Custom, Excise & Service Tax Tribunal
M/S. Tata Iron & Steel Co.Ltd vs Commissioner Of Central Excise, ... on 15 December, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH: KOLKATA
1 & 2) Appeal Nos. EA-351/04 & 157/05
Sl.No.1) (Arising out of Order-in-Original No.01/COMMR./2004 dated 27.01.2004 passed by the Commissioner of Central Excise, Jamshedpur.)
Sl.No.2) (Arising out of Order-in-Appeal No.23/TPA/RAN/CEX/APPEAL/2005 dated 11.01.2005 passed by the Commissioner(Appeals) of Central Excise & Service Tax, Ranchi.)
FOR APPROVAL AND SIGNATURE
HONBLE DR. D.M. MISRA, MEMBER(JUDICIAL)
HONBLE SHRI H.K.THAKUR, MEMBER(TECHNICAL)
1. Whether Press Reporters may be allowed to see
the Order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the
CESTAT(Procedure) Rules, 1982 for publication in any
Authorative report or not?
3. Whether Their Lordship wishes to see the fair copy
of the Order?
4. Whether Order is to be circulated to the Departmental
Authorities?
M/s. Tata Iron & Steel Co.Ltd.,
Applicant (s)/Appellant (s)
Vs.
Commissioner of Central Excise, Jamshedpur
Respondent (s)
Appearance:
Dr.Samir Chakraborty, Advocate & Shri Abhijit Biswas, Advocate for the Appellant(s) Shri K.Chowdhury, Supdt.(AR) for the Revenue CORAM:
Honble Dr. D.M. Misra, Member(Judicial) Honble Shri H.K.Thakur, Member(Technical) Date of Hearing :- 15.12.2015 Date of Pronouncement :- 24.02.2016 ORDER NO.FO/75189-75190/2016 Per Dr. D.M. Misra.
1. These two Appeals are filed against Order-in-Original No.01/COMMR./2004 dated 27.01.2004 passed by the Commissioner of Central Excise, Jamshedpur ( Appeal No.E/351/04) and Order-in-Appeal No.23/TPA/RAN/CEX/APPEAL/2005 dated 11.01.2005 passed by the Commissioner(Appeals) of Central Excise & Service Tax, Ranchi( Appeal No.E/157/05).
2. Facts of the case in relation to Appeal No. E/351/2004 are that the appellant has been engaged in the manufacture of iron and steel products. A show cause cum Demand notice was issued on 10.06.1998 alleging that during the period May, 1993 to May, 1995 they have clandestinely manufactured and captively consumed 240 numbers of saddles classifiable under chapter sub-heading 7308.90 of CETA, 1985 valued at Rs.2,02,39,450.00 without payment of duty of Rs.30,35,917.50. On adjudication, the demand was confirmed and penalty of Rs.30,35,917.50 was imposed under the provisions of Rule 9(2) and 52A of Central Excise Rules, 1944 and penalty of Rs.1.00 Lakh under Rule 9(2), 52A(B) and 173Q of Central Excise Rules, 1944 was imposed. Besides 240 number of saddles valued at Rs.2,02,39,450.00 were confiscated under Rule 173Q of Central Excise Rules, 1944 with option to redeem the same on payment fine of Rs.1.00 Lakh. The said Order was challenged by the Appellant before this Tribunal and this Tribunal Remanded the matter to the Commissioner for fresh adjudication vide Order No.A-314/Kol/2001 dt.21.05.2001.
2.1 In the second adjudication order No.60/COMMR/2001 dated 31.12.2001, the same amount of duty was confirmed, but in addition to the penalty of Rs.30,35,917.50 imposed earlier under section 11AC, penalty of Rs.30,35,917.50 was also imposed under Rule 173Q read with Rule 9(2) and 52A of the Central Excise Rules, 1944; besides confiscation of 240 number of saddles with an option to redeem the same on payment of fine of Rs.1.50 Lakhs was directed. The said Order was also challenged before this Tribunal and it was remanded again by this Tribunal for denovo adjudication vide Order No.A-273/Kol/2003 dt.25.03.2003.
2.2 In the second denovo proceeding under the impugned order, duty of Rs.30,35,917.50 was confirmed, penalty of Rs.30,35,917.50 was imposed under Rule 173Q(1) read with Rule 9(2) and 52A of Central Excise Rules, 1944. 240 number of saddles valued at Rs.2,02,39,450.00 was confiscated with option to redeem the same on payment of fine of Rs.40.00 Lakhs. No penalty was imposed under Section 11AC nor interest was imposed under Section 11AB of Central Excise Act, 1944. Hence, the present Appeal.
2.3 In relation to Appeal No.EA-157/05, show cause notice was issued to the Appellant on 10.06.1998 demanding duty of Rs.6,08,019.45 for manufacture and clearance of saddles during the period from November, 1995 to January, 1996 and May, 1998 used for storing of Hot Rolled Coils in the Hot Strip Mill (HSM) in the factory premises. On adjudication, the demand was confirmed by the Additional Commissioner of Central Excise and penalty of equivalent amount was imposed under section 11AC of Central Excise Act, 1944 and also under rule 173Q(1) of erstwhile Central Excise Rules, 1944. Aggrieved by the said order the appellant preferred an appeal before the Ld. Commissioner(Appeals), who by its order dated 11.01.2005 upheld the order of the adjudicating authority. Hence, the present appeal.
