Custom, Excise & Service Tax Tribunal
Hardev Singh vs Indore on 23 July, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL,
WEST BLOCK NO.2, R.K. PURAM, NEW DELHI-110066
BENCH-DB
COURT -II
Date of
Appeal No Appellant Respondent Arising out of Order No. Impugned Passed By
Order
Commissioner of
ST/57428/2013- C.C.E. & S.T.- OIA-IND-CEX-000-APP-
Hardev Singh 06/02/2013 Central Excise-INDORE(
DB Indore 26-33-2013
Appeal)
Commissioner of
ST/57429/2013- C.C.E. & S.T.- OIA-IND-CEX-000-APP-
Majister Singh 06/02/2013 Central Excise-INDORE(
DB Indore 26-33-2013
Appeal)
Commissioner of
ST/57431/2013- Rajkumar C.C.E. & S.T.- OIA-IND-CEX-000-APP-
06/02/2013 Central Excise-INDORE(
DB Vishwakarma Indore 26-33-2013
Appeal)
Commissioner of
ST/57432/2013- C.C.E. & S.T.- OIA-IND-CEX-000-APP-
Arun Singh 06/02/2013 Central Excise-INDORE(
DB Indore 26-33-2013
Appeal)
Commissioner of
ST/57434/2013- Rajendra C.C.E. & S.T.- OIA-IND-CEX-000-APP-
06/02/2013 Central Excise-INDORE(
DB Vishwakarma Indore 26-33-2013
Appeal)
Commissioner of
ST/57435/2013- C.C.E. & S.T.- OIA-IND-CEX-000-APP-
Anil Kumar 06/02/2013 Central Excise-INDORE(
DB Indore 26-33-2013
Appeal)
Avtar Singh Commissioner of
ST/57436/2013- C.C.E. & S.T.- OIA-IND-CEX-000-APP-
Padam Prop Of 06/02/2013 Central Excise-INDORE(
DB Indore 26-33-2013
Meena Industries Appeal)
Commissioner of
ST/57437/2013- C.C.E. & S.T.- OIA-IND-CEX-000-APP-
Paramjeet Singh 06/02/2013 Central Excise-INDORE(
DB Indore 26-33-2013
Appeal)
Commissioner of
ST/52593/2014- C.C.E. & S.T.- OIA-IND-CEX-000-APP-
C P Moury 28/01/2014 Central Excise and
DB Indore 38-2014
Service Tax-INDORE
OIA-
ST/50101/2015- C.C.E. & S.T.- Commissioner of
C P Mourya IND/CEX/000/APP/238- 24/09/2014
DB Indore Central Excise-INDORE
250-2014
OIA-
ST/50102/2015- Sanjay Kumar C.C.E. & S.T.- Commissioner of
IND/CEX/000/APP/238- 24/09/2014
DB Yadav Indore Central Excise-INDORE
250-2014
OIA- Commissioner of
ST/50103/2015- Raj Kumar C.C.E. & S.T.-
IND/CEX/000/APP/238- 24/09/2014 Central Excise and
DB Vishwakarma Indore
250-2014 Service Tax-INDORE
OIA- Commissioner of
ST/50104/2015- C.C.E. & S.T.-
Anil Kumar IND/CEX/000/APP/238- 24/09/2014 Central Excise and
DB Indore
250-2014 Service Tax-INDORE
OIA- Commissioner of
ST/50105/2015- C.C.E. & S.T.-
Arun Singh IND/CEX/000/APP/238- 24/09/2014 Central Excise and
DB Indore
250-2014 Service Tax-INDORE
OIA- Commissioner of
ST/50106/2015- Rajendra C.C.E. & S.T.-
IND/CEX/000/APP/238- 24/09/2014 Central Excise and
DB Vishwakarma Indore
250-2014 Service Tax-INDORE
OIA- Commissioner of
ST/50107/2015- C.C.E. & S.T.-
Paramjeet Singh IND/CEX/000/APP/238- 24/09/2014 Central Excise and
DB Indore
250-2014 Service Tax-INDORE
OIA- Commissioner of
ST/50108/2015- C.C.E. & S.T.-
Meena Industries IND/CEX/000/APP/238- 24/09/2014 Central Excise and
DB Indore
250-2014 Service Tax-INDORE
OIA- Commissioner of
ST/50109/2015- C.C.E. & S.T.-
Majister Singh IND/CEX/000/APP/238- 24/09/2014 Central Excise and
DB Indore
250-2014 Service Tax-INDORE
Commissioner of
ST/50323/2015- Rajendra C.C.E. & S.T.- OIA-IND-CEX-000-APP-
14/10/2014 Central Excise-INDORE(
DB Vishwakarma Indore 287-297-14
Appeal)
2
Commissioner of
