Excise or service tax leviability on activity relating to construction of greenhouse needs fresh adjudication

Sriroz Consultants Pvt. Ltd. Vs Commissioner of CGST & CE (CESTAT Mumbai)

CESTAT Mumbai held that for the same period excise duty is demanding alleging that activities undertaken by the appellants do amount to manufacture of Prefabricated building i.e. Green House and also service tax on activity of erection and commission of Greenhouse and Polyhouse at site. Accordingly, held that to ascertain the position, it is prudent to remand the matter to the adjudicating authority.

Facts- Appellant is engaged in the activity of sale of green house material and construction of greenhouses as per the requirement of the farmers/customers. Revenue was of the view that ‘greenhouses’ are put up as elements to be assembled on site, and appellant was manufacturer of greenhouses where they supply the raw material and carry out erection/ installation also.

Appellants are therefore required to pay Central Excise duty on the manufacture & clearance of their finished goods with effect from 28.02.2005.
Despite the fact that the appellant was engaged in manufacture of ‘Green House’, they failed to get themselves registered under Section 6 of the Central Excise Act, 1944 read with Rule 9 of the Central Excise Rules, 2002 and continued clearing ‘Green House without following procedures prescribed under ‘the Act’ and ‘the Rules’.

Appeal filed before Commissioner (Appeal) was dismissed. Being aggrieved, the present appeal is preferred.

Conclusion- Held that apparent that the claims of the appellants that they are just purchasing materials and selling the same & that they merely collect bought out duty paid items and supply them is not correct in as much as these goods are thereafter assembled and installed at the customer site by the appellant to bring into existence the “greenhouse”.

The issue whether the activities undertaken by the appellants do amount to manufacture of Prefabricated building – Green House or not is a question of fact and needs to be ascertained from the facts available on the records. In the paper book filed along with the appeal, appellants have enclosed a number of purchase order and invoices which were in reference to the supply of raw material, and the material. In fact there are no purchase orders/ invoices for the supply of Green House. No clear cut findings have been rendered by any authority on this aspect. Further whether appellants are paying service tax in respect of the erection and commissioning activities undertaken at the site, is also not very clear. Joint commissioner has in his order referred above has recorded the factum of issuance of notice demanding service tax and its adjudication. But do not records anything further. All these facts need to be ascertained and final view needs to be taken in the matter for ascertaining whether the activities undertaken by the appellant amounted to manufacture of prefabricated building – green house.

We find that separate show cause notices were issued to the appellant, for the same period, demanding service tax on the activity of erection and commissioning of Greenhouse and Polyhouse at site and the same was confirmed on adjudication. The appellant has admitted and service tax discharged along with interest on the said activity of erection and commissioning of Greenhouse/Polyhouse at site. From the records it is not clear whether the service tax was paid on separate activities or it is a part of assembling of Greenhouse/ Polyhouse at site out of the fabricated item cleared from their factory. To ascertain the aforesaid position, thus it is prudent to remand the matter to the adjudicating authority.

FULL TEXT OF THE CESTAT MUMBAI ORDER

These are two appeal filed by the appellant are against orders as indicated in the table below:

Amount in Rs
Appeal No	Period in dispute	Show Cause Notice date	Impugned OIO / OIA date	Duty Demand	Penalty Imposed
E/85046/ 13	Feb 05 to Mar 09	21.10.2009	5.10.2012	21.11.362	21,11.362
	Apr 09 to Oct 09	16.04.2010		36,76,543	36,76,543
E/630/12	Nov 09 to Mar 10	01.10.2010	23.1.2012	37,96,355	37,96,355
	Apr 10 to Dec 10	31.03.2011		81,68,520	81,68,520

1.2 Since the issue involved in the two appeals is identical they are taken up for consideration please. Appeal No

1.3 By the impugned order in appeal No E/85046/2013 Commissioner Central Excise (Appeal) Pune has held as follows:

“I confirm and uphold the impugned Order in Original No P1/JC/52/CEX/2010 dated 15.11.2010 issued by the Joint Commissioner, Central Excise Pune 1 Commissionerate as just fair and legal. Consequently the appeals filed by the appellants is dismissed.”

Original authority has by his order in original held as follows:

a) “I confirm and order to recover the total Central excise duty amounting to Rs 57,87,905/- (Rupees Fifty Seven Lakhs eighty Seven Thousand Nine Hundred and Five only) ( Cenvat duty Rs 56,27,392/- + Ed cess Rs 1,12,540/- + SHE Cess Rs 47,964/-) under the provisions of Section 11 A (2) of the Central excise Act, 1944 from M/s Siroz Consultants Private Limited, 227/228. 2^nd Floor, B wing, Kohinoor Arcade, Nigdi Pune -44.

b) I order to recover interest at the appropriate rate on the aforesaid determined duty amount from M/s Siroz Consultants Private Limited, 227/228. 2^nd Floor, B wing, Kohinoor Arcade, Nigdi Pune -44, under the provisions of section 11AB of Central excise Act, 1944.

c) I impose penalty of Rs 5,00,000/- (rupees Five lakhs only) under the provisions of Rule 25 (1) (c) of the central excise Rules, 2002 upon M/s Siroz Consultants Private Limited, 227/228. 2^nd Floor, B wing, Kohinoor Arcade, Nigdi Pune -44

29 This order is issued without prejudice to any other action that may be taken under this law or any other law for the time being in force in India.”

