46. Should the Govern-ment under-taking be considered under a different footing for the purpose of putting them to terms in stay application, as burden of deposit has to be shared by Government of India?

Held : Yes

The appellants are PSU rendering service of maintenance and repair to customer on basis of quotations.

The appellants relied on the circular issued by finance ministry vide letter dated 27-7-2005 which clarified that service tax was leviable only when there was a contract for carrying out maintenance and service activity prior to 16-6-2005. They claimed that since they did, not have a contract and did the work on simple work order they are not liable prior to 16-6-2005.

The learned JDR opposed the argument and said that circular was not applicable to them.

Tribunal on hearing the matter held that prima facie the board’s circular has applicability. They further held that President’s Bench has already taken a prima facie view that units which are run by Government of India come under a different footing for the purpose of putting them to terms in the stay application, as the burden of deposit has to be shared by Government of India and the amounts are being transferred from one department to another department. Taking the overall facts and circumstances including the merits of the case argued by the appellants, the tribunal granted full waiver of pre-deposit and staying its recovery till the disposal of the appeal. An early hearing out of turn was also granted to appellant.

[Cochin Shipyard Ltd. vs. CCE Cochin 5 Service Tax Review 347 TRI - Bang.]

47. Whether delay can be condoned of 292 days in filing appeal, on a bona fide belief that relief can be claimed from lower authorities following the judgment of the Supreme Court. Delay not on account of inaction or negligence on the part of the appellant ?

Held : Yes

The appellants sought for delay condonation of 292 days in filing the appeal against the order in original.

The appellants were before the Hon'ble Supreme Court in a particular matter and they succeeded in the Supreme Court. The management was under the impression that the issue was before the Apex Court and hence there was no requirement to challenge each of the orders before the appropriate authorities and that all pending matters will get concluded in terms of the judgment of the Supreme Court. In fact, the management made a refund application to the lower authorities.

The Tribunal held that the appellants have made a strong case for condoning the delay in filing the appeal.

The condonation application was allowed.

[Anant Spinning Mills vs. C. C. E, Bhopal 197 E.L.T 112 (Tri-Del)]

48. Whether CBEC is entitled to authorize any Commissioner other than the one adjudicating to file an appeal.

Held : No.

Whether the above error is rectifiable or substantive in nature.

Held : Substantive.

Whether the Commissioner is entitled to adopt two different methods of valuation while valuing the same goods even if they are removed clandestinely?

Held : No.

The appellants contended that the adjudicating order was passed by Commissioner of Central Excise Mumbai. The board authorized him to file an appeal before CESTAT. The appeal however was filed by CCE Surat, the jurisdictional Commissioner of the appellant. The above was violative of the provisions of 35E (1) prior to 2001.

The learned SDR supported the appeal filed by CCE, Surat and in the alternative contended that CCE Mumbai be allowed to file an appeal.

The Tribunal relying on the decision of G.T.C. Industries Ltd. vs. CCE 144 ELT 632 held that prior to 2001 the provision of sec 35E (1) as it stood required the adjudicating Commissioner to file an appeal. They further held that the provision is not procedural but substantive in nature and hence the alternative plea of the SDR was not accepted.

The next ground raised by the appellant was that the method adopted by the Commissioner in arriving at assessable value was incorrect and on the higher side. It was contended that the Commissioner adopted one method for valuing goods for which dispatch proof form of LR was available and another method for valuing goods which were cleared by way of Internal gate passes for which no LRs were available. This act resulted in inflation of assessable value. Further contentions were raised that the Commissioner did not grant any reasons for the method of valuation adopted by him.

The Hon'ble Tribunal observed "On the face of it, there is considerable force in the appellants pleadings. Commissioner will have to give reason as to how the assessable values are arrived at. Assessable values of all clandestinely removed goods also should be arrived at by adopting a uniform approach."

The matter was remanded back to the Commissioner.

[CCE, Surat vs. RAVASCO Transmission and Packaging Pvt. Ltd. 197 E.L.T. 65 (Tri-Mumbai)].

49. When raw materials like plates, angles and channels are subjected to punching, revetting welding etc. resulting in dry dock roof structure, gantry beam rail and foundations for dock fittings and fixtures, it should be regarded as immovable structure not leviable to excise duty

Held : Yes.

