By TIOL News Service

NEW DELHI, JULY 03 2017: THE appellants received flats and angles of iron and steel supplied by M/s ABB Ltd.

After cutting to size the said flats and angles and drilling holes therein, the said products were joined by using nuts, bolts and washers before returning the same to the principal namely M/s ABB Ltd.

Revenue harbored the view that the appellants are liable to pay Central Excise duty on such process.

SCN was issued and the duty demand of Rs.5,40,618/- was confirmed along with penalty of Rs.5000/- u/r 27 of CER.

Aggrieved that the Commissioner(A) had upheld this order, the appellant is before the CESTAT.

It is submitted that the activity undertaken does not amount to manufacture and, in fact, the appellants were discharging service tax on the said process under the category of “Business Auxiliary Services”.

The AR justified the CE duty demand by placing reliance on the apex court decision in Man Structurals Ltd. = 2002-TIOL-182-SC-CX-CB .

It is also emphasized that the appellants were discharging Central Excise duty on similar items when they have undertaken the said work on their own raw material and, therefore, such a dual approach by the appellant is not permissible.

The Bench observed –

Merits:

++ The impugned order categorically recorded that the resultant goods have different characteristics, marketable under different names and classifiable under different heading [7508.90]. Accordingly, it was concluded that the processes carried out on the raw materials are covered by the scope of Section 2(f) of Central Excise Act, 1944. A perusal of tariff heading 7308.90 will show that the said heading covers structures and parts thereof of various types made up of plates, rods, angles, shapes, sections, tubes and the like, preparing for use in structures, of iron and steel. The product cleared by the appellants, after the processes undertaken by them fit into such description.

++ The products, in question, as cleared by the appellants are specifically identifiable and classifiable under a tariff heading under Chapter 73. The raw materials are of general nature falling under Chapter 72. As such, we have no reason to interfere with the findings of the lower authorities.

Limitation:

++ Appellants had knowledge and applied different reasoning to follow different tax liabilities for the same processes. As such, we are in agreement with the lower authorities regarding demand for extended period.

Holding that there is no merit in the appeal,the same was dismissed.

In passing: A case of service tax refund, perhaps!

(See 2017-TIOL-2243-CESTAT-DEL)