Custom, Excise & Service Tax Tribunal
Namdhari Industrial Traders vs Cce & St, Ludhiana on 16 November, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
DIVISION BENCH
Court No.III
Appeal No.E/58226/2013-EX(DB)
(Arising out of OIA No.11/LDH/2013 dt.15.3.2013 passed by the CCE, Ludhiana)
Date of Hearing/Decision 16.11.2015
For approval & Signature:
Honble Ashok Jindal, Member (Judicial)
Honble Mr.B.Ravichandran, Member (Technical)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No
3.
Whether their Lordships wish to see the fair copy of the order?
seen
4.
Whether order is to be circulated to the Department Authorities?
yes
Namdhari Industrial Traders Appellant
Vs.
CCE & ST, Ludhiana Respondent
Appearance:
Present for the Appellant: Shri P.K.Mittal, Advocate Present for the Respondent: Shri S.Nunthuk, JCDR Coram: Honble Ashok Jindal, Member (Judicial) Honble Mr.B.Ravichandran, Member (Technical) Final Order No.53542/2015 Per: B.Ravichandran The appeal is against the order dated 15.3.2013 passed by the Commissioner, Central Excise, Ludhiana.
2. Brief facts of the case are that the appellants are engaged in trading of steel angles, channels, etc. and are also engaged in cutting welding of these steel angles, channels apart from getting these items galvanized by job worker. Based on certain information, the officers of Central Excise Ludhiana conducted investigation relating to non payment of central excise duty by the appellants. The proceedings were initiated against the appellants resulted in order dated 5.5.2011 through which a demand of Rs.2,07,34,612/- and penalty of equal amount was confirmed. On appeal, the Tribunal vide Final Order dated 12.12.2011 remanded the matter back to the original authority for fresh order after considering all the aspects. The present impugned order dated 15.3.2013 came to be passed on such remand order.
3. Learned Counsel for the appellants Shri P.K.Mittal submitted that the appellants are engaged both in trading of steel items like angles, channels, etc. and are also engaged in the cutting and welding of these items as per requirement of the buyers. They get these items galvanized, as and when required, by the job worker. The appellants do not have any facility for extensive fabrication of steel structure or for galvanizing steel items. Learned Counsel submitted that the departments case is that all items cleared by the appellants are liable to central excise duty because: (a) cutting and welding resulted in new structural product and (b) galvanizing steel items amounts to manufacture. Learned Counsel strongly pleaded that the original authority did not follow the direction given by the Tribunal in their remand order. Instead, he virtually reiterated the earlier order. Learned Counsel further submitted that the impugned order shows lack of application of mind and mixed up various issues without any clarification in finding. The original authority did not examine in detail the exact nature of processes carried out by the appellants which will result in commercially identifiably new product liable to central excise duty. The original authority quoted certain description of the products mentioned in their invoices. These descriptions are as per indent placed by the buyers which are actually products which buyers intends to make out of cutting and wielding products supplied by the appellants.
4. Learned Counsel stated that galvanizing work on steel items were carried out by their job workers. Galvanizing amounts to manufacture but the appellant is not involved in such manufacture. Duty liability, if any, is on the job worker if they have not followed the exemption procedure as per Notification NO.214/86-CE.
5. Learned AR Shri S.Nunthuk reiterated the findings in the impugned order.
6. We have heard both sides and examined the appeal records.
7. We find that this is second round of litigation of the same matter. In the remand order dated 12.12.2012, the Tribunal specifically directed the original authority to examine whether there was manufacturing activity in respect of each of the items sold. It was found that the argument of the appellant that they cannot be held liable for manufacturing process done by the job worker has strong force and should be examined by the Revenue. The adjudicating authority was directed to examine excisability of the product sold by the appellants by grouping like goods together and giving clear finding whether the process amounts to manufacture and specified duty liability by products of each group.
8. On examination the impugned order, we find that there is no detailed discussion regarding nature of process undertaken by the appellant and nature of emerging final products. The order mentions that the appellants have undertaken the process of cutting and welding, drilling, grinding and galvanizing on inputs like HR sheets, plates, channels to make manufactured parts of steel structure. Hence, the products were ordered to be classified CTH 73089090. Reliance was placed on the description in the invoices which indicated that MS Box, channels fabricated, Joist channels fabricated, galvanized structures etc. Apparently the term fabricated used in the invoice led to the conclusion by the adjudicating authority that there is manufacturing activity. This aspect has not been explained.
9. No enquiry appears to have been conducted from the buyers of these items and on which state these items were cleared by the appellants from their unit. The impugned order did not make any attempt to segregate/ to group various types of structural and processes involved in making them. It is also seen that despite specific direction given by this Tribunal for grouping like goods together and given clear finding whether the process amounts to manufacture and to specify the duty liability for products of each groups, no such comprehensive attempt has been made by the original authority.
10. The original authority did not follow these directions fully. There was a summary finding based on certain description in the invoices and in the tariff heading of CTA 1985.
11. Regarding the demand of duty from the appellant for galvanizing work done by the job worker, the original authority stated that certain processes like cutting welding were done before they are sent to galvanizing. This observation has not been supported by the original authority with source. Further, observation of the original authority that it is the duty of the appellant to follow the procedure for job work notification and to pay duty on final products is not supported by any legal provision. If the job work procedure is not followed then the duty liability is on the person who undertakes the manufacture activity. In the present case, it is the person who undertakes galvanization who is liable to duty, if any. As such, we find that the original authority is in error in his finding.
12. In the statements of the proprietor of the appellants firm various categories of the items and nature of process undertakes and nature of process undertaken on such items were given. It is necessary for the original authority to examine the processes carried out category wise and to give finding on such process resulted in production of totally a new identifiable and marketable product falling undfer specific classification in tariff. We find that the original authority has not followed these requirements to arrive at the conclusion of duty liability against the appellants. As such, we find that the impugned order is not sustainable and has to be set aside. We do accordingly. The appeal is allowed setting aside the impugned order.
(pronounced in open court)
(B.Ravichandran) (Ashok Jindal)
(Member (Technical) (Member (Judicial)
mk
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