1.4 By the impugned order in appeal No E/630/2012 Commissioner Central Excise Pune 1 has held as follows:

1. The goods cleared by M/s. Sriroz Consultants Pvt. Ltd., Ambike Chal, Near Gram Panchayat Office, Chikhali Village, Pune District for the period from November 2009 to March 2010 and April 2010 to December 2010 are classifiable as Green Houses under Chapter Heading 9406 of Central Excise Tariff Act, 1985.

2. I confirm Central Excise duty of (1) Rs. 37,96,355/- (Rs. Thirty Seven lakh Ninety six thousand three hundred and fifty five only) (Rs. 36,85,782/- Ex. Duty + Rs. 73,715/- Ed. Cess + Rs.36,858 SHE Cess) demanded vice SCN No. 94/P-III/PR I/JC/ADJ/2010 dated 1st Oct. 2010 for the period from November 2009 to March 2010 (ii) Rs. 81,68,520/- (Rs. Eighty, one lakh sixty eight thousand five hundred (1.6U and twenty only) {Rs. Rs.79,30,6027- Ex. Duty + Rs.1,58,612/- Ed. Cess + ale by Rs.79,306/- SHE Cess) demanded vide SCN No. 133/P-III/R-PR-) I/COMMR/ADJ/2010 dtd.31st March 2011 for the period from April 2010 to December 2010) Total Rs. 1,19,64,875/- (Rupees One Crore Nineteen Lakhs Sixty Four Thousand Eight Hundred Seventy Five only) on the Green Houses cleared by M/s. Sriroz Consultants Pvt. Ltd., Ambike Chal, Near Gram Panchayat Office, Chikhali Village, Pune District, is confirmed under Section 11 A(1) of the Central Excise Act, 1944.

3. I order payment of interest at appropriate rates on the amounts confirmed in (2) above under Section 11 AB of the Central Excise Act, 1944 to be recovered from M/s. Sriroz Consultants Pvt. Ltd., Ambike Chal, Near Gram Panchayat Office, Chikhali Village, Pune District.

4. I order imposition of Penalty upon M/s. Sriroz Consultants Pvt. Ltd., Ambike Chal, Near Gram Panchayat Office, Chikhali Village, Pune District under Rules 25(1)(a) and 25(1)(c) of the Central Excise Rules, 2002, as detailed hereunder:

i. 37,96,355/- (Rs. Thirty seven lakh Ninety six thousand three hundred and fifty five only) in respect of SCN dtd. 01.10.10 (ii) :&

ii. 81,68,520/- (Rs. Eighty one lakh sixty eight thousand five hundred and twenty only) in respect of SCN dtd. 31.03.2011;

totaling to Rs. 1,19,64,875/- (Rupees One Crore Nineteen Lakhs Sixty Four Thousand Eight Hundred Seventy Five only)

5. I impose penalty of Rs. 5,000/- (Rupees Five Thousand only) in respect of SCN dtd 01.10.2010 & Rs. 5000/- (Rs. Five thousand only) in respect of SCN dtd. 31.03.2011; (total Rs. 10,000/-) upon M/s. Sriroz Consultants Pvt. Ltd., Ambike Chal, Near Gram Panchayat Office, Chikhali-Village, Pune District under Rule 27 of the Central Excise Rules, 2002.

2.1 Appellant are engaged in the manufacture of “Green Houses” classifiable under Chapter Heading 9406 of Central Excise Tariff Act, 1985 (hereinafter referred to as the ‘Tariff Act’).

2.2 Appellant is engaged in the activity of sale of green house material and construction of greenhouses as per the requirement of the farmers/customers. After obtaining orders from the farmers/customers, the appellant processed the raw materials viz. pipes/angles in their workshop by carrying out the processes of cutting, bending, drilling, welding, etc. so as to give them a form of parts/elements of greenhouse and thereafter cleared them to the customer’s site for the construction and erection of greenhouse. At the site, the structure of green house was assembled by jointing/welding the different parts/elements of greenhouse, and, thereafter the structure was covered with polythene or knitted fabrics, as per requirement of customers. Revenue was of the view that ‘greenhouses’ are put up as elements to be assembled on site, and appellant was manufacturer of greenhouses where they supply the raw material and carry out erection/ installation also.

2.3 Appellants are therefore required to pay Central Excise duty on the manufacture & clearance of their finished goods with effect from 28.02.2005.

2.4 Despite the fact that the appellant was engaged in manufacture of ‘Green House’, they failed to get themselves registered under Section 6 of the Central Excise Act, 1944 read with Rule 9 of the Central Excise Rules, 2002 and continued clearing ‘Green House without following procedures prescribed under ‘the Act’ and ‘the Rules’. Therefore, they contravened the following provisions:

i. Rule 6 of the Rules’ inasmuch as they failed to assess duty on the goods manufactured and cleared;

ii. Rule 4 read with Rule 8 of the ‘the Rules’ inasmuch as they failed to pay central excise duty on the said goods;

iii. Rule 11 of the Rules’ inasmuch as they cleared the goods without the cover of invoice as prescribed under the said rule:

iv. Rule 10 of ‘the Rules’ inasmuch as they failed to maintain true and proper account of the goods manufactured and cleared; v. Rule 12 of the Rules’ inasmuch as they failed to file periodical returns as required under the said rules.