3. Assailing the impugned order, Ld. Sr.Advocate Dr.Samir Chakraborty for the Appellant advanced the following arguments: he has submitted that fabrication of saddles from the supplied inputs/raw materials would not result into manufacture within the meaning of section 2(f) of Central Excise Act, 1944; secondly, even if such saddle is manufactured, the real manufacturers were the fabricators/job workers and not the appellant; thirdly, in any event the appellant are entitled to the benefit of exemption Notification No.61/90-CE dated 20.03.1990 and 41/1994-CE dated 01.03.1994 as applicable. Besides, the ld.Advocate has also pleaded that show cause notices issued on 10.06.1998 in relation Appeal No.EA-351/04 and show cause notice dated 08.09.2000 in relation to Appeals No.EA/157/05 were barred by limitation in as much in the first show cause Notice there was no suppression of facts as classifications lists were filed from time to time and in the second show cause notice all facts were within the knowledge of the department while issuing the first Notice, hence there was no suppression of facts. He has also argued that in the event of aforesaid argument of the appellants are not acceptable they are entitled to the benefit of MODVAT Credit on the inputs/raw materials used in or in relation to the fabrication/manufacture of saddles.
3.1. Elaborating the said arguments, Ld. Sr.Advocate submitted that the inputs/ raw materials used and process undertaken by the fabricators to bring out saddles comprises of basically a horizontal plate (laid down on the earth) measuring 1 meter in width and 10 meters in length, over which smaller plates are gas-cut and welded in V shapes at an angle of 450 each from the base, which are later grouted to earth. He has contended that the fabrication is carried out by two contractors, namely, M/s.U.B.Engineering Ltd. and M/s.Eastern Transport Agencies where as foundation and grouting work was carried out by a third party contractor i.e. M/s.Aparna Construction Co.. It is his contention that a total number of 240 saddles were fabricated and used captively for storage of coils in their Hot Strip Mill (HSM) during the period May, 1993 to May, 1995 (Appeal No.EA-351/04) and 58 numbers during the period November, 1995 to January, 1998 (Appeal No.EA-157/05).
3.2. In support of his contention that fabrication of saddles does not result into manufacture, the learned Sr.Advocate vehemently argued that after saddles are fixed/grouted to earth, as required to make them operational, these saddles become immovable and consequently seize to be goods. Accordingly, these are not excisable goods. The learned Sr.Advocate referred to the decision in the case of Union of India vs. Sonic Electrochem (P) Ltd. 2002 (145) ELT 274(SC), Flex Engineering Ltd. v. CCE 2012 (276) ELT 153(SC), Lupin Ltd. v. Union of India 2013 (293) ELT 354(Guj.).
3.3. The second plank of his argument is that the saddles were neither marketable nor known to the trade as such which could be bought and sold in the market and no evidence has been disclosed in both the proceedings by the Revenue in establishing the fact that these saddles were marketable or marketed. It is his contention that the saddles were specifically designed by the Appellants engineers and there is no evidence led by the Revenue that any other manufacturer of steel use such goods, hence, it cannot be interpreted that the saddles were excisable goods within the meaning of section 2(g) of the Central Excise Act, 1944 as was in existence at the relevant time and accordingly liable to duty. Rebutting the contention of the Revenue relating to the use of saddles in railway wagons in which hot rolled coils were transported, the ld. Sr.Advocate submitted that such use cannot be construed that these saddles are marketable since no market enquiry has been carried out nor any evidence in this regard has been put-forth by the Revenue. It is his contention that to establish the marketability of a product, the burden squarely rests on the Revenue. In support he has referred to the decisions, namely, Gujarat Narmada Valley Co.Ltd. v. CCE 2005 (184) ELT 128(SC), Bata India Ltd. v. CCE 2010 (252) ELT 492(SC), Cipla Ltd. v. CCE 2008 (225) ELT 403(SC). He has further submitted that decision of the Honble Supreme Court in the case of A.P.State Electricity Board v. CCE 1994 (79) ELT 3(SC) does not support the findings of the Commissioner.
