Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs Krishna Saa Fabs Pvt Ltd on 19 February, 2018
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH REGIONAL BENCH AT HYDERABAD BENCH - DB COURT - I Appeal(s) Involved: E/2334/2011-DB, E/2343/2011-DB (Arising out of Order-in-Appeal No. 36 & 37-2010 dated 17/03/2010 passed by Commissioner of Central Excise Kannavarithota, Guntur) Commissioner of Central Excise, TIRUPATI Appellant(s) Versus KRISHNA SAA FABS PVT LTD Respondent(s) N. DORASWAMY , MD , M/S. KRISHNA SAA FAB PVT LTD Respondent(s) Appearance: Mr Devashish, A.R. for the Appellant. Mr. M.V. Sridhar, Adv for the Respondent. CORAM: HON'BLE Mr. M.V.RAVINDRAN, MEMBER (JUDICIAL) HON'BLE Mr. C. J. MATHEW, MEMBER (TECHNICAL) Date of Hearing: 19/02/2018 Date of Decision: 19/02/2018 Final Order No. A/ 30202-30203 / 2018 [Order per: M.V.RAVINDRAN] .
These two appeals are filed by the Revenue against orders-in-appeal No. 36 & 37/2010 dated 17/03/2010.
2. Heard both sides and perused the records.
3. The issues that falls for consideration in these appeals are as below:
i) Whether demand of excise duty on the goods processed/manufactured by the appellants out of the free issue of input materials received from their customers and galvanisation of the manufactured goods received by them from their customers and after the required processes the goods were returned to the customers form whom the input goods were received, is sustainable law.
ii) Whether the Notice is hit by limitation.
iii) Whether the appellant shave properly availed the benefits of Notifications 8/2002-CE, dt 1.3.2002 as amended; and 9/2003-CE dt. 1.3.2003, as amended and whether the CENVAT credit was taken irregularly and
iv) Whether imposition of penalties on the appellants company as well as on the Managing Director is sustainable.
Learned A.R. takes the Bench through the entire order and also the records and submits that the activity undertaken by the appellant would amount to manufacture. Learned counsel submits that for the subsequent period, this Bench in Final Order No A/30514/2016 dated 21.06.2016 has considered the very same issue and held in their favour and produces a copy of the order of the Division Bench.
4. On consideration of the submissions made by both sides and perusal of the order passed by the Tribunal, in their own case, we find it so.
5. The relevant findings of the Tribunal in the respondents own case are reproduced herein below:
5. We have considered the rival submissions. The crux of the dispute is whether the processes of cutting/sizing, drilling and galvanizing of MS Bars and HA Steel ribbed strips result in process of manufacture and that the final products necessitate being classified under Chapter Heading 73.08. On similar facts, the Tribunal in the matter of CCE, Hyderabad Vs K.Ramachandra Rao Final Order No.712/08 dated 19.06.2008 referred to the judgment in Mahindra & Mahindra decision of Larger Bench 2005(190) ELT 301 (Tri-LB) held such processes do not amount to manufacture. The relevant part of the decision is extracted below:
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Further the learned advocate stated that even after the decision of the Larger Bench of CESTAT in the case of Mahindra & Mahindra Ltd. Vs. CCE, Aurangabad, Chandigarh, Kanpur and Chennai, there is no change in the position. He invited our attention to the relevant paragraph in the above decision which is reproduced herein below:-
The iron and steel raw material such as angles, plates, tubes etc. are used in making part of structures and they acquired a distinctly different shape to suit the structural design. 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 wholes 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 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.
4. On a very careful consideration of the issue, we find that the respondents received duty paid MS angles, rods, channels, plates etc. and the activity carried out by them amounts merely to drilling of holes and cutting them and these are sent to the various parties for manufacture of towers. In our view, the process undertaken by the respondents do not amount to manufacture as the MS rods, plates, angles etc. remain the same even after the process have been carried out. Therefore, there is no new manufacturing process involved. In our view, the impugned order of the Commissioner(Appeals) is legal and proper. There is no merit in the Revenues appeals and the same are rejected.
We do not find any reason to take a different view from the findings already recorded as in the above case. Respectively following the ratio thereof, the impugned order is upheld and this Revenue appeal is rejected.
6. The above judgment is applicable to the case in hand, the issue and facts being similar. We further note that the demand of duty by department relates to period from march 2004 to June 2004, whereas, the Chapter Note 5 in Chapter 72 laying down that the process of galvanization to be deemed manufacture for the products of Chapter 72, has been brought into effect w.e.f 01.03.2011 vide the Union Budget 2011. This being so, the process of galvanizing carried out on the impugned products would not be deemed manufacture during the material period.
7. In view thereof we hold that the impugned order is unsustainable. The same is set aside. The appeal is allowed with consequential reliefs, if any.
6. Since identical issue has been considered as not amounting to manufacture by this Bench in the appellants own case, we hold that the impugned order is correct and legal and does not suffer from any infirmity. The impugned order is upheld and appeals are rejected.
(Order pronounced and dictated in open court) C. J. Mathews MEMBER (TECHNICAL) M.V.RAVINDRAN MEMBER (JUDICIAL) Neela Reddy 4