2.5 Therefore show cause notices as detailed in table in para 1 were issued to the appellant. These show cause notices required the ‘Noticee to show cause to the adjudicating authority, as to why:

i. The activities carried out by them for various clients, during the period November 2009 to December 2010, should not be treated as amounting to manufacture of Green Houses falling under Chapter Heading No. 9406 of the First Schedule to the Central Excise Tariff Act, 1985;

ii. Central Excise duty amounting to Rs. 1,19,64,875/-(Rs. 37,96,355/-for the period from November 2009 to March 2010 + Rs. 84,68,520/- for the period from April 2010 to December 2010) should not be demanded and recovered from them under the provisions of Section 11A(1) of the Central Excise Act, 1944;

iii. Interest on the above Excise duty, should not be charged and recovered from them under Section 11AB of the Central Excise Act, 1944;

iv. Penalty should not be imposed upon them under the provisions of Rule 25(1)(a) and 25(1)(c) of the Central Excise Rules, 2002; and

v. Penalty should not be imposed upon them under Rule 27 of the Central Excise Rules, 2002 for not obtaining Registration under Section 6 of the Central Excise Act, 1944 read with Rule 9 of the Central Excise Rules, 2002.

2.6 The first two show cause notices covering the period from February 2005 to October 2009 were adjudicated by the Joint Commissioner vide his order referred in order of Commissioner (Appeal) referred in para 1.2 above, holding as follows:

a) I confirm and order to recover the total Central Excise duty amounting to Rs 57,87,905/- (Rupees Fifty Seven Lakhs Eighty Seven Thousand Nine Hundred and Five only (Cenvat duty Rs 56,27,392+ Ed. Cess Rs 1,12,549/- + SHE Cess Rs 47,964/-) under the provisions of Section 11 A (2) of the Central Excise Act, 1944 from M/s Siroj Constructions Pvt Limited 227/228, 2nd Floor, B wing Kohinoor Arcade Nigdi Pune 44.

b) I order to recover interest at the appropriate rate on the aforesaid determined duty amount from M/s Siroj Constructions Pvt Limited 227/228, 2^nd Floor, B wing Kohinoor Arcade Nigdi Pune 44, under the provisions of Section 11 AB of the Central Excise Act, 1944.

c) I impose penalty of Rs 5,00,000/- (Rupees Five Lakhs only) under the provisions of Rule 25 of the Central excise Rules, 2002 upon M/s Siroj Constructions Pvt Limited 227/228, 2^nd Floor, B wing Kohinoor Arcade Nigdi Pune 44

2.6 Against this order of the Joint Commissioner appellants preferred the appeal before Commissioner (Appeal) which was dismissed by the Commissioner (Appeal) for non compliance with order for pre-deposit made in terms of section 35 F of Central Excise Act, 1944. Appellants appealed to tribunal, and tribunal has vide Order No A/378/12/EB/C-II dated 27.03.2012 remanded the matter back to Commissioner (Appeal) for decision on merits.

2.7 In the mean time other two show cause notices covering the period from November 2009 to December 2010 were adjudicated by the Commissioner as per impugned order referred in para 1.3. and Aggrieved appellants have filed this appeal.

2.8 In the remand proceedings the appeals filed by the appellant were decided by the Commissioner (Appeal) as per the impugned order in para 1.2. Aggrieved appellant have filed this appeal.

3.1 We have heard Shri Rajesh Ostwal and Shri Saurabh Bhise, Advocates for the appellant and Shri Deepak Bhilegonkar, Additional Commissioner, Authorized representative for the revenue.

3.2 Arguing for the appellant learned counsel submits:

> The impugned Order-in-Original is incorrect in law as well as in facts. The impugned order is a non-speaking order as the adjudicating authority has not given findings on all the submissions made by the appellants.

> The entire proceedings are based on assumptions and presumptions and the duty liability has been calculated solely on the basis of sales amount, as shown in balance sheet after deducting amount of second sale and resale of materials without verifying the relevant documents such as invoices, works orders etc.

> In some cases only trading has been done by the appellants on which Central Excise duty cannot be demanded.

> The appellants are not engaged in manufacture of “Greenhouses”. The materials namely pipes, nuts, bolts etc. supplied by the appellants, are not parts/elements of greenhousel poly house. The said goods are not even bought together by the appellants. In many cases, the appellants only undertake erection work and the material are supplied by their customers. Therefore, it is incorrect to suggest and hold that the appellants have manufactured pre fabricated buildings. Even the Department admits that, the bought out items are delivered to the customer’s site directly.

> The activity of cutting, bending etc does not amount to manufacture of parts of greenhouse/polyhouse.

