partitions, and office interiors, constitute "manufacture" under Section 2(f) of the Central Excise Act, 1944, thereby making them liable for excise duty. Additionally, the issue of whether the appellant is entitled to CENVAT credit if the demand is sustained was also considered.

ISSUE-WISE DETAILED ANALYSIS

1. Definition of Manufacture and Excisable Goods

- Relevant Legal Framework and Precedents: The legal framework hinges on Section 2(f) of the Central Excise Act, which defines "manufacture" and the requirement for goods to be both movable and marketable to be considered excisable. The appellant relied on various judicial precedents, including the Supreme Court rulings in Metlex (I) Pvt Ltd, Quality Steel Tubes Pvt Ltd, and Ajit India Pvt Ltd, which emphasize the necessity of a new product with a distinct identity and marketability for excise duty to be levied.

- Court's Interpretation and Reasoning: The Tribunal examined whether the processes undertaken by the appellant resulted in a new and distinct product that could be considered excisable goods. It was argued that the activities performed did not result in the creation of a new product with a distinct market identity, as the final installations were part of immovable property.

- Key Evidence and Findings: The appellant provided Chartered Accountant certificates and relied on deposition statements to demonstrate that the activities did not involve manufacturing as defined by law. The Tribunal noted that the appellant's activities were primarily site-specific installations that did not result in marketable goods.

- Application of Law to Facts: The Tribunal applied the principles from the cited precedents and circulars, concluding that the activities did not meet the criteria for manufacturing excisable goods. The processes involved were preparatory and did not result in a new product before integration into immovable property.

- Treatment of Competing Arguments: The Tribunal considered the Revenue's argument that the activities constituted manufacturing because they involved processing raw materials into components used in construction. However, the Tribunal found these arguments unpersuasive given the lack of a distinct and marketable product emerging from the processes.

- Conclusions: The Tribunal concluded that the appellant's activities did not constitute manufacturing under the Central Excise Act, as the final products were part of immovable property and not marketable goods.

2. CENVAT Credit Eligibility

- Relevant Legal Framework and Precedents: The appellant argued for CENVAT credit eligibility based on the provisions of the CENVAT Credit Rules, supported by a Chartered Accountant certificate.

- Court's Interpretation and Reasoning: The Tribunal did not delve deeply into the CENVAT credit issue, given its primary finding that the appellant's activities were not subject to excise duty. However, it acknowledged the appellant's argument that even if the activities were dutiable, the credit would offset the liability.

- Key Evidence and Findings: The Chartered Accountant certificate was presented to establish the appellant's entitlement to CENVAT credit, suggesting that the net duty liability, if any, would fall below the threshold for excise duty exemption.

- Application of Law to Facts: Given the Tribunal's finding on the non-excisability of the activities, the issue of CENVAT credit was rendered moot in this context.

- Treatment of Competing Arguments: The Tribunal did not need to address competing arguments on CENVAT credit due to its primary finding.

- Conclusions: The Tribunal did not make a definitive ruling on CENVAT credit, as the primary issue of excisability was resolved in favor of the appellant.

SIGNIFICANT HOLDINGS

- The Tribunal held that the appellant's activities did not constitute "manufacture" under Section 2(f) of the Central Excise Act, as they did not result in a new, distinct, and marketable product. The installations were deemed part of immovable property.

- The Tribunal emphasized the importance of the twin tests of movability and marketability in determining excisability, citing the Supreme Court's interpretation in Quality Steel Tubes Pvt Ltd and other relevant cases.

- The Tribunal found that the processes undertaken by the appellant were preparatory and did not lead to the creation of excisable goods, as the final products were integrated into immovable structures.

- The Tribunal set aside the impugned order, allowing the appeals with consequential relief in accordance with the law.