3.4 Advancing the second line of the argument, the learned Sr. Advocate submitted assuming that the said saddles were manufactured then the Appellant cannot be treated as the manufacturer of the said saddles, but the respective fabricators, namely, M/s.U.B.Engineering Ltd. and M/s.Eastern Transport Agency Ltd., who has fabricated the saddles were the manufacturers. In this regard he has referred to the statement of Shri M.K.Bhuyan, Resident Engineer, M/s.U.B.Engineering dated 30.01.1995 and the work order dated 26.04.1993 issued to the said fabricator, and the findings of the adjudicator in the first order dated 16.02.1999 that the fabrication and manufacture being done by the contractors, liability to pay duty could only rest with the contractors and the appellant could not be held to be the manufacturer of saddles nor any duty could be demanded form them. Assailing the finding of the ld.Commissioner that they had supplied of all raw materials/inputs to the contractors and having all controls and supervision over the manufacturing of the said goods and exercising the right to tell the contractors not only what to do, but how to do are factually incorrect, inasmuch as from the statements recorded by the department and also allegations in the show cause notice it would be clear that although the appellant had supplied certain input materials free of cost, the contractor also had to provide certain other materials for carrying out the contractual jobs under the respective work orders and the limited scope of supervision exercised by the appellant over the contractors was apparently visible from the said work orders. In these circumstances, the contractors being the job-workers were the actual manufacturers in view of the decisions of Honble Supreme Court in the cases of Ujagar Prints vs. Union of India 1988 (38) ELT 535(SC) & 1989 (39) ELT 493(SC) and Pawan Biscuits Ltd. vs. Commissioner of Central Excise 2000 (120) ELT 24(SC). Further, the learned Sr.Advocate referred to the decision of this Tribunal in their own case reported as The Tata Iron & Steel Co.Ltd. v. Commissioner of Customs & Central Excise, Jamshedpur 2003 (156) ELT 681(T), wherein it has been held that the job-workers were the manufacturers in relation to the manufacture/fabrication of ladders and staircases at site. The finding of the ld.Commissioner that there exist a master-servant relationship is imaginary finding without supported by any materials, hence erroneous and incorrect in fact. The contracts were awarded and performed on principal to principal basis against enquiry floated by the appellant. Also, the learned Sr.Advocate submitted that the reliance by the Commissioner on the decisions of the Honble Supreme Court in Shree Agency vs. S.K.Bhattacharjee 1977 (1) ELT J168(SC) and Bajrang Gopilal Gajabi vs. M.N.Balkundri 1986 (25) ELT 609(SC) is completely mis-placed which are distinguishable on facts and not applicable to the present case.
3.5 The third plank of argument of learned Sr.Advocate is that the appellant are eligible to benefit of Notification No.61/9-CE dated20.03.1990 & 41/94 dt.01.03.1994. He has submitted that the saddles were complete upon fabrication by the two contractors namely M/s.U.B.Engineering and M/s.Eastern Transport Agencies and duty was demanded on saddles, whereas the grouting process was carried out by the third contractor M/s.Aparna Construction Co. at a stretch subsequent to the manufacture of the saddles as per a separate drawing namely anchoring details of coil storage saddle for Hot Strip Mill against a separate work order. It is his contention that the construction work was carried out by M/s.Aparna Construction Co. subsequent to the manufacture of the saddles, therefore, there cannot be any doubt that these fabricated goods had satisfied the condition of the Notifications of its use in construction work and accordingly entitled to the benefit thereunder. It is his submission that the ld.Commissioner has failed to appreciate their submission that the work carried out for erection of the saddles involve construction work, hence, the is untenable in law. In support, he has referred to the following decisions :-
(i) CCE v. Afcon Pauling Joint Venture 2005 (180) ELT 377(T) & 2005 (187) ELT A68(SC), (ii) Simplex Concrete Piles (India)Ltd. v. CC & CE 2004 (172) ELT 369(T), (iii) Prestress (I) Pvt.Ltd. v. CCE 2009 (245) ELT 269(T).
3.6 The learned Sr.Advocate further submitted that the demands are barred by limitation. In relation to Appeal No.EA-351/04, he has submitted that in the tariff heading 7308.90 there was no mention of description of goods known as saddles or coil storage saddles and the said goods were sought to be classified under the residuary sub-heading declaring the same as other structure of iron and steel. It is hos contention that since the said classification list contained the description as required under chapter heading 73.08 and sub-heading 7308.90, and Rule 173B of the said Rules did not require description of such fabricated structure beyond contained in the relevant tariff heading, therefore, it cannot be the requirement for the appellant to declare the goods specifically with a name which were coined by them only for its own purpose and name was neither known to the market nor mentioned in any technical literature books. The Central Excise authorities were fully aware of the fact that fabricated structures fall under sub-heading 7308.90 of CETA, 1985 and the appellant was claiming benefit of exemption under the said Notification in respect thereof. In such scenario there cannot be any allegation of suppression of fact and or mis-representation with intent to evade payment of duty. The learned Sr.Advocate referred to the decisions, namely, Lubri-Chem Industries Ltd.v.CCE 1994 (73) ELT 257(SC) and Cadila Laboratories Private Ltd. v. CCE, Vadodara 2003 (152) ELT 262(SC).
In relation to Appeal No.EA-157/05, the learned Sr.Advocate submitted that the show cause notice was issued on 08.09.2000 invoking extended period on the very same issue involving subsequent period, therefore, the demand is barred by limitation in view of the judgement of the Honble Supreme Court in the case of Nizam Sugar Factory v. CCE, AP 2006 (197) ELT 456 (SC).
3.7 Further, he has submitted that in the event the appellant were required to pay duty on the saddles, they are eligible to avail MODVAT Credit on the duty paid inputs which was wrongly denied to them. In support of his contention the learned Sr.Advocate placed reliance on the judgements namely Formica India Division v. Collector of Central Excise 1995 (77) ELT 511(SC), CCE v. Chemplast Sanmar Ltd. 2009 (239) ELT 398 (Mad) and Narmada Enterprises v. CCE 2013 (298) ELT 394(T).