ST/50324/2015- Rajkumar C.C.E. & S.T.- OIA-IND-CEX-000-APP-
14/10/2014 Central Excise-INDORE(
DB Vishwakarma Indore 287-297-14
Appeal)
Commissioner of
ST/50327/2015- C.C.E. & S.T.- OIA-IND-CEX-000-APP-
Paramjeet Singh 14/10/2014 Central Excise-INDORE(
DB Indore 287-297-14
Appeal)
Commissioner of
ST/50328/2015- C.C.E. & S.T.- OIA-IND-CEX-000-APP-
Anil Kumar 14/10/2014 Central Excise-INDORE(
DB Indore 287-297-14
Appeal)
Commissioner of
ST/50329/2015- C.C.E. & S.T.- OIA-IND-CEX-000-APP-
Meena Industries 14/10/2014 Central Excise-INDORE(
DB Indore 287-297-14
Appeal)
Commissioner of
ST/50382/2015- C.C.E. & S.T.- OIA-IND-CEX-000-APP-
Majister Singh 14/10/2014 Central Excise-INDORE(
DB Indore 287-297-14
Appeal)
Commissioner of
ST/50325/2015- C.C.E. & S.T.- OIA-IND-CEX-000-APP-
Bir Bahadur Yadav 14/10/2014 Central Excise-INDORE(
DB Indore 259-260-14
Appeal)
Commissioner of
ST/50326/2015- C.C.E. & S.T.- OIA-IND-CEX-000-APP-
Sulakhan Singh 14/10/2014 Central Excise-INDORE(
DB Indore 259-260-14
Appeal)
Present for the Appellant : Mr.Pravin H. Parekh, Sr. Advocate
Mr.Sumit Goel, Advocate, Mr.Vishal Prasad, Advocate,
Ms.Pratyusha Priyadarshini, Advocate,
Ms.Malvika Bhanot, Advocate for Parekh & Co.
Present for the Respondent: Mr.Sanjay Jain, D.R. & Mr. G.R. Singh, D.R.
Coram: HON'BLE MR. V.PADMANABHAN, MEMBER (TECHNICAL)
HON'BLE MRS. RACHNA GUPTA, MEMBER (JUDICIAL)
Date of Hearing : 03.07.2018
Pronounced on : 23.07.2018
FINAL ORDER NOs. 52580-52605/2018
PER: RACHNA GUPTA
Present order disposes of several appeals as detailed below being filed
by the respective appellant being aggrieved by the respective orders as
detailed below. All these appeals are taken together because of the question
for consideration for them being similar. Hence, all are disposed of by the
present common order.
2. The facts found in these appeals as relevant for present adjudication
are as follows:-
2.1 That the appellants herein are the house labour contractors of
M/s. Larsen & Toubro Ltd. (L & for short) who is the principal manufacturer
of transmission towers and is getting one or the other job work for the
3
purpose from all the appellants. On an intelligence being gathered by the
Department, the Regional Unit of Indore, it was alleged that the appellants
are performing such activities for the L & T which falls under the definition of
Business Auxiliary Services against the charges received for the purpose.
However, they are not paying the due Service Tax on the gross amount
received by them from L & T. They deliberately have not got registered
themselves with the Service Tax Department. Resultantly, such show cause
notices for such period and purpose as below were served upon them:-
Appeal No. Name of Show Period Activity which is Date of Date of
appellant. cause involved alleged to be BAS Original Appellate
notice order order
ST/57428/2013- Hardev 01.04.07 Straightening and 06.06.12 06/02/2013
DB Singh 22.03.2011 to debarring of
31.03.10 angles,
straightening of
heavy section
angles, lengthwise
separating,
bundling and
moving to
respective place,
stack after
segregation,
unloading and
seggragation of one
feet scrap,
unloading of
chemicals/ lead,
bolt and nut.
