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TMI Blog2005 (6) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... on and steel products such as plates, angles etc., by subjecting them to processes of cutting, welding, rivetting etc., into items required for erection amounts to manufacture since the resultant goods have a distinct name from the raw materials. 3. In his order he demanded an amount of Rs. 1,14,28,688/- for the period from 12-1-87 to 5-11-88. M/s. AFCONS appealed against the order of the Collector. Meanwhile, the Department filed a miscellaneous application dated 17-5-93, seeking to change the classification of the Dock Roof Structure... and dock gates (Caisson and flap gates) from 7308.90 to 8486.00 and 8907.00 respectively. The SCN proposed to demand duty on the part of steel structures and dock gates whereas the miscellaneous application sought to demand duty on steel structure and dock gates in finished conditions. AFCONS filed a miscellaneous application that the demand is hit by time-bar under Section 11A of the Act, while the SCN is issued on 5-1-89 invoking the larger period. 4. The Tribunal passed final order dated 3-3-97 remanding the matter back to the Commissioner with the remark that there has to be a clear finding by the original authority on the question of ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic order has been given on the issue of imposing penalty on these individuals. (vi) No penalty was imposed against M/s. AFCONS in the said Adjudication Order. When the Commissioner has confirmed the demand made in the Show Cause Notice, it appears that, he has no option to refrain from imposing penalty does not appear to be correct in the light of Hon'ble Supreme Court's order in the case of Z.B. Nagarkar v. Union of India , wherein the court has clarified that, imposition of penalty is imperative/mandatory and only the amount of penalty imposable by the Adjudicating Authority is discretionary. 6. The grounds of appeal in respect of AFCONS are as follows : I. The Commissioner's finding that process of cutting, welding, drilling carried out on the items like steel plates, angles, beams, etc…, purloins, runners amounts to manufacture is not correct. The appellants rely on the following decisions to substantiate that the above processes do not amount to manufacture : • Aruna Industries and others v. Collector -1986 (25) E.L.T. 580 • CCE, Nagpur v. Wainganga Sahakari Kharkhana - 2002 (142) E.L.T. 12 (S.C.) • Elecon Engineering v. CC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding given by the Commissioner on the issue of marketability of submarine roof portal and Gantry beam rail and the decisions of the Hon'ble Apex Court, High Court and Tribunal, relied upon by the appellants that the impugned goods are not marketable are not distinguished. VII. Submarine Roof Portal Frame and Gantry Crane Beam Rails are immovable structures. Even the Collector in his earlier order has observed the following : "It would also be clear that the various fabrications produced with the processes like cutting, welding, drilling, rivetting etc., utilized the inputs like angles, channels plates form the entire structure that is to be erected and as such the structure can be stated to have been produced in knocked down condition; this is also evident from the demarcations given to the various fabricated items" VIII.The appellant contended that the demand is for the period from January 1987 to November 1988. But the SCN dated 5-1-89 was received on 9-1-89. Therefore the demand for the period up to January 88 is time-barred. IX. Notification No. 197/87, dated 28-8-87 provides exemption to goods falling under CH 73 provided they are manufactured by a fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The admitted facts are that M/s. AFCONS undertook a work contract with the Chief Engineer Dry Dock Visakhapatnam. As far as the present dispute is concerned the items of work are as follows: (1) Submarine dock roof structure, Gantry beam Rail and foundations for dock fittings and fixtures. (2) Dock Gates (Caisson and flap) In order to appreciate the issue we are giving the following pictures, which are part of the case records. 9. A perusal of the photos reveal that the items fabricated by M/s. AFCONS are part of submarine dry dock. It has been averred by M/s. AFCONS that the Chief Engineer dry dock supplied to the appellant finished products namely steel on which excise duty has already been paid for using it in the construction work. The steel consisting of plates, angles and channels were not at any time sold to the appellants. They remained the property of the defence department and were to be used exclusively on the construction work entrusted to the appellants. The steel items of plates, angles and channels were subjected to cutting, punching, rivetting, welding etc., so that they could be used in the construction work as specified in the contract. The ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Afterwards the workers can repair the ship. This is the function of dry dock caisson. What has been dealt with in the CEGAT's order is the same as the present goods. 12. In the landmark case Thungabhadra Steel Products Ltd. v. UOI it has been held that fabrication of Hydraulic gates, hoists, gantry cranes for such gates, penstock pipes for river valley projects/dams, etc., out of duty paid materials would not amount to manufacture. Further, they are not excisable as they are not capable of being sold in the market. In the present case also the caisson gate and the other structures are specifically meant for the dry dock, which will be a fixed structure and therefore the fabricated parts cannot be marketable and in that view they are not excisable. Similarly the Gantry rails as can be seen from the photos are fixed on which the Gantry crane moves. For the same reasons as stated earlier they also cannot be called as goods. In these circumstances, in our view there is no merit in the Revenue's demand at all. Since the appeal is allowable on merits alone we are not going into the issue of limitation. The entire demand is liable to be quashed for the reasons stated above. Hence, ..... 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