Custom, Excise & Service Tax Tribunal
M/S. Harshad Thermic Industries Pvt. ... vs Cce &Customs, Raipur on 22 May, 2014
IN THE CUSPTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing/ Decision:22.05.2014
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Whether Press Reporter may be allowed to see the Order for publication as per Rule 26 of the CESTAT (Procedure) Rules, 1982?
2
Whether it should be released under Rule 26 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
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Whether their Lordships wish to see the fair copy of the Order?
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Whether Order is to be circulated to the Departmental authorities?
Appeal No.ST/308/2008-CU(DB)
(Arising out of Order-in-Original No.Commissioner/RPR/16/2008 dated 15.02.2008 passed by the Commissioner of Central Excise & Customs, Raipur).
M/s. Harshad Thermic Industries Pvt. Ltd. Appellants
Vs.
CCE &Customs, Raipur Respondent
Appearance:
Shri B.L. Narsimhan & Shri Narendra Kumar Singhvi, Advocate for the appellant.
Shri Pramod Kumar & Shri Amresh Jain, DR for the respondent.
Coram:
Honble Mr. Justice G. Raghuram, President Honble Mr. Rakesh Kumar, Technical Member Final Order No.52453 /Dated:22.05.2014 Per Rakesh Kumar:
The facts leading to filing of this appeal are, in brief, as under:-
2. The appellant are engaged in the business of manufacture of thermite mixture and rendering service in relation to thermite welding of rail joints. The thermite mixture, which is used for thermite welding consists of iron oxide (ferric oxide) and metal powder like aluminum powder, magnesium powder zinc powder etc. In thermite welding process using the mixture of iron oxide and aluminum powder as fuel, the aluminum reduces the iron oxide and iron is produced with a large amount of heat as the reaction is exothermic. The melted iron produced fills the gap between the rails to be joined. The appellant undertake the joining of two pieces of rails at site for Railways by thermite welding. The department was of the view that the process undertaken by the appellant is production or processing of goods not amounting to manufacture and hence, Business Auxiliary Service attracting service tax under Section 65(105)(zzb) read with Section 65(19) of the Finance Act, 1994. It is on this basis that a service tax demand of Rs.50,32,293/- was raised against the appellant along with interest and also for imposition of penalty vide show cause notice dated 23.10.2007 for the period 16.06.2005 to 28.02.2007. The show cause notice was adjudicated by the Commissioner vide order-in-original dated 14.02.2008 by which the Commissioner confirmed the above demand to the extent of Rs.26,09,242/- and dropped the remaining demand of Rs.24,29,051/- on the ground that this service tax has been demanded on the cost of materials sold. Besides this he also demanded interest on the service tax demand confirmed and also imposed penalty of equal amount on the appellant under Section 78 of Finance Act, 1994. Against this order of the Commissioner, this appeal has been filed.
3. Heard both the sides.
4. Shri B.L. Narsimhan, Advocate, ld. Counsel for the appellant explained in detail the process of thermite welding undertaken by the appellant for joining of rails and pleaded that since the rails have been joined at site, no goods have emerged for delivery to Railways and that in view of this, the process undertaken by the appellant cannot be categorized as production or processing of of goods not amounting to manufacture so as to attract service tax demand under Section 65(105)(zzb) read with Section 65(19) of the Finance Act, 1994. He, therefore, pleaded that the impugned order is not correct.
5. Shri A. Jain, ld. DR, defended the impugned order by reiterating the findings of the Commissioner and pleaded that as a result of the process undertaken by the appellant, the pieces of rail with longer length emerge and hence, the process undertaken by the appellant is production of goods not amounting to manufacture and would attract service tax under Section 65(105)(zzb) read with Section 65(19) ibid.
6. We have considered the submissions from both the sides and perused the records.
7. Undisputedly, the appellant undertake the joining of sections of rails at site by thermite welding process. The welding of section of rails which are of length of 100 Mtrs is done at site as result of which there are lesser number of gaps at every 2Km instead of at every 100 Mtrs resulting in smooth movement of train on railway tracks. In fact, the process undertaken by the Appellant is part of the process of laying down of tracks and make them fit for traffic movement as before undertaking the thermite welding process, the rails have to be precisely aligned. In our view, therefore, the activity of the appellant does not result in any deliverable goods to the railway and it cannot be said to be the production or processing of goods not amounting to manufacture. The impugned order, therefore, is not sustainable. The same is set aside. The appeal is allowed.
[operative portion already pronounced] (Justice G. Raghuram) President (Rakesh Kumar) Member (Technical) Ckp.
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