ST/57429/2013- Majister 22.03.2011 01.04.06 Loading picking, 23.02.12 06/02/2013
DB Singh to dipping, finishing
31.12.10 and offering to final
inspections of only
punched plates and
punched cleats of
tower parts, taking
dross from bath,
moulding and
handling over to
stores, zinc as
screening and
packing and
cleaning of filter
press, flux tanks,
rinse water tank,
acid tank sludge,
and other cleaning
activities etc.
etc......
ST/57431/2013- Rajkumar 22.03.11 01.04.06 Plate bending, bend 29.03.12 06/02/2013
DB Vishwakarma to removing from
31.12.10 angles and channel
and beam and
bending of tower
parts(angles
only).....
ST/57432/2013- Arun Singh 22.03.11 01.04.09 Whole 06.06.12 06/02/2013
DB to enlargement,
4
31.12.10 angles and plates
debarring,
numbering of tower
parts, sharing,
punching and
getting inspection
through QA.
ST/57434/2013- Rajendra 22.03.11 01.04.06 Marking and drilling 29.03.12 06/02/2013
DB Vishwakarma to of angles and
31.12.10 plates, whole
enlargement, heel
grinding of angles
and cleats,
debarring works,
notching of tower
parts, reworks of
tower part,
fabrication of
ladder and cable
tray including
setting full welding,
clearing and
getting inspected
through QC etc.
etc.
ST/57435/2013- Anil Kumar 22.03.11 01.04.06 Fabrication of tower 29.03.12 06/02/2013
DB to parts including
31.12.10 cutting, punching,
numbering,
notching, and
getting inspected
through QA.
ST/57436/2013- Avtar Singh 22.03.11 01.04.06 Cutting of angles, 29.03.12 06/02/2013
DB Padam Prop to whole enlargement
Of Meena 31.12.10 by drilling, heel
Industries
grinding of angles
and cleats,
debarring works,
notching tower
parts, rework of
tower parts
include-ing
welding, grind-ing,
marking,
punching/drilling
and getting
inspect- ion
through QC.
ST/57437/2013- Paramjeet 22.03.11 01.04.06 Processing of goods 29.03.12 06/02/2013
DB Singh to involving the
31.12.10 activity of
materials, loading
at steel yards,
unloading of receipt
materials at steel
yards,
straightening of
material, cylinder
receipt & stacking,
identifying the
materials as per
indent, removing
the same from
stack lifting,
moving to shop
floor and placing
the material near
to respective
machine
sequentially/
priority wise, wire
receipt and
stacking, on the
5
raw materials/
inputs, etc. etc.
ST/52593/2014- C P Moury 22.03.11 01.10.06 Fabrication of tower 16.03.12 28/01/2014
DB to parts including
31.12.10 shearing, cutting,
punching,
numbering,
notching, marking,
drilling debarring
and getting
inspected through
QA.
ST/50101/2015- C P Mourya 18.04.12 01.01.11 Fabrication of tower 30.08.13 24/09/2014
DB to parts including
31.03.12 shearing, cutting,
punching,
numbering,
notching, marking,
drilling debarring
and getting
inspected through
QA.
ST/50102/2015- Sanjay 17.10.12 01.01.11 Fabrication of tower 30.08.13 24/09/2014
DB Kumar Yadav to parts including
31.03.12 shearing, cutting,
punching,
numbering,
notching, marking,
drilling debarring
and getting
inspected through
QA.
ST/50103/2015- Raj Kumar 18.04.12 01.01.11 Fabrication of tower 30.08.13 24/09/2014
DB Vishwakarma to parts including
31.03.11 shearing, cutting,
punching,
numbering,
notching, marking,
drilling debarring
and getting
inspected through
QA.
ST/50104/2015- Anil Kumar 18.04.12 01.01.11 Fabrication of tower 30.08.13 24/09/2014
DB to parts including
31.03.11 shearing, cutting,
punching,
numbering,
notching, marking,
drilling debarring
and getting
inspected through
QA.
ST/50105/2015- Arun Singh 17.10.12 01.01.11 Fabrication of tower 30.08.13 24/09/2014
DB to parts including
31.03.12 shearing, cutting,
punching,
numbering,
notching, marking,
drilling debarring
and getting
inspected through
QA.