4. Per contra, the ld.AR for the Revenue submitted that the appellant are manufacturer of iron and steel product and one of their product is HR coils. He submits that for storage of coils the appellant had manufactured saddles at their premises by hiring fabricators. The appellant provided drawing and design to the fabricators and also raw materials/inputs including Oxygen gas and consumables for manufacture of the said saddles. The said fabrication was carried out at the instruction and under directed supervision of the appellants engineers at their factory premises. Throughout the manufacture of saddles, from the stage of raw materials, the ownership of the manufacturing remained with the appellants. It is his contention that saddles were first fabricated, thereafter these were fastened to earth with the help of nuts and bolts. These saddles were also mounted on wagons for transportation of HR coils. It is his contention that the appellants had issued excise invoices and discharged duty on saddles manufactured and mounted on railway wagons, whereas they have failed to discharge duty on the saddles used in storage of HR coils in their factory premises.
4.2 He submits that two demand notices were issued to the appellants; one on 10.06.1998 covering the period between May, 1993 and May, 1995 and the second one was issued on 08.09.2000 for the period from November, 1995 to January, 1996 and May 1998. In both these cases demands were confirmed on merit as well as on limitation. He submits that fabrication of saddles out of the raw materials definitely involved manufactured within the meaning of section 2(f) of Central Excise Act, 1944, inasmuch as the saddles were having different name, character and use from the raw materials from which these were manufactured. These saddles are classifiable under chapter sub-heading 7308.90 and they are excisable goods. In support he has referred to the decision of larger Bench of this Tribunal in the case of Mahindra & Mahindra Ltd.v.CCE 2005 (190) ELT 301 (Tri-LB). He submits that the judgements cited by the ld.Advocate for the Appellant are distinguishable on facts and cannot be made applicable to the present circumstances inasmuch as these cases do not deal with structures fabricated site.
4.3 Further he has submitted that the Appellant are manufacturer of saddles at their premises by hiring fabricators. The appellant had provided drawing and design and also the raw materials/goods were supplied to these fabricators. The job was done at the instruction and under the direct supervision of the Appellants engineers. Hence, the Appellant are the manufacturers of the saddles and not the fabricators as claimed by them. In support he has referred to the decision of this Tribunal in the case of Raymond Ltd. v. CCE 2014 (302) ELT 415(Tri.Mumbai) and Maruti Udyog Ltd. v. CCE 2001 (134) ELT 188(Tri-Del.).
4.4 The ld.AR for the Revenue further submitted that the appellant are not entitled to the benefit of Notification No.61/90-CE dated 20.03.1990 and 41/94-CE dated 01.03.1994. It is his contention that Notification No.61/90-CE and 41/94-CE exempted excisable goods manufactured at site and used for construction at site. The additional condition in Notification No.61/90-CE was that the materials which are used for manufacture at site also must have suffered duty. It is his contention that fastening saddles to earth by nuts and bolts cannot be construed as construction at site. If this is considered as construction activity then fastening of any material to earth by nuts and bolts would result into construction and would lead to an absurd consequence, which cannot be the intention of the legislature in framing such exemption Notification. Also, it is not established from the records that the materials used for fabricating saddles had suffered appropriate duty. Therefore, the benefit of exemption Notifications were not admissible to the appellant. Further the appellant are not entitled to Notification No.67/95-CE dated 16.03.1995 in case of Appeal No.E-157/05.
4.5 Further, he has submitted that since the appellant had failed to produce any evidence to show that the materials were used for fabrication of saddles had suffered duty or were received against prescribed duty paying documents in accordance with the procedure laid down under Rule 57G of erstwhile Central Excise Rules, 1944, the appellant, therefore, not entitled for the CENVAT Credit, which they claimed.
4.6 The ld.AR further submitted that the show cause notices were not barred by limitation inasmuch as in the first show cause notice dated 10.06.1998 the appellant did not disclose specifically that they were engaged in the manufacture of saddles in their classification list filed under Rule 173B of erstwhile Central Excise Rules, 1944. In the classification list it was shown as fabricated steel structurals under tariff sub-heading No.7308.90 and such classification lists were effective from 25.07.1991, 01.03.1992, 28.02.1993 and 01.03.1994. The first work order for saddles was issued on 26.04.1993. Therefore fabricated steel structurals was shown in the first three classification list/declaration could not be construed as saddles. It is his contention that even after commencement of manufacture of saddles, the appellant did not specifically declare the description of goods as saddles in the classification lists/declarations. Appellant also did not file price lists/declarations and failed to file return for saddles. However, in some cases, the appellant had paid duty on saddles therefore extended period of limitation is rightly invoked. Further, since 240 number of saddles were removed without payment of duty therefore, its confiscation is as well as imposition of penalty on the Appellant has been correctly directed by the adjudicating authority. Hence the appellants appeals are liable to be rejected.
5. Heard both sides and perused the records. The main issues common to both Appeals need to be addressed are, whether: (i) fabrication of saddles is manufacture as defined under section 2(f) of Central Excise Act, 1944, (ii) the appellant or the fabricators are the manufacturer of the saddles, (iii)the appellants are eligible to the benefit of Notification No.61/90 dated 20.03.1990 and Notification No.41/94 dated 01.03.1994, (iv) the appellants are eligible to the benefit of MODVAT Credit, and (v) whether the demands are barred by limitation.