• • Executive Engineer, Fabrication Workshop MPSEB [2004 (178) ELT 440 (T.)] Affirmed by Supreme Court at 2015 (324) ELT A196 (S.C.)
  • Servo-Med Industries [2015 (319) ELT 578 (S.C.)]
  • Ajni Interiors [2008 (230) ELT 562 (T.)] Affirmed by Supreme Court at 2016 (339) ELT A220 (S.C.)
  • Elecon Engineers [2005 (190) ELT 195 (T.)] Affirmed by Supreme Court at 2012 (277) ELT A84 (S.C.)
  • EPC Irrigation Ltd. Vs. CCE 2002 (139) ELT 84 (T.) Affirmed by Supreme Court at 2010 (254) ELT A99 (S.C.)
  • Faridabad Iron & Steel Traders Association Vs. Union of India 2004 (178) ELT 1099 (T.) Affirmed by Supreme Court at 2005 (181) ELT A68 (S.C.)
  • Crane Betel Nut Powder Works [2007 (210) ELT 171 (S.C.)]
  • Deepak Galvanising &Engg. Indu. P. Ltd. 2008 (228) ELT 40 (T.) Affirmed by Andhra Pradesh High Court at 2015 (317) ELT A160 (A.P.) and 2015 (315) ELT A90 (A.P.)
  • Ramachandra Rao 2008-TIOL-1653-CESTAT-BANG
  • Castings (India) Inc. 2016 (342) ELT 343 (Jhar.)

> The reliance placed on Note 4 to Chapter 94 is totally misconceived, out of context and misplaced. Chapter Note 4 to Chapter 94 of the Tariff has no application to facts of the present case. In any case, materials cleared by the appellants cannot qualify as prefabricated buildings.

> Burden to prove activity amounts to manufacture always on the Revenue. Mere specification in tariff entry not enough to hold that item was manufactured.

• • Grasim Industries [2011 (273) ELT 10 (S.C.)]
  • Markfed Vanaspati & Allied Indus. [2003 (153) ELT 491 (S.C.)]
  • Castings (India) Inc. – 2016 (342) ELT 343 (Jhar.)

> The activity of purchase and sale of materials to the customers is nothing but trading in materials. In absence of any manufacturing activity, there can be no question of demanding Excise Duty. The appellants place reliance on the decision of the Apex Court, in the case of UOI VS Delhi Cloth and General Mills Co. Ltd as reported in 1977(1) ELT (J199) (SC)

> The materials cleared by the appellants does not qualify as pre-fabricated building covered under CETH 9406 since these are not elements presented together, for assembly on site having essential characteristic of pre-fabricated buildings,

> The polyhouse fabricated at the customer’s site is an immovable property excisable and hence not dutiable. Without prejudice, greenhouse comes into existence at farmers’ site as an immovable property and hence, not excisable.

• • Triveni Engineering & Indus. Ltd. [2000 (120) ELT 273 (S.C.)]
  • Shapoorji Pallonji & Co. [2005 (192) ELT 92 (Bom.)]
  • Virdi Brothers 2007 (207) ELT 321 (S.C.)
  • Larsen & Toubro Ltd. [2009 (243) ELT 662 (Bom.)]
  • Jeetex Engineering Ltd. [2001 (130) ELT 801 (T.)]
  • Silson India Pvt. Ltd. [2005 (194) ELT 37 (T.)]
  • Jupiter Enterprises [2014 (314) ELT 301 (T.)]

> In case, if the activity amounts to manufacture, then the appellants are eligible for credit on the inputs.

• • Siddhartha Tubes Ltd. [2006 (193) ELT 3 (S.C.)]
  • CCE Vs. Mahavir Aluminium Ltd. [2007 (212) ELT 3 (S.C.) ]

> While computing the differential duty demand in the show cause notices, Respondent incorrectly included labour charges, Value Added Tax, export turnover on which excise duty cannot be levied in the present case.

> benefit of cum-duty benefit must be granted to the appellants as the appellants have not recovered any excise duty from the farmers. Therefore, sale price of the materials should be treated as cum-duty. Kindly refer:

• • Meghdoot Gramoudyog Sewa Sansthan [2014 (312) ELT 699 (T.)]
  • Hi-Line Pens Ltd. [2017 (5) GSTL 423 (T.)]
  • Samyu Glass Pvt. Ltd. [2017 (6) GSTL 330 (T.)]

> In the instant case, extended period of limitation cannot be invoked as mere failure to declare, without intention to evade payment of duty, does not amount to suppression of facts. The appellants were under bonafide belief that, no duty is leviable on the activity carried out by them.

> Penalty is not imposable on the appellants, as they are not engaged in any activity amounting to manufacture and therefore question of obtaining registration does not arise.

Interest is not recoverable from the appellants, as it is a settled principle of law that, in cases where the original demand is unsustainable, interest cannot be levied.

3.3 Arguing for the revenue learned authorized representative submits:

> In instant case all supply was in nature of sale of pipes, poly films, bolts nuts, locking wires etc. to be shaped by Appellant as elements of prefabricated Greenhouse/Building. All transactions in various forms are between Appellants alone and his various clients. It is admitted facts by Appellant that they also carry out various processes or fabrication in form of cutting, bending and drilling etc. on these materials (herein after also called as said process) specifically pipes and tubes in their warehouse/premises for making specific sets/elements of Greenhouse/Poly-house for installation at farm site. It may be emphasized that before transporting these supplied and processed elements to his various clients’ farm for ultimate installation/erection as greenhouse these elements are ready to be used as pre-fabricated structure.

> The above said nature of supply and activity is squarely covered in case of Jain irrigation Systems Ltd vs Commissioner of Central Excise and Service Tax, Alwar (2018 (14) G.S.T.L. 286 (Tri. – Del.)).