ST/50106/2015- Rajendra 17.10.12 01.01.11 Fabrication of tower 30.08.13 24/09/2014
DB Vishwakarma to parts including
31.03.12 shearing, cutting,
punching,
numbering,
notching, marking,
drilling debarring
and getting
inspected through
QA.
ST/50107/2015- Paramjeet 18.04.12 01.01.11 Fabrication of tower 30.08.13 24/09/2014
6
DB Singh to parts including
31.03.11 shearing, cutting,
punching,
numbering,
notching, marking,
drilling debarring
and getting
inspected through
QA.
ST/50108/2015- Meena 18.04.12 01.01.11 Fabrication of tower 30.08.13 24/09/2014
DB Industries to parts including
31.03.11 shearing, cutting,
punching,
numbering,
notching, marking,
drilling debarring
and getting
inspected through
QA.
ST/50109/2015- Majister 18.04.12 01.01.11 Fabrication of tower 30.08.13 24/09/2014
DB Singh to parts including
31.03.11 shearing, cutting,
punching,
numbering,
notching, marking,
drilling debarring
and getting
inspected through
QA.
ST/50323/2015- Rajendra 16.09.13 01.04.12 Fabrication of tower 28.01.14 14/10/2014
DB Vishwakarma to parts including
31.03.13 shearing, cutting,
punching,
numbering,
notching, marking,
drilling debarring
and getting
inspected through
QA.
ST/50324/2015- Rajkumar 03.10.12 01.01.11 Fabrication of tower 05.02.14 14/10/2014
DB Vishwakarma to parts including
31.03.13 shearing, cutting,
punching,
numbering,
notching, marking,
drilling debarring
and getting
inspected through
QA.
ST/50327/2015- Paramjeet 16.09.13 01.01.11 Fabrication of tower 17.02.14 14/10/2014
DB Singh to parts including
31.03.13 shearing, cutting,
punching,
numbering,
notching, marking,
drilling debarring
and getting
inspected through
QA.
ST/50328/2015- Anil Kumar 14.08.13 01.04.11 Fabrication of tower 12.02.14 14/10/2014
DB to parts including
31.03.13 shearing, cutting,
punching,
numbering,
notching, marking,
drilling debarring
and getting
inspected through
QA.
ST/50329/2015- Meena 03.10.12 01.04.11 Fabrication of tower 17.02.14 14/10/2014
DB Industries to parts including
31.03.13 shearing, cutting,
punching,
7
numbering,
notching, marking,
drilling debarring
and getting
inspected through
QA.
ST/50382/2015- Majister 16.09.13 01.04.11 Fabrication of tower 14.02.14 14/10/2014
DB Singh to parts including
31.03.13 shearing, cutting,
punching,
numbering,
notching, marking,
drilling debarring
and getting
inspected through
QA.
ST/50325/2015 Bir Bahadur 18.04.2012 01.01.11 Fabrication of tower 30.08.13 14/10/2014
Yadav to parts including
31.03.11 shearing, cutting,
punching,
numbering,
notching, marking,
drilling debarring
and getting
inspected through
QA.
ST/50325/2015 Sulakhan 18.04.2012 01.01.11 Fabrication of tower 30.08.13/ 14/10/2014
Singh to parts including 04.09.13
31.03.11 shearing, cutting,
punching,
numbering,
notching, marking,
drilling debarring
and getting
inspected through
QA.
3. All these orders under challenge have confirmed the demand denying
the activity of the appellants to be the activity of manufacture rather holding
it to be the one under clause 5 of Section 65 (19) of Finance Act, 1944. The
Adjudicating authority denied the benefit of exemption Notification
No.6/2005 dated 1st March, 2005. However, benefit of exemption
Notification No. 8/2005 dated 1st March, 2005 was extended in favour of the
appellants. Aggrieved of these orders the present appeals have been filed.
4. We have heard Mr. P.H. Parekh & Mr. Sunil Goyal alongwith Ms.
Malvika, Advocate and Vishal Prasad, Advocate, Pratyusha, Advocate for the
appellant and Mr. Sanjay Jain & Shri G.R. Singh ld. D.Rs. for the
Department.