5.2 There is no dispute of the fact that saddles were fabricated inside the factory premises of the appellant and the said fabrication was carried out by two contractors/fabricators, namely, M/s.U.B.Engineering Co., M/s.Eastern Transport Agency and the fabricated saddles were later grouted to earth by another contractor namely M/s.Aparna Construction Co.; all the raw materials and consumables were supplied by the Appellant to the fabricators. The argument of the learned Sr.Advocate precisely is that the saddles are tailor-made and not bought and sold in the market, becomes immovable property after being grouted to earth, hence seize to be goods, therefore, not liable to duty under Tariff Heading 73.08 of CETA, 1985. The Revenue on the other hand argued that similar saddles were fabricated through contractors on the same terms and conditions but cleared on payment of duty when these were fixed on railway wagons for storage/transportation of HR coils. It is their contention that to satisfy the condition of marketability of fabricated/manufactured saddles, it need not be brought to the market for being bought and sold, but the capability of the said goods to be bought and sold in the market would suffice the purpose and object of marketability.
5.3 The principle to test marketability of goods in a given case has been clearly laid down by the Honble Supreme Court in A.P.State Electricity Boards case (supra). Their Lordships at para 10 had observed as under :-
10.?It would be evident from the facts and ratio of the above decisions that the goods in each case were found to be not marketable. Whether it is refined oil (non-deodorised) concerned in Delhi Cloth and General Mills, or kiln gas in South Bihar Sugar Mills, or aluminium cans with rough uneven surface in Union Carbide, or PVC films in Bhor Industries or hydrolysate in Ambalal Sarabhai, the finding in each case on the basis of the material before the court was that the articles in question were not marketable and were not known to the market as such. The marketability is thus essentially a question of fact to be decided in the facts of each case. There can be no generalisation. The fact that the goods are not in fact marketed is of no relevance. So long as the goods are marketable, they are goods for the purposes of Section 3. It is not also necessary that the goods in question should be generally available in the market. Even if the goods are available from only one source or from a specified market, it makes no difference so long as they are available for purchasers. Now, in the appeals before us, the fact that in Kerala these poles are manufactured by independent contractors who sell them to Kerala State Electricity Board itself shows that such poles do have a market. Even if there is only one purchaser of these articles, it must still be said that there is a market for these articles. The marketability of articles does not depend upon the number of purchasers nor is the market confined to the territorial limits of this country. The appellants own case before the excise authorities and the C.E.G.A.T. was that these poles are manufactured by independent contractors from whom it purchased them. This plea itself - though not pressed before us - is adequate to demolish the case of the appellant. In our opinion, therefore, the conclusion arrived at by the Tribunal is unobjectionable.
5.4 The meaning and scope of marketability has been deliberated at length by the Larger Bench of the Tribunal in Mahindra & Mahindras case(supra) pursuant to a remand order by Constitution Bench of the Supreme Court for determination of the issue whether structures and parts of structures are liable to excise duty. The Tribunal recorded its finding as :
13.1Thus, the concept of marketability in the context of marketability of parts of steel structures of the above nature falling under Heading 73.08 cannot be viewed through a hawkers eye. Hawking in its traditional sense, where the hawker moves with the goods screaming for the attention of potential customers, cannot be applied to the marketability of such structures or parts of structures, unless the concept of hawking itself is widened to include E-hawking. The customer in the context of such product is the person who places the order for fabrication of such parts of structure to be raised by entrusting the contract to the manufacturer of such structurals or by itself engages workers on job basis to get them manufactured. Such customers provide adequate marketability to the movable structures and parts of structures falling under heading 73.08 which remain excisable goods until they are permanently fixed to become part of some immovable structure. Therefore, in our opinion all the above items fall under Heading 73.08 are marketable commodities. 5.5 Recently while considering the excisability of an intermediate product, namely transmission assemblies which came into existence during the course of manufacture of Tractors the Honble Supreme Court in the case of Escorts Ltd. vs. CCE, Faridabad 2015(319) ELT 406(SC) after considering the principle of law laid down by the Honble Supreme Court in earlier cases starting from UOI v. Delhi Cloth and General Mills 1977 (1) ELT 199 including AP State Electricity Boards case(supra), rejected the contention of the appellant that the transmission assemblies since not available in the market for being bought and sold, hence were not excisable goods being not marketable. Confirming the principles laid down in earlier cases, their Lordships have held that the product should be known in the market with a commercial name and the moment a product is commercially known in the sense of fulfilling practical test of being known to the persons in the market, who buy and sale, the test is satisfied. The fact that the product is generally not bought or sold or has no demand in the market is irrelevant.
5.6 Applying the aforesaid principle to the facts of the present case we are of the opinion that saddle is a common name known to the market and the fact that it is not brought and sold in the market could not in any manner diminish its capability of being marketable which is evident from the fact that the appellant themselves use the said saddle in the railway wagons for carrying HR coils, and for such use they consider it as marketable commodity and discharge duty accordingly.
