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TMI Blog2024 (12) TMI 344X X X X Extracts X X X X X X X X Extracts X X X X ..... ot amounts to 'manufacture'. It depends upon the facts and circumstances of each case. However, before going into the question whether quality testing, labelling/branding etc amounts to manufacture or not it must be established that the appellant has actually undertaken such activities in their factory premises. In the present case, it is observed that the appellant did not have any manufacturing facility in their premises; there was no machinery found during the course of search; no raw material or manufactured goods were found in the process of manufacturing at the time of search; there was no manpower employed by them for undertaking the manufacturing process; the monthly electricity charges of the factory was within Rs.4,000/- to Rs.5,000/- which evidences that no manufacturing activity was undertaken in the factory. Thus, we observe that the evidences available on record does not support the conclusion arrived at by the adjudicating authority that the appellant has undertaken some activity amounting to 'manufacture' in their premises. The adjudicating authority has not produced any other evidence to substantiate the allegation that the appellant has actually ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1)(c) of the Central Excise Rules, 2002 does not arise - the demand of interest and penalties imposed on the Appellant-company are set aside. Penalty imposed on the Partner of the Appellant-company - HELD THAT:- Penalty has been imposed on the ground that the Partner played a role in the commission of the alleged offence. Since it is already held that the demand of duty on the activity undertaken by the Appellant is not sustainable, the role of the appellant in commission of the alleged offence is not established. Accordingly, the penalty imposed on the Partner viz. Shri Sudipta Dey under Rule 26(1) of the Central Excise Rules, 2002 is also set aside. The demands confirmed in the impugned order are set aside and the appeals filed by both the Appellants are allowed - HON BLE SHRI R. MURALIDHAR , MEMBER ( JUDICIAL ) And HON BLE SHRI K. ANPAZHAKAN , MEMBER ( TECHNICAL ) Shri J. P. Khaitan , Senior Advocate Assisted by Shri Agnibesh Sengupta and Shri Indranil Banerjee , both Advocates for the Appellant ( s ) Shri B. K. Singh , Authorized Representative for the Respondent ORDER ORDER : [ PER SHRI K. ANPAZHAKAN ] M/s. Annapurna Engineering Works, 59/18, 23, 24 Natabar Paul Road, Howrah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acturers, who are responsible for discharging central excise duty on the goods manufactured by them. 4. The said Notice was adjudicated by the Ld. Commissioner vide the impugned Order-in-Original No. 18/COMMR./CE/KOL-II/Adjn/2010-11 dated 29.10.2010 wherein the Ld. Commissioner has confirmed the demand of Central Excise Duty of Rs.5,19,24,945/-, along with interest and imposed equal amount of tax as penalty under Section 11AC of the Central Excise Act, 1944 along with a penalty of Rs.10,00,000/- under Rule 25(1)(c) of the Central Excise Rules, 2002, for non-registration. A penalty of Rs.10,00,000/- was imposed on Shri Sudipta Dey, Partner of the Appellant-company, under Rule 26(1) of the Central Excise Rules, 2002. 5. Aggrieved by the confirmation of the demands and imposition of penalties, the Appellant-company as well as its Partner viz. Shri Sudipta Dey, have filed the present appeals. 6. The submission of the Appellants is that on 19.06.2008 when the Officers conducted the search, there were no plant and machinery or working staff available in the factory premises. In the course of search, no raw material or manufactured goods were found in the process of manufacturing; no manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods, the Show Cause Notice issued is ex-facie bad in law. 6.3. The Appellants further submitted that in the Show Cause Notice, it has been alleged that as per the terms and conditions of the Railway tenders, inspection of the goods has been done by RITES / RDSO at the factory premises of the supplier; accordingly, it was alleged in the Notice that testing and branding activities are therefore undertaken at the Appellant s premises; these premises, which were used for completion of the manufacture of the goods, belonged to the Appellant and hence the Appellant would be liable to pay Central Excise Duty on the goods manufactured by them. In this regard, the Appellant submits that in most of the cases, there was no requirement of testing and there was no requirement of branding of the goods; testing, if any, as and when required, was done at the office of RITES / RDSO, where samples were drawn and only after approval from RITES / RDSO, the goods were accepted. They also submit that it is not the requirement by the Railways that before supply, the goods are to be tested as a necessary condition; however, whenever necessity of testing was considered by the inspecting authority of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the extended period of limitation is not sustainable. Accordingly, the appellants prayed for setting aside the demands confirmed in the impugned order. 