8
5. It is submitted on behalf of appellant that Department has wrongly
alleged the activities of the appellant to fall under the category of the
Business Auxiliary Services, it is mentioned that the same is very much a
manufacturing activity, as the appellants are engaged in fabrication of tower
parts which includes cutting of angles, punching of angles, computerized
numbering plates on which parts are erected on the site, notching, bending,
drilling etc. It is submitted that holes are made in the angles as per the
drawings provided by the client / L & T. It is further impressed upon that all
these activities, since, aid in manufacturing of the final product i.e. the
transmission tower. Therefore, these activities are incidental or ancillary to
the completion of manufactured product and as such fall very much in the
definition of manufacture. The Orders under challenge to that effect are
accordingly, prayed to be set aside. The appellants have mainly relied upon
the decision of Larger Bench of this Tribunal in the case of Mahindra &
Mahindra Ltd. vs. CCE, Aurangabad - 2005 (190) ELT 301.
6. Ld. DR while justifying the impugned order has impressed upon the
findings of Commissioner (Appeals), where appellants were found to engage
in the work of cutting of angles (to size), drilling, Punching, bending
stamping etc. as instructed by L & T. They are getting paid on the quantum
of work done on M.T. basis and not on the basis of workers employed or on
commission basis. Also since no new product emerges in the process, these
activities do not amount to manufacture. But are the activities in clause 5 of
definition of Business Auxiliary Service in Section 65 (19) of the Finance Act.
Any alleged infirmity in the order is vehemently denied and appeals are
prayed to be rejected.
6.1 In support of his argument ld. DR relied upon the following case laws:-
9
1. CCE, Bangalore-II vs. Osnar Chemical Pvt. Ltd. - 2012 (276)
ELT 162 (SC)
2. Haryana State Electricity Board, Steel STR.FAB. Workshop
vs. ACC & CE - 2008 (221) ELT 198 ( P & H)
3. Collector of C. Ex., Jaipur vs. Pratap Rajasthan Special Steel
Ltd. - 1999 (108) ELT 437 (Tri.)
4. PSL Ltd. vs. CCE, Rajkot - 2009 (16) S.T.R. 247 (Tri. -
Ahmd.)
5. CCE , Chennai-II vs. Tarpaulin International - 2010 (256)
ELT 481 (SC)
6. Orient Packaging Ltd. vs. CCE, Meerut-I - 2011 (23) STR
167 (Tri.-Del.)
7. Rathore Engg. Works vs. CCE, Chandigarh - 2012 (27) STR
37 (Tri.- Del.)
7. After hearing all the parties, we are of the considered view that the
issues to be decided herein are:
(1) whether the activities of the respective appellant as mentioned above
are classifiable as business auxiliary service or as manufacture.
(2) Whether the appellant is entitled for the benefit of exemption Notification
No. 6/05 dated 1st March, 2005.
(1) For adjudicating for this issue, the definition of BAS as well as
manufacture is important to be looked into which is as follows:-
Section 65 (19) of the Finance Act, 1994, defines the business auxiliary service
and the relevant part of the same is reproduced below:-
" 19) "business auxiliary service" means any service in relation to -
(i) ......
.......
(v) Production or processing of goods for, or on behalf of, the client. and includes services as a commission agent, but does not include any activity that amounts to manufacture of excisable goods.
10Explanation - For removal of doubts, it is hereby declared that for the purposes of this clause, -
(a) ........
(b) ........
(c) "manufacture‟ has the meaning assigned to it in clause (f) of Section 2 of the Central Excise Act, 1944."
(Emphasis Supplied)
5. The relevant part of Section 2 (f) of the Central Excise Act, 1944 reads as follows:-
"2(f) "manufacture" includes any process, -
(i) Incidental or ancillary to the completion of a manufactured product;
(ii) ....................; or
(iii) .....................
and the word "manufacturer" shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his account."
7.1 Word "manufacture" as defined above has been a subject matter of interpretation by various judgements of this Tribunal as well as of the Hon‟ble Supreme Court.
"(i) Hon‟ble Supreme Court in the case of Collectorate, Central Excise Mumbai vs. S.D. Chemicals Private Limited reported in 1995 (2) SCC 336 at para 12 page 342 held that the definition of the expression „manufacture‟ ... is not confined to the natural meaning of the expression „manufacture‟ but is an expansive definition. It was also held that one of the main tests ... is whether on account of processes employed or applied by the assessee, the commodity so obtained is no longer regarded as the original commodity but is, instead, recognised as a distinct and new article that has emerged as a result of the processes.
