Larsen & Toubro (ECC Division) Vs Commissioner of Central Excise (CESTAT Bangalore)
The CESTAT Bangalore adjudicated appeals arising from an Order-in-Original dated 31.05.2012, which had confirmed central excise duty demand, interest, and penalties against the appellant on the ground that its activities amounted to manufacture. The Tribunal examined two key issues: whether the activities undertaken constituted “manufacture” under the Central Excise Act, 1944, and whether invocation of the extended period of limitation was justified.
The appellant was engaged in execution of a Rural Load Management System (RLMS) project on a turnkey basis, involving supply of materials, assembly, testing, and commissioning. The RLMS units consisted of various components such as programmable logic controllers (PLC), circuit breakers, transformers, and energy meters. The department alleged that the appellant assembled RLMS units and cleared them without payment of excise duty. The adjudicating authority concluded that the appellant was the manufacturer, as it procured all raw materials and subcontracted assembly work, and therefore confirmed duty demand with penalties.
The appellant submitted that assembly activities were carried out by subcontractors such as SAR Engineering Services and Surabhi Electricals, who provided manpower and executed assembly at the appellant’s site. Statements recorded during investigation indicated that these subcontractors assembled RLMS units using components supplied by the appellant under delivery challans. It was also noted that similar activities were carried out earlier by another contractor.