> From the records of this case it is also verifiable that the appellants are procuring raw material such as pipes, nuts, bolts, Poly sheets etc. from markets and are carrying out said processes such as cutting, bending, drilling etc. on certain procured items, so as to give proper shape, size and drilling hole for creating a set of elements along with certain other bought items for installation of greenhouse/poly house at farm site. As stated above also, the MD of the company has admitted that after processing the certain bought out items like pipe and tubes they are cleared along with some other bought out items to the customer’s site for erection of greenhouse/polyhouse. In other words, the polyhouse/green house is put up and dispatched from manufacturing premises as set of elements to be assembled at site and also major elements such as gloss/polyfilm sheets which are required for use in the ceiling as well as wall of the green houses. It so happens value of bought out items is much more than that of the goods fabricated within the factory.

> The learned adjudicating authority has arrived at his conclusions on the basis of the invoices of various transactions submitted by the appellants and on the basis of the statement given by the MD of the company. MD in his statement stated that It is apparent that the claims of the appellants that they are just purchasing materials and selling the same & that they merely collect bought out duty paid items and supply them does not stand scrutiny.

> It is further confirmed from perusal of copies of sample purchase orders which were handed over by the Appellant during the course of adjudication proceedings; they themselves have admitted that they undertake cutting and bending of the Pipes & Tubes which are then supplied by them. They also further supply Polythene, Polyfilm, Curtain Rings, Pulley and Locking Wire as evidenced by said documents.

> For the sake of repetition it is reiterated that mere cutting, bending etc. of the pipes, sheets etc. would not amount to manufacture, however, that cutting of the materials to specific dimensions and supply of pre-defined quantity of such various components for assembly at customers site, would amount to manufacture since a new and distinct product emerges out of such assembling of the components. Commissioner (A) has accordingly concluded that goods leaving workshop/premise of the appellant are nothing but elements of a “Greenhouse”.

4.1 We have considered the impugned order along with the submissions made in appeal and during the course of arguments

4.2 Commissioner has in the impugned order held as follows:

“21. The synopsized contentions as per the show cause notices are:

(i) The ‘Noticee’ was engaged in the activity of sale of green house material and construction of greenhouses as per the requirement of the farmers/customers.

(ii) After obtaining orders from the farmers/customers, the ‘Noticee’ processed the raw materials viz. pipes/angles in their workshop by carrying out the processes of cutting, bending, drilling, welding, so as to give them a form of parts ! elements of greenhouse and thereafter cleared them to the customer’s site for the construction and erection of greenhouse.

(iii) At the site, the structure of green house was assembled by jointing/welding the different parts/elements of greenhouse, and, thereafter the structure was covered with polythene or knitted fabrics, as per requirement of customers.

(iv) Hence, it was apparent that ‘greenhouses’ are put up as elements to be assembled on site.

(v) Thus, the ‘Noticee’ was the manufacturer of greenhouses where they supply the raw material and carry out erection/installation also. Hence, their entire activity was nothing but manufacture of ‘greenhouses’ classifiable under Tariff item No. 94060019 and consequently were required to pay Central Excise duty on the manufacture & clearance of their finished goods with effect from 28.02.2005.

22. On the other hand the ‘Noticee’ contends:

(i) They were not conducting any manufacturing activity and that they do not have any manufacturing activity at their Chikali store / godown.

(ii) They did cutting and bending of the Pipes & Tubes inside the store and dispatched the same to the Purchaser’s address.

(iii) In addition to this activity they were involved in “TRADING” also and they were trading pipes of various sizes, and, other materials of various kinds from there.

(iv) Their activity was to supply the pipes/tubes as per the Orders placed by the Customers who were generally farmers.

(v) Green House was not only poly structure but it had so many other parts / components, Soil and various Equipments for maintaining the required environment of the plant / Crop

(vi) Green House has a specific entry under CH 9406 of the First Schedule to the CETA, 1985 w.e.f. 1.3.2005. The green house is covered under the generic heading “Prefabricated Buildings”. Theirs was not the prefabricated buildings, and hence they were not liable for taking the Registration and paying the duty thereon. Mere entry in the Tariff did not make any goods excisable. They were not manufacturing any type of prefabricated buildings falling under CH 9406 of CET. Similarly they did not manufacture “GREEN HOUSE” or any HOUSE. Therefore they were not covered by the both the entries viz. “prefabricated buildings” or “Green House”. Their items sold to the Customers were not the item which would be covered under “Prefabricated Buildings” or “Green House”. As per the Explanatory Chapter Note 4, of the CH-94, it was very clear that their goods being traded goods were not fabricated buildings. There was no word Green House in the category of Pre fabricated Buildings. All others including housings/workplace shops, sheds and buildings were only covered. The pipes / tubes were not covered.

(vii) Yes, they were engaged with the activity of sale of the poly houses not green houses materials. The major items such as Computer, Huinidifier, Temperature Controller Composter, all these big items, which were essential and formed the parts of green house were never sold / traded from their Company. They dealt with the pipes and Tubes and used to cut the pipes / tubes as per the demand of the Customers.