(ii) Brakes India Limited vs. Superintendent of Central Excise and Others reported in 1997 (10) SCC 717 at paras 1 and 2 page 717 wherein it was held by the Hon‟ble Supreme Court that if by a 11 process, a change is effected in a product, which was not there previously, and which change facilitates the utility of the product for which it is meant, then the process is not a simple process, but a process ancilliary to the completion of a manufactured product. It was also held that when adopting a particular process, if a transformation takes place, which makes the product have a character and use of its own, which it did not bear earlier, then the process would amount to "manufacture"."
8. Now coming to the authority as is relied upon by the appellant i.e. Mahindra & Mahindra (supra), it is observed that finding of Larger Bench of Tribunal therein are as follows:-
10.There can be no dispute over the proposition that immovable property, be it immovable steel structure embedded in earth or a constructed building, cannot be subjected to excise duty which applies to excisable goods, i.e. to movables. In the making of an immovable structure or building are used a variety of movable. Raising iron and steel structures like sheds involves fabrication work and many of the articles used in raising the structure come into existence through fabrication as per the pre-determined design to be fitted into the structure that is to be raised. For example, roof frame may be fabricated for the roof structure of a shed. Such fabrication of frames may be done at the construction site or at some factory premises. The iron and steel frames fabricated at the factory premises away from the site of construction would be brought to the site for their use in erecting the structure. The frames pre-fabricated and brought at the site and frames fabricated the site of erection both are goods manufactured. There will be variety of parts of structures of iron and steel, that can be fabricated either at the site or at some factory premises away from the site. The iron and steel raw material, such as angles, plates, tubes, etc., are used in making parts of structures and they acquired a distinctly different shape to suit the structural designs. For example, if iron or steel angles and plates are cut to make a steel table or chair which can be dismantled, it cannot be said that there are no goods manufactured because the iron and steel angles or plates remain such angles and plates though of different sizes, and merely holes are punched and screws fitted. Unlike in liquid mixtures, the raw material of iron and steel or wood will retain their identity, but it is precisely their being cut, and designed, punched and fitted to make an article commercially known that involves manufacture of an article distinct from the angles, sheets, tubes etc. used in it. Mere drilling holes or mere cutting jobs in isolation may not by themselves involve manufacture of an article, but, converting raw material like angles, tubes, plates etc. to bring about a distinct commodity will surely amount to manufacture as it is not "mere" drilling holes or cutting, but the activity is aimed at bringing about a distinct commodity. Thus, making of porta cabin from iron and steel angles with, roof frame-work i.e. trusses, doors, windows, ladders in it made by drilling holes and cutting the raw material, will be a movable structure having identity as a distinct marketable commodity. When the porta cabin is 12 dismantled it nonetheless remains the manufactured products i.e. porta cabin dismantled or disassembled. The material such as angles, rods, shades, sections plates, tubes, etc. of such designed structure in their pre-
assembled or disassembled form are prepared for use in the said structure, namely porta cabin. One cannot, with any conviction or authority, say that these dismantled parts of the structures are raw material used in its original form and that mere cutting or drilling holes has made no difference. The items in the parenthesis of Heading 7308 described as excisable goods include roofs, roofing frame-work, doors, windows and their frames, thresholds for doors, shutters, pillars, column, balustrades pillars, sheets of iron and steel, each one of these items has a complete distinct identity. The contractor undertaking the works contract for erecting a structure may not himself manufacture all such items used for structure. He may order the doors and windows to be made by a particular manufacturer and roof frame-work by the other, depending on the specialization and expertise of the manufacturer of different items. The contractor may supply designs and raw material for various parts of structures and get the work done on job work basis. To save time and expenses he may get the fabrication done at the site of construction instead of getting it done at some distance in a factory. When the required parts are fabricated they will be fixed as per the designed structure and will continue to be moveable object until made immovable by permanently fixing them in the designed immovable structure. To say that no parts of the structures came into existence as distinct commodities because ultimately they got permanently fixed into an immovable structure will run counter to the legislative intent to impose excise duty on such excisable goods at a stage when they have a separate identity as marketable goods anterior to their being permanently fixed in the immovable structure.