5.7 The other argument of the appellant is that since saddles are not excisable goods being grouted to earth and accordingly being immovable property cannot be called as goods, in our opinion, devoid of merit for the simple reason that these saddles were affixed to earth by another contractor viz. M/s Aparna Construction Co. through nuts and bolts and could be removed from the place of its installation easily by unscrewing the nuts and bolts, therefore, are excisable goods. This receives support from the judgement of the Honble Supreme Court in Commr. of C.Ex. Ahmedabad Vs. Solid & Correct Engg. Works 2010 (252) ELT 481(SC). At para 33 of the said judgment laying down the principle their Lordships observed as:
33.?It is noteworthy that in none of the cases relied upon by the assessee referred to above was there any element of installation of the machine for a given period of time as is the position in the instant case. The machines in question were by their very nature intended to be fixed permanently to the structures which were embedded in the earth. The structures were also custom made for the fixing of such machines without which the same could not become functional. The machines thus becoming a part and parcel of the structures in which they were fitted were no longer moveable goods. It was in those peculiar circumstances that the installation and erection of machines at site were held to be by this Court, to be immovable property that ceased to remain moveable or marketable as they were at the time of their purchase. Once such a machine is fixed, embedded or assimilated in a permanent structure, the movable character of the machine becomes extinct. The same cannot thereafter be treated as moveable so as to be dutiable under the Excise Act. But cases in which there is no assimilation of the machine with the structure permanently, would stand on a different footing. In the instant case all that has been said by the assessee is that the machine is fixed by nuts and bolts to a foundation not because the intention was to permanently attach it to the earth but because a foundation was necessary to provide a wobble free operation to the machine. An attachment of this kind without the necessary intent of making the same permanent cannot, in our opinion, constitute permanent fixing, embedding or attachment in the sense that would make the machine a part and parcel of the earth permanently. In that view of the matter we see no difficulty in holding that the plants in question were not immovable property so as to be immune from the levy of excise duty.(emphasis supplied) 5.8 Thus there is no doubt that the saddles are excisable goods and accordingly chargeable to duty.
5.9 The second line of argument advanced by the learned Sr.Advocate is that even if saddles are considered to be manufactured and excisable goods, the manufacturer of the said saddles were the fabricators and not the appellants. In this connection the learned Sr.Advocate placed reliance on judgements of Honble Supreme Court in the case of Ujagar Prints, ETC.ETC. vs. UOI and Others 1988 (38) ELT 535 (SC) and Pawan Biscuits Co.(Pvt.)Ltd. vs. CCE, Patna 2000 (120) ELT 24 (SC). Also, he has referred to the decision of this Tribunal in their own case reported in 2003 (156) ELT 651. It is their contention that mere supply of drawings, designs, raw materials including consumables, provided space for fabrication to the fabricators, occasional supervision of the fabrication work by their qualified engineers cannot make the appellant as manufacturer of the said saddles. In their own case this Tribunal has held that fabrication of ladders and staircases at site through job-workers would not make the appellant as manufacturers, but the job-workers were manufacturers.
5.10 Countering the said argument the Revenue has argued that the appellant had supplied drawing, design, raw materials, electricity, premises to the fabricators for manufacture of saddles. The fabricators are not free to work in their own way, but the appellant directed them not only what to do, but how to carry out the fabrication work. It is their contention that the saddles were thus manufactured under close supervision and control of the appellant, therefore, the appellants be considered as the manufacturer of the saddles. Further, it is also contended by the Revenue that on fabrication of saddles under the same terms and conditions through fabricators and used in the railway wagons for transport of the HR coils accepted by the appellant as manufactured by them and appropriate duty was duly discharged at the time of its clearance. Therefore, the appellant cannot be allowed to claim that they are not manufacturer of the said saddles, but the fabricators. The Ld. A.R for the Revenue submitted that the case laws cited by the Appellant are not applicable to the facts of the present case. On the other hand, the decisions of the Tribunal in the case of Maruti Udyog Ltd.(supra). & Raymond Ltd. vs. CCE(supra) are applicablt to the present case.
5.11 We find that in Raymond Ltd.s case more or less similar question was raised before the Tribunal. M/s.Raymond Ltd. in that case were engaged in the manufacture of excisable goods falling under chapter 51, 55 and 58 of CETA, 1985. They got fabricated racks and trolleys falling under tariff heading 9403 of CETA,1985 in their factory premises out of the raw materials supplied by M/s.Raymond Ltd. and based on their own drawings and specifications. In that case also M/s.Raymond Ltd. had supplied all raw materials, consumables such as welding rods, cutting gases etc. required for such fabrication work in their factory premises. In this factual back drop this Tribunal relying the ratio laid down by the Honble Supreme Court on the subject and that of decision in Maruti Udyog Ltd. observed as follows:
5.2?An identical issue came up before this Tribunal in the case of Maruti Udyog Ltd. wherein Maruti Udyog Ltd. got fabrication of trolleys, bins and pallets in their factory premises by certain fabricators. Further, Maruti Udyog Ltd. supplied raw materials and consumables. In that context, this Tribunal held as follows :