The brief facts of the case are as follows.

M/s Asia Foundations and Constructions Limited, Visakhapatnam (hereinafter known as M/s. AFCONS) are engaged as contractors for specialized civil engineering works. In the course of its business they were given a contract by the Chief Engineer Dry Dock, (CEDD), Visakhapatnam, for carrying out various items civil, electrical and mechanical works for North Dry Dock. The Collector of Central Excise, vide order in original No. 13/89, dated 2-6-1986 held that the structures fabricated by M/s. AFCONS, would be classified under "Others" covered by sub-heading 7308.90 as on 28-2-1986. He held that the process of conversion of duty paid iron and steel products such as plates, angles etc., by subjecting them to processes of cutting, welding, rivetting etc., into items required for erection amounts to manufacture since the resultant goods have a distinct name from the raw materials.

The processes carried out by the appellants are:–

1. Submarine Roof Portal Frame

1. The design and drawing of the structure is prepared as per required specification.
    

2. The inputs like plates, runners, beams columns etc. are supplied by CEDD. These are cut to file in the size of the structure is erected by welding and rivetting.

2. Gantry cranes

1. The beam which is duty paid is fabricated into required length so that the same fitted with the structure.
    

2. The columns attached to the earth are installed to support beams.
    

3. The beams are welded with the columns.
    

4. The gantry crane is thereafter installed. The cranes move on the wheel.

The Tribunal took the photographs of the work done on record. They pursued the photographs. They observed that the Chief Engineer dry dock supplied to the appellant finished products namely steel on which excise duty has already been paid for using it in the construction work. The steel consisting of plates, angles, and channels were not at any time sold to the appellants. They remained the property of the defence department and were to be used exclusively on the construction work entrusted to the appellants. The steel items of plates, angles and channels were subjected to cutting, punching, rivetting, welding etc, so that they could be used in the construction as specified in the contract. The activity of
M/s AFCONS have resulted in the dry dock roof structure, Gantry beam rail Foundations for dock fitting and fixtures.

They then pursued the clarification given by the board in its order dated 15-1-2002 in Para (v) as under:–

"If items assembled or erected at site and attached by foundation to earth cannot be dismantled without substantial damage to its components and thus cannot be reassembled, then the items would not be considered as movable and will, therefore, not be excisable goods."

The finally held "In our view, the items fabricated by M/s AFCONS have become immovable property as can be clearly seen in the photographs. In other words the portal frames on the roofing and on the sites of the dry dock are still structures fabricated at site. By no stretch of imagination they can be called as goods. The above items are similar to the ones which are subject matter of the CEGAT decision in Aruna Industries, Visak and Others vs. Collector of Central Excise Guntur and Ors. – 1986 (25) E.L.T. 580 (T), wherein it is held that making of structural shapes like presses, beams, gudders etc, from raw materials such as plates, channels, angles by cutting, drilling, rivetting etc, and assembling structural shapes for construction of building or shed, is a fabrication activity and not a manufacturing process. In these cases even though the identity of the original product is lost no transformation is taking place.

In the landmark case Thungabhadra Steel Products Ltd. vs. UOI it has been held that fabrication of hydraulic gates, hoists, gantry cranes for such gates, penstock pipes for river valley projects/dams, etc, out of duty paid materials would not amount to manufacture. Further, they are not excisable as they are not capable of being sold in the market. In the present case also caisson and the other structures are specifically meant for the dry dock, which will be a fixed structure and therefore, the fabricated parts cannot be marketable and in that view they cannot be excisable. Similarly, the Gantry rails as can be seen from the photos are fixed on which the Gantry cranes moves. For the same reason as stated earlier they cannot be called as goods. In these circumstances, in our view there is no merit in the Revenue’s demand at all. Since the appeal is allowable on merits alone we are not going into the issue of limitation. The entire demand is liable to be quashed for the reasons stated above. Hence, there is no need to consider the points raised in Revenue’s appeal. Summing up we hold that the items fabricated by M/s. AFCONS are not goods as they are not marketable and also in view of the fact that they had become part of immovable structure. Hence, the Order in Original has no merits. The same is set-aside. We also dismiss Revenue’s appeal.

[Afcons Infrastructure Ltd. vs. CCE 197 ELT 247 (Tri-Bang.)]