7. The Ld. Authorized Representative for the Revenue submitted that the statements given by various job workers clearly indicate that the Appellant had monitored the manufacturing activity as well as offered financial assistance to the job workers; further, many of the job workers said to have undertaken the job work were not even found to be physically existing in the places where their addresses had been mentioned. Thus, the Ld. Authorized Representative for the Revenue contended that the Appellant had actually undertaken the manufacturing activity by themselves and created a network of job workers to create an impression that the goods were manufactured by job workers. Accordingly, he supported the impugned order confirming the demands against the Appellants. 8. Heard both sides and perused the appeal records. 9. We observe that the Appellant has received orders from the Railways for supply of railway parts and components. They are registered with the Railways as manufacturers. Accordingly, the impugned order considered the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellants submission is that they got the entire activity undertaken by the job workers, but the department's contention is that they have undertaken activities such as testing, branding done at their premises, which amounts to 'manufacture' as per section 2(f) of the Central Excise Act, 1944. Thus, we observe that the main ground under which the adjudicating authority considered the appellant- company as the manufacturer is that the appellant- company has undertaken some processes in their premises which amounts to 'manufacture' as defined under section 2(f) of the Central Excise Act and hence appellant-company is the actual manufacturer. 10. In view of the above position, it is to be decided, under the facts and circumstances of this case, whether the appellant-company is the manufacturer or the job worker, who has undertaken the activities as per the designs supplied by the Railways, on the raw materials supplied by the appellant, is the actual manufacturer? 10.1. Section 2(f) of the Central Excise Act, 1944 deals with manufacture . For the sake of ready reference, the said Section is reproduced below: - Section 2. Definitions. In this Act, unless there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rawn and only after approval from RITES / RDSO, the goods were accepted. They also submit that it is not the requirement by the Railways that the before supply, the goods are to be tested as a necessary condition; however, whenever necessity of testing was considered by the inspecting authority of Railways, the goods were tested at the place of RITES / RDSO where samples used to be sent. It is also stated that on several occasions examination of the goods were carried at job workers' premises. We observe that there is no evidence available on record to substantiate the allegation that the appellants have carried out some processes amounting to manufacture in their factory premises. We observe that the adjudicating authority has relied upon the statements reordered form various job workers to substantiate this allegation. 10.3. We have perused some of the statements relied upon by the adjudicating authority in the impugned order to conclude that the appellant-company are the actual manufacturers. Statement dated April 23, 2009 of Sri Biswajit Paul, proprietor of M/s Paul Welding Works 10.3.1. From the statement dated April 23, 2009 of Sri Biswajit Paul, proprietor of M/s Paul We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any process at the premises of the appellant-company. We observe that on the basis of this statement, the adjudicating authority has arrived at a conclusion that the job worker has manufactured only a part of the finished product. We observe that there is no basis for arriving at this conclusion. 10.3.4. It has also been alleged that the appellant- company has given financial assistance the S.S. Industries and supervised the manufacturing activities at the premises of the job worker. The Ledger account of the job worker S.S. Industries has been relied upon for this purpose. From the ledger account of the appellant in the books of M/s. S. S. Industries for the Financial Year 2007-08, we observe that the said concern sold goods worth Rs.9,64,616 to the appellant against which the appellant paid Rs.9,01,723, leaving outstanding an amount of Rs.62,893 which was paid on April 8, 2008 in the next financial year 2008-09. The said ledger account for the financial year 2007-08 does not show any advance payment by the appellant to M/s S.S. Industries. The ledger account for the period April 1, 2008 to July 31, 2008 falling within the financial year 2008-09 shows that during the period April ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the drawings and designs provided by railways. Apart from the cutting work, M/s. Nabin Enterprise also sold to the appellant goods which they got manufactured outside with raw material purchased by them. We observe that his statement has been interpreted to arrive at the conclusion that the goods sent by him to the appellant required further processing. We observe that Shri. Jaiswal said that he did not know what the appellant did with the goods supplied by him. We observe that the adjudicating authority interpreted this statement wrongly and concluded that the goods sent by M/s. Nabin Enterprise to the appellant were not finished products or that the same were parts of some product which was allegedly assembled in the appellant's premises. Thus, we observe that this statement is not sufficient to arrive at the conclusion that the appellant has undertaken further processing at their premises, which amounts to manufacture. Statement dated October 20, 2008 of Sri Dipak Kumar Roy, partner of M/s. Unique Tube Industries 10.3.9. According to the replies given by Shri Roy, the goods were manufactured by him according to the designs/drawings provided by the appellant. We obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 (169) E.L.T. 187], testing of goods being one of the essential requirement for completion of the goods, it cannot be said that the goods were in fully manufactured condition before testing. 