In our opinion, all these parts of structures which were fabricated These were not simply members such as angles, etc., with holes or cut to a different size, but the process was undertaken to bring them into a particular commercially known shapes and assemble them for that purpose as per the designs and having fabricated them, to use them for permanently fixing them in the structures which were to be erected as per the design under the works contracts.
9. Now coming to the case law relied upon by the Department, it is observed that many of them are pre Mahindra and Mahindra case. The adjudication in the case of Commissioner of Excise, Bangalore vs. Osna Chemical Pvt. Ltd. (supra), no doubt it is held that the raw-material „Bitumin‟ therein when is processed by being boiled and being blown with air, thereafter, the same is only for improving the quality of the product. Hence, cannot be amount to manufacture. To our opinion, the said adjudication is not applicable to the facts of the present case because in the 13 present case no doubt the raw-material in question has undergone the simple process of cutting of angles, punching of angles, notching, bending, drilling etc. but the fact remains is that those activities are being carried out with the sole objective of those raw-material to be customised into a particular shape and size, even in terms of the location of hole/punch there upon, to suite the design, specification of the final product that is the transmission tower in hand. It has well been clarified by various judgements as discussed above i.e. Mahindra and Mahindra (supra) and Brakes India Limited vs. Superintendent of Central Excise and Others (supra) that the activity bringing a change to a raw material, howsoever simple as that of cutting or drilling, that too such a shape, size or structure that it is no more in the original form of its raw-material and cannot be used for any other purpose except for the final product for which it has been so customised.
10. The another peculiar fact of the present case which distinguishes it from the case law as relied upon by the Department is that the final product here is a transmission tower, which is to be removed from the premises of L & T in CKD condition only i.e. all such parts as processed by the appellants herein shall be cleared from L & T premises in unassembled form, though together, to be finally assembled at the site of the client in the form of a transmission tower. Thus, it become clear that the processes undertaken by the appellants on the raw-material provided to them by L & T in L & T‟s own premises are nothing but the processes to convert the said raw-material into a customized part of the whole transmission tower and as such, to our opinion, the activity of the appellants is incidental/ ancillary to the completion of the manufactured product and thus, falls under Section 2 f (i) of Central Excise Act, 1944. Brakes India Ltd. case (supra) is again relied 14 upon. At this stage clause 5 of Section 65(19) of Finance Act, 1994 defining BAS is perused. It is clear that it includes the activity which is production or processing of the goods for or on behalf of the client but does not include any activity that amounts to manufacture of excisable goods.
11. In view of entire above discussion, we are of the view that the activities of the appellants are the activities of manufacture. Resultantly, the findings of order under challenge holding the activities of the appellants to be the business auxiliary activities and confirming the demands in response thereof is held to be a wrong observation. The orders under challenge are set aside to that extent.
12. Now coming to another aspect of adjudication it is observed and held as:
The exemption Notification No.6/2005 prescribes the exemption to taxable services upto the aggregate value of Rs. 8,00,000/- during the year 2007-08 and Rs.10,00,000/- w.e.f. 1st April 2008 to the service provider.
Vide the Order-in-Original, it was observed that no evidence has been produced by the appellants about the aggregate value of taxable services.
Resultantly, the benefit of this Notification was denied and the same findings are confirmed by Commissioner (Appeals). We are of the opinion that it is an admitted fact that M/s. L & T had been performing further manufacturing activities on the semi finished goods processed by the appellants and have been clearing those goods on payment of duty as well as under the exemption Notification without payment of duty. The appellants have failed to provide the gross aggregate value received by them from M/s. L & T even before the first Appellate Authority. Resultantly, the authority has rightly denied the benefit of exemption Notification No.06/05 to the appellants.
With respect to granting the benefit of exemption Notification No.08/2005- 15 ST dated 1st March, 2005 also we do not find any infirmity in the impugned order. The findings thereof are upheld qua both these Notifications.
13. As a result of entire above discussion, we partly allow the appeal holding the impugned activity to be the one as that of manufacture. Benefit of Notification No.08/2005 of 1st March, 2005, is confirmed, however, denying the benefit of Notification No. 06/2005 dated 01.03.2005. Consequential benefits to follow.
[Pronounced in the open Court on 23.07.2018]
(RACHNA GUPTA) (V.PADMANABHAN)
MEMBER (JUDICIAL) MEMBER (TECHNICAL)
Anita