(viii) According to them this activity was not falling / covered under CHS 94060019 of the First Schedule and the definition of Section 2(f) of the Central Excise. Similarly it was not as per the entry specified vide CHS 9406 of C.E.T. 1985. Taxable event under Section 3 of the CEA, 1944 for levy of excise duty was manufacture and in the absence of any manufacturing activity on their part, there was no question of demanding excise duty. Also mere collection of bought out items and the activity of cutting, drillina, pressing, etc did not amount to manufacture,

(1x) The structures fabricated at the customers site was an immovable property and hence was not excisable.

(x) They relied upon a number of judgments as indicated in brief facts above.

(xi) They have also relied upon the C.B.E.C’s Circular / Order No. 58/1/2002-CX dated 15.1.2002 issued through the File No. 154/20/99- CX-4 and the letter issued from the Chief Commissioner’s Office under their F. No. IV/16 16/CCO/PZ/10 dated 6.10.2010, and stated that since they were only trading the pipes & tubes to the Customers their activity would not be covered under Service Tax as well as under Central Excise.

ix. The entire proceedings were vitiated as the revenue had not bothered to VISIT the shop / godown of the ‘Noticee’. The work orders placed by the customers, invoice raised thereof, sale tax payment details etc. had not been verified and scrutinized before the issuance of SCN. The Service Tax paid by them was also not taken into consideration. The duty liability was calculated solely on the basis of sales amount furnished by them which was impermissible in law. The process by which such products are obtained was amounting to manufacture in terms of Section 2(f) of the Act and that the product which had emerged was marketable, was not established

23. in this regard I find that: A. Section 2(f) of the Central Excise Act, 1944 defines manufacture as “manufacture” includes any process, –

(i) incidental or ancillary to the completion of a manufactured product;

(ii) which is specified in relation to any goods in the section or Chapter notes of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture; or

(ill) ……………………………….. and the word “manufacturer” shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account;

24. I further find that C.B.E.C’s vide a section 37B Order No. 58/1/2002 -CX dated 15.01.2002 on the subject “Excisability of plant and machinery assembled at site”, inter alia, for the purpose of uniformity in connection with classification of goods erected and installed at site, has clarified as under:

(i) For goods manufactured at site to be dutiable they should have a new identity, character and use, distinct from the inputs/components that have gone into its production. Further, such resultant goods should be specified in the Central Excise Tariff as excisable goods besides being marketable i,e, they can be taken to the market and sold ( even if they are not actually sold). The goods should not be immovable,

(ii) Where processing of inputs results in a new product with a distinct commercial name, identity and use ( prior to such product being assimilated in a structure which would render them as a part of immovable property ), excise duty would be chargeable on such goods immediately upon their change of identity and prior to their assimilation in the structure or other immovable property.

(iii) Where change of identity takes place in the course of construction or erection of a structure which is an immovable property, then there would be no manufacture of “goods” involved and no levy of excise duty.

(iv) Integrated plants/machines, as a whole, may or may not be goods! For example, plants for transportation of material (such as handling plants) are actually a system or a net-work of machines. The system comes into being upon assembly of its component. In such a situation there is no manufacture of “goods” as it is only a case of assembly of manufactured goods into a system. This cannot be compared to a fabrication where a group of machines themselves may be combined to constitute a new machine which has its own identity/marketability and is dutiable (e.g. a paper making machine assembled at site and fixed to the earth only for the purpose of ensuring vibration free movement).

(V) 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 moveable and will, therefore, not be excisable goods.

(vi) If any goods installed at site (example paper making machine) are capable of being sold or shifted as such after removal from the base and without dismantling into its components/parts, the goods would be considered to be movable and thus excisable. The mere fact that the goods, though being capable of being sold or shifted without dismantling, are actually dismantled into their components/parts for ease of transportation etc., they will not cease to be dutiable merely because they are transported in dismantled condition. Rule2(a) of the Rules for the Interpretation of Central Excise Tariff will be attracted as the guiding factor is capability of being marketed in the original form and not whether it is actually dismantled or not, into its components. Each case will therefore have to be decided keeping in view the facts and circumstances, particularly whether it is practically possible (considering the size and nature of the goods, the existence of appropriate transport by air, water, land for such size, capability of goods to move on self propulsion -ships- etc.) to remove and sell the goods as they are, without dismantling into their components. If the goods are incapable of being sold, shifted and marketed without first being dismantled into component parts, the goods would be considered as immovable and therefore not excisable to duty.

(vii) When the final product is considered as immovable and hence not excisable goods, the same product in CKD or unassembled form will also not be dutiable as a whole by applying Rule 2(a) of the Rules of Interpretation of the Central Excise Tariff. However, components, inputs and parts which are specified excisable products will remain dutiable as such identifiable goods at the time of their clearance from the factory or warehouse.

(viii) The intention of the party is also a factor to be taken into consideration to ascertain whether the embedment of a machinery in the earth was to be temporary or permanent. This, in case of doubt, may help determine whether the goods are moveable or immovable.

25. I find that Tariff Item No. 9406 in the Central Excise Tariff reads as under:

15 And the Chapter Note 4 to Chapter 94 reads: –

For the purposes of heading 9406, the expression “prefabricated buildings” means buildings which are finished in the factory or put up as elements, presented together, to be assembled on site, such as housing or worksite accommodation, offices, schools, shops, sheds, garages or similar buildings.

26. I find that the ‘Noticee’, has contended that the activity carried out by them is restricted to:

(i) Cutting and bending of the Pipes & Tubes inside the store and dispatched.