Fabrication of the items in dispute was not only carried out by the three different job workers within the factory premises of the appellants, but also on their shop floor itself. The appellants supplied all the raw materials for fabrication/repair/modification as well as the samples like welding electrodes, gas, paint, primer, thinner, etc. They were also to make available to the fabricator, the slot milling machine and the Keyway Milling machine without any charges. The Terms and Conditions of the various work orders clearly spell out a master and servant relationship between the appellants on one hand and the fabricators on the other, as not only did the appellants have the right to tell the fabricators what to do, but also how to do it. In other words, the work was to be carried out under the total control and supervision of the appellants. Hence the three fabricators have rightly been held to be hired labour of the appellants herein and not independent manufacturers. 5.3?Similarly, in the case of Shree Agency v. S.K. Bhattacharjee - 1977 (1) E.L.T. J168 (S.C.), a Constitution Bench of the Supreme Court considered a similar issue. The facts relevant to the case were as follows : The appellant therein supplied textile yarns to power loom units and got the cloth manufactured (woven) on payment of job-charges but the dealings were camouflaged to appear as transactions of sale of yarn by the appellant to power loom units and purchase of cloth from them. The question arose as to who is the manufacturer and the Honble Apex Court held that power loom units were only hired labour and the supplier of yarn has to be treated as manufacturer. Similarly, in Shree Agency v. Assistant Collector, Central Excise, Kolhapur - 2000 (124) E.L.T. 24 (Bom.), the Honble Bombay High Court held that the definition of manufacturer does not refer to the ownership of the factory where the goods are manufactured. It covers anyone who employs hired labour in the production and manufacture of goods. The expression who manufactures, or engages in their production or manufacture on his own account would also apply to a person who hires the labour and the person who hires the labour has to be treated as the manufacturer. In the present case, the trolleys and racks have been fabricated on account of the appellant. They have supplied the raw materials, consumables, fuels, etc. required for the manufacture and the fabrication work has been undertaken in the appellants own factory. The fabricators merely supplied labour for undertaking the fabrication work. Therefore, it has to be held that the appellants are the manufacturers of the impugned goods and not the fabricators. Accordingly, we reject the contention of the appellant that they are not the manufacturers of racks and trolleys but the fabricators who actually undertook the fabrication work are the manufacturers. 5.12 A plain reading of the aforesaid judgment of this Tribunal, we find that the facts of the present case are more less similar to the above one and hence, the conclusion and principle recorded therein is squarely applicable to the present case. Besides, we find that for fabrication of similar saddles, when fitted to the railway wagons, the appellant had considered themselves as manufacturer and discharged duty even though the said saddles were also fabricated in their own premises from the raw materials supplied by the Appellant to the fabricators against same terms and conditions except that in one case the saddles were fitted in the Railway wagons and in another it were grouted to earth but with the common objective to place the HR coils on the said saddles. Thus, the circumstances in their earlier case decided by this Tribunal earlier is quite different from the present one, therefore, the judgement delivered in connection with fabrication of ladders and staircases at site, would not be comparable to the facts of the present case, accordingly, not applicable. Therefore, we have no hesitation to hold that the appellant are the manufacturer of the saddles.
5.13 The next issue that needs to be addressed is: whether the appellant are entitled to the benefit of Notification NO.61/90-CE dated 20.03.1990 and Notification No.41/94-CE dated 01.03.1994. For the sake of convenience the said Notifications are reproduced below:-
[Notification No.61/90-CE, dated 20-3-1990] In exercise of the powers conferred by sub-section (1) 5A of the Central Excises and Salt Act, 1944 (1 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts goods falling under Heading No.73.08 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) fabricated at the site of construction work for use in such construction work from the whole of the duty of excise leviable thereon which is specified in the said Schedule:
Provided that the said goods are manufactured out of iron or steel products on which the appropriate duty of excise leviable thereon under the said Schedule or the additional duty leviable thereon under section 3 of the Customs Tariff Act, 1975 (51 of 1975, as the case may be, has already been paid.
[Notification No.41/94-CE, dated 01-3-1994] In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excises and Salt Act, 1944 (1 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts goods of the description specified in column (3) of the Table hereto annexed and falling under Chapter or heading Nos. or sub-heading Nos. of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as are specified in the corresponding entry in column (2) of the said Table, from so much of the duty of excise leviable thereon which is specified in the said Schedule, as is in excess of the amount calculated at the rate specified in the corresponding entry in column(4) of the said Table, subject to conditions, if any, specified in the corresponding entry in column (5) of the said Table.
TABLE (1) (2) (3) (4) (5) Sl.
No. Chapter or Heading No. or sub-heading No. Description of goods Rate Conditions
15. 73.08 All goods Nil If such goods are fabricated at site of work for use in construction work at such site 5.14 The common requirement in both the Notifications is that the goods falling under heading No.73.08 would be exempted from payment of whole of duty if fabricated at the site of construction work & for use in such construction work. The learned Sr.Advocate made a sincere attempt to establish that the saddles were fabricated at site of construction and since it had been used thereafter for grouting to make it usable for storage of saddles, therefore, it should be construed as used in the construction work. We do not find force in the said contention of the appellant inasmuch as the sole object for which saddles were fabricated was for its use in storage of the HR coils in the factory premises and grouting has been done by fixing with nuts and bolts only for the purpose of making it stationery, hence, such grouting cannot be considered as construction work. In the result, the appellant also failed to substantiate their claim on exemption from duty on the saddles under the above two Notifications.