2) In Rolls Prints (Packaging) Ltd [1998 (104), E.L.T. 712] case, the assessee were carrying out inspection, counting packing. Before the removal of final product, inspection is one of the processes that are carried out by the manufacturer. The Tribunal observed that the definition of manufacture in section 2(f) of CEA 44 includes any process incidental or ancillary to the completion of a manufactured product. 3) In Prasad films Vs CCE [2001 (130) E.L.T. 491(CEGAT)] goods were brought in factory after processing by Job workers. These were tested randomly labeling was done. It was held that quality control is an important facet of manufacturing activity where goods manufactured are of sensitive nature. 4) In CCE Vs General Cement products (P) Ltd. [1989 (39) E.L.T. 689(CEGAT)], it has been held that where quality, tests are mandatory requirements as per agreement with customer, goods cannot be said to be fully manufactured till such quality control, tests are carried out. 10.4.1. We find that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. Thus, we observe that the evidences available on record does not support the conclusion arrived at by the adjudicating authority that the appellant has undertaken some activity amounting to 'manufacture' in their premises. 10.4.4. Regarding testing of the goods, the Appellant submits that in most of the cases, there was no requirement of testing and there was no requirement of branding of the goods; testing, if any, as and when required, was done at the office of RITES / RDSO, where samples were drawn and only after approval from RITES / RDSO, the goods were accepted. They also submit that it is not the requirement by the Railways that before supply, the goods are to be tested as a necessary condition; however, whenever necessity of testing was considered by the inspecting authority of Railways, the goods were tested at the place of RITES / RDSO where samples used to be sent. It is also stated that on several occasions examination of the goods were carried at job workers' premises. The appellant also submitted that for railway supplies the marking is done only for identification purposes. They affix the letters 'AE' to identify the product later for repair or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise Law. The placing of a sticker on the Towers showing the brand name of the appellants will not render the appellants as a manufacturer of the Towers. Such branding affixations may only deprive the job worker-manufacturer of the Small Scale Exemptions. Duty demands pursuant to denial/ineligibility of the benefit of notification cannot be made on the appellants. 10.4.7. We observe that the same view has been taken by this Tribunal in the case of SA Enterprise v. Commissioner of C.Ex., Kolkata-II vide Final Order Nos. 74848-74853 of 2023 dated 27.06.2023 in Excise Appeal No. 392 of 2012 ors. [CESTAT- Kolkata]. The relevant portion of the said order is reproduced below: 13. C. Job work : We find that the appellant firm had also traded in items obtained through job work. However, as compared to the total turnover of the appellant firm, the quantum of sale of job worked goods was quite low in value. To support such conclusions, we have perused the details and documents submitted by the appellant firm in relation to job worked goods for the period 2011-12 and 2012-13. We find that during the said period the appellant firm had maintained separate set of sale bills for sale of goods manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has already been raised and the issue has been settled in favour of the appellant. In that case, the Ld. adjudicating authority has categorically held that the appellant was not the manufacturer as defined under Section 2(f) of the Central Excise Act. Since, there is no suppression of facts with intention to evade the tax established in this case, raising the demand by invoking extended period of limitation again is legally not sustainable. We find that this view has been held by the Hon ble Supreme Court in the Nizam Sugar Factory v. Collector of Central Excise, A.P. [2006 (197) E.L.T. 465 (S.C.)] wherein it has been categorically held that once a demand has been raised for any issue by invoking the extended period of limitation, then another demand cannot be raised again by invoking the extended period on the same issue for a subsequent period. The relevant part of the said order is reproduced below: 9. Allegation of suppression of facts against the appellant cannot be sustained. When the first SCN was issued all the relevant facts were in the knowledge of the authorities. Later on, while issuing the second and third show cause notices the same/similar facts could not be taken a ..... 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