(ii) Supply the pipes/tubes as per the Orders placed by the Customers who were generally farmers.

(iii) Engaged with the activity of sale of the poly houses materials,

27. I find however that the perusal of the copies of sample Purchase Orders for supply of material which were handed over during the personal hearing indicates, to my view, that it simply cannot be case of trading of the said materials. The “Noticee’ has themselves agreed that they do undertake cutting and bending of the Pipes & Tubes which are then supplied by them. They also further supply Polythene, Polyfilm, Curtain Rings, Pulley and Locking Wire as evidenced by these documents. Further, I also find that some of these documents contain description of the work to be undertaken by the ‘Noticee’ like “Supply of material for your Agriculture shade (Nursery)” and “1. Marking & layout of the plots 2. Civil foundations on site me with your material, 3. Assembly of nursery shade, 4. Fixing of polythene & shadenet on the shade”.

28. It is therefore apparent that the claims by the ‘Noticee’ that (i) they just Cut and bend Pipes & Tubes, that (ii) they are just purchasing materials and selling the same, & that (iii) they merely collect bought out duty paid items and supply them does not stand scrutiny. The activity indicated on the documents as stated in sub para E above, clearly proves that it is for the assembly of shades in nurseries which are nothing but Green Houses which as indicated in the impugned show cause notices are structures made of pipes grounded to the civil foundation and covered with polythene cover, net, etc. to provide a controlled and more suitable environment for crops and that as per Harmonized System of Nomenclature (HSN), Heading No. 94.06 covers “Pre-fabricated buildings” of all materials which can be designed for a variety of uses, such as housing, worksite accommodation, offices, schools, shops, sheds, garages and green houses are generally presented in the form of:

–Complete building, fully assembled, ready for use; –Complete buildings, unassembled;

–Incomplete buildings, whether or not assembled, having the essential character of pre-fabricated buildings:

It cannot be a case for the Noticee that just because they call the structure a Poly House, it is not a Green House. In the circumstances, I have no doubt in arriving at the conclusions that the goods leaving the factory/workshop of the Noticee are nothing but the elements of a “Greenhouse” to be assembled at site and thus fall well within the ambit of Chapter Note 4 to Chapter 94 of the First Schedule to the Central Excise Tariff Act, 1985.

29. In arriving at this conclusion, I draw sustenance from the decision of the CESTAT, PRINCIPAL BENCH, NEW DELHI in MAHINDRA & MAHINDRA LTD. Versus C.C.E., AURANGABAD, CHANDIGARH, KANPUR & CHENNAI-2005 (190) E.L.T. 301 (Tri. – LB) wherein, inter alia, on the question of “Manufacture – Fabrication of iron/steel structures like roof frame of sheds or porta cabin at construction site or factory premises – In either case, fabrication amounts to manufacture as raw materials like angles, plates, tubes, etc. acquired a distinct shape to suit the structural design, though mere drilling of holes or cutting jobs in isolation may not by themselves amount to manufacture – Heading 73.08 of Central Excise Tariff – Sections 2(f) and 3 of Central Excise Act, 1944” it was held vide paras 10 & 12 that-In the making of an immovable structure or building are used a variety of movable. Raising iron and steel structures like sheds involves fabrication work and many of the articles used in raising the structure come into existence through fabrication as per the pre-determined design to be fitted into the structure that is to be raised. For example, roof frame may be fabricated for the roof structure of a shed. Such fabrication of frames may be done at the construction site or at some factory premises. The iron and steel frames e fabricated at the factory premises away from the site of construction would be brought to the site for their use in erecting the structure. The frames pre fabricated and brought at the site and frames fabricated the site of erection both are goods manufactured. There will be variety of parts of structures of iron and steel that can be fabricated either at the site or at some factory premises away from the site. 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 holes 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 the 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 as it is not “mere” drilling holes or cutting, but the activity is aimed at bringing about a distinct commodity. Thus, making of porta cabin from iron and steel angles with, roof framework i.e, trusses, doors, windows, ladders in it made by drilling holes and cutting the raw material, will be a movable structure having identity as a distinct marketable commodity. When the porta cabin is dismantled it nonetheless remains the manufactured products i.e. porta cabin dismantled or disassembled. The material such as angles, rods, shades, sections, plates, tubes, etc. of such designed structure in their pre-assembled or disassembled form are prepared for use in the said structure, namely porta cabin. One cannot, with any conviction or authority, say that these dismantled parts of the structures are raw material used in its original form and that mere cutting or drilling holes has made no difference. The items in the parenthesis of Heading 7308 described as excisable goods include roofs roofing framework, doors, windows and their frames, thresholds for doors, shutters, pillars, column, balustrades pillars, sheets of iron and steel, each one of these items has a complete distinct identity. The contractor undertaking the works contract for erecting a structure may not himself manufacture all such items used for structure. He may order the doors and windows to be made by a particular manufacturer and roof framework by the other, depending on the specialization and expertise of the manufacturer of different items. The contractor may supply designs and raw materials for various parts of structures and get the work done on job work basis. To save time and expenses he may get the fabrication done at the site of construction instead of getting it done at some distance in a factory. When the required parts are they will be fixed as per the designed structure and will continue to be movable object until made immovable by permanently fixing them in the designed immovable structure. To say that no parts of the structures came into existence as distinct commodities because ultimately they got permanently fixed into an immovable structure will run counter to the legislative intent to impose excise duty on such excisable goods at a stage when they have a separate identity as marketable goods anterior to their being permanently fixed in the immovable structure. The part of structures which were first fabricated on the ground and thereafter were used in the designed structure which was erected by permanently fixing them in such structures, all these had acquired their identity before they were so permanently fixed and as observed above, they are well known in the market as separate commodities. Their state of being movables, being parts of structures fabricated for the purpose of being used in the erection of a structure, came to an end only after they were permanently fixed in the structure. The liability to pay duty, that had arisen at the time when they were manufactured as parts of structures had however, crystallised, and it was possible to ascertain the same even after they got fixed by referring to the quantities of the raw material that went into making them for the purpose of ascertaining their value. Therefore, any enquiry into the raw material used was only for the purpose of ascertaining the value of the parts of the structures which were already fabricated at the site, and was not an enquiry for imposing excise duty on the raw material, i.e. members such as angles, plates, etc. It was an enquiry to ascertain the value of the parts of the structures which were fabricated such as trusses, ladders, doors, windows, columns, beams, rafters, glazing frames, crane girders, hoppers, bracings, gable runners, platform, hand-rails, gratings rails, walk-ways, stairs, gutter support, ladders, railings etc. As per the contractual terms and the relevant statements which clearly indicate that the parts of the structure were first fabricated on the ground and thereafter they were used for erecting the designed structures. All these parts of structures which were fabricated were distinct marketable commodities the existence of which was brought about by the process of manufacture as defined in Section 2(f) of the Act. These were not simply members such as angles, etc., with holes or cut to a different size, but the process was undertaken to bring them into a particular commercially known shapes and assemble them for that purpose as per the designs and having fabricated them, to use them for permanently fixing them in the structures which were to be erected as per the design under the works contracts.