5.15 The next issue needs to be addressed is whether the demands confirmed in each of the Appeal is barred by limitation. In relation to Appeal No. EA-351/04 it is argued that in the Classification lists filed with the department one of the manufactured item was declared as fabricated steel structurals, which according to the Appellant include saddles also. The contention of the Revenue on the other hand is that the saddles were not specifically disclosed under the column description of goods of the classification list and only one classification list filed w.e.f. 01.03.1994 is relevant for the present demand issued for the period May, 1993 to May, 1995. Rebutting the contention of the Appellant that saddles is not a commercial name and being not mentioned under the tariff heading 73.08, therefore the appellant were not required to disclose the fabricated items as saddles, the Revenue argued that whatever items were manufactured by the appellant, its true description ought to have been disclosed and accordingly its classification under particular heading is claimed by the assesse. The classification is later decided by the department which exercise would always be subsequent to the declaration of correct description of the item by the assessee. Besides, when same saddles were considered by the Appellant as excisable and duty was paid, hence the department had no occasion to know that the saddles grouted to earth were without payment of duty. We find substance in the argument of the Revenue inasmuch as the appellant is required to disclose the true description of the goods and its classification would be determined on the basis of said declaration vis-`-vis the entries of the respective chapter headings/sub-headings etc. The reverse is not true. Besides, we find that the saddles when manufactured and fitted to Railway wagons appropriate duty was paid but when used in the factory for same purpose treated as non dutiable without any valid reason. Therefore, we are of the view that the fact of manufacture and use of saddles in the factory premises were not disclosed in the respective classification list, therefore the claim of the appellant that all facts were within the knowledge of the department and no facts were suppressed cannot be sustained. Consequently, extended period of limitation is applicable to the facts and circumstances of the present case.
5.16 In relation to Appeal No.EA-157/05, there is no dispute that the show cause notice was issued on 08.02.2000 for the period November, 1995 to January, 1996 and May, 1998 invoking extended period of limitation demanding duty on fabricated saddles used in the factory. We agree with the contention of the Ld. Sr.Advocate that second show cause notice on the same issue demanding duty invoking extended period of limitation is barred by limitation in view of the judgement of the Honble Supreme Court in Nizam Sugars case (supra). Consequently, the impugned order is unsustainable in law and accordingly liable to be set aside on the ground of limitation. Since, in our opinion the demand is barred by limitation, the other issues viz. eligibility of benefit of exemption 67/95 CE. Dt.16.03.1995 for captive use of saddles and correctness of the assessable value raised in the said Appeal become academic and accordingly not dealt with.
5.17 The next contention of the Appellant that in the event they are required to discharge duty on the saddles, since duty paid inputs were used in the manufacture of saddles, therefore, they would be entitled to MODVAT Credit under the relevant Rules. The Revenue resisted to the said argument pleading that necessary procedure laid down under Rule 57G of erstwhile Central Excise Rules,1944 by filing the declaration etc. had not been followed, hence, the appellant are not eligible to avail the credit. We do not find merit in the contention of the Revenue in view of the decision of the Honble Supreme Court in the case of Formica India Division vs. Collector of Central Excise 1995 (77) ELT 511(SC) followed in the case of Commissioner of Central Excise, Salem vs. Chemplast Sanmar Ltd. 2009 (239) ELT 398(Mad.) and followed by this Tribunal in the case of Narmada Enterprises vs. CCE, Bhopal 2013 (298) ELT 394(Tri.-Del.). The learned Sr.Advocate in his written submission claimed that the appellant would be eligible to MODVAT Credit against the use of duty paid input material in the fabrication/manufacture of saddles to the extent of Rs.22,56,300/-(approximately). In our view the Appellant are eligible to the Modvat credit, but, to ascertain the exact quantum of credit, it needs to be remitted to the Ld. Commissioner for verification/scrutiny.
5.18 On the issue of quantum of penalty and fine, the contention of the learned Sr.Advocate is that in the first adjudication order dated 16.02.1999 the penalty imposed under Rule 173Q read with other provisions of Central Excise Rules was Rs.1.00 Lakh and the redemption fine was also Rs.1.00 Lakh; however, in the de novo proceeding, the penalty was enhanced from Rs.1.00 Lakh to Rs.30,35,917.50 and redemption fine from Rs.1.00 Lakh to Rs.40.00 Lakhs , which is erroneous and bad in law. In support, he has referred to the judgement of Honble Supreme Court in the case of Banshi Dhar Lachhman Prasad and Another vs. UOI 1978 (2) ELT (J 385)(SC), Sony Impex vs. Commissioner of Central Excise, Customs 2006 (202) ELT 486(Tri.-Kolkata), Commissioner v. Sony Impex 2007 (215) ELT A 49(SC), HCL Ltd. vs. Collector of Customs, Calcutta 2000 (126) ELT 808 (Tribunal). We find force in the contention of the Ld. Sr. Advocate. In view of above findings, saddles are excisable goods and the Appellant being manufacturer of the same, non payment of duty on the same, liable for confiscation and imposition of penalty but the quantum of same cannot be enhanced in the de novo proceeding. Now, since we have observed that the appellant are eligible to the MODVAT Credit on the duty paid inputs used in the manufacture of 240 no. of saddles and for determination of the exact amount of credit, the matter is remitted to the ld. Commissioner; thus, in our opinion, the penalty and fine be accordingly determined thereafter, but, in any case the respective amount cannot exceed the amount of fine and penalty imposed in the first order dated 16.02.1999.
5.19 To summarize: the Appeal No. E/351/04 is partly allowed to the extent of admissibility of Modvat credit on the inputs used in the manufacture of 240 nos. of saddles and the matter is remanded to the Ld. Commissioner for verification of the quantum of modvat credit and accordingly, redetermination duty liability, fine and penalty in the light of above observation. The Appeal No. E/157/05 is allowed on the ground of limitation. Appeals disposed accordingly.
(Pronounced in the open court on 24.02.2016.) SD/ SD/ (H.K.THAKUR) (D.M.MISRA) MEMBER(TECHNICAL) MEMBER(JUDICIAL) sm 2 Appeal No.EA-351/04 & 157/05