30. Having found that the activity undertaken by the ‘Noticee’ amounts to manufacture of Green Houses falling under Chapter Heading No. 9406 of the First Schedule to the Central Excise Tariff Act, 1985, I also further find that these Green Houses fulfill the conditions of excisability prescribed vide C.B.E.C’s 37B Order No. 58/1/2002 – CX dated 15.01.2002.

31. Viewed in the background of the aforesaid findings, I hold that nothing new will come to fore even if the request of the ‘Noticee’ that departmental officers may be deputed to visit their premises to ascertain the exact nature of their activity is considered and precisely for this reason I reject the request.

32. I also find that the letter issued from the Chief Commissioner’s Office!! under their F. No. IV/16-16/CCO/PZ/10 dated 06.10.2010, relied upon by the ‘Noticee’, inter alia, had very clearly clarified that Poly House cannot be distinguished from Green House by referring the previous as mere iron structure and the later as system, comprising of equipment and facility of providing desired environment for growth of plant. Poly House is a prefabricated building for use as green house and the activity taken up by the poly house / green manufacturers precisely answers to the definition of “Green House” as stipulated under Ch. 94.06 of CETA, 1985 read with corresponding heading of HSN. As such, the activity taken up by the poly house / green manufacturers attracts Central Excise Duty as specified under Ch. 9406 00 11 of CETA 1985. This letter further went on to state that prefabrication of “poly house” which is, at times, cleared in partially assembled condition or cut to size (beams, joints, etc) attracts Central Excise duty. Post erection status of the goods is not excisable, as whole structure being fixed to earth.

33. I further find that in view of the aforesaid findings, the culpability of the ‘Noticee’ regarding the their failure to get themselves registered under Section 6 of the Central Excise Act, 1944 read with Rule 9 of the Central Excise Rules, 2002 in spite of being engaged in manufacture of Green House’, and their clearance without following procedures prescribed under the Act’ and the Rules clearly stands confirmed, more so, since the noticee continued his behavior even after the clarification on the issue advanced to them, which apparently was in fact sought by them. Instead of following the law they have sought to adduce a catena of judgments as relied upon which are clearly unfounded in the context and are thus of no help to them.

34. I therefore hold that the activities carried out by the ‘Noticee’, during the period November 2009 to December 2010, amount to manufacture of Green Houses falling under Chapter Heading No. 9406 of the First Schedule to the Central Excise Tariff Act, 1985. Consequently, the Central Excise duty amounting to Rs. 1,19,64,875/- (Rs. 37,96,355/-for the period from November 2009 to March 2010 + Rs. 84,68,520/- for the period from April 2010 to December 2010) is therefore liable to be confirmed in terms of show cause notices bearing Nos. 94/P III/PR I/JC/ADJ/2010 dated 01.10.2010 and 133/P-III/R-PR I/COMMR/ADJ/2010 dated 31.03.2011 respectively, under the provisions of section 11A(1) of the Central Excise Act, 1944. I further hold that Interest on this amount of Central Excise duty is liable to be recovered under Section 11AB of the Central Excise Act, 1944. Since it has been fairly and clearly established that the activities of the ‘Noticee’ amount to manufacture and on which the applicable Central Excise duty has not been discharged by them with an intention to evade payment of duty by not taking registration under Section 6 of the Central Excise Act, 1944 read with Rule 9 of the Central Excise Rules, 2002. I further hold that the noticee is liable to pay penalty in terms of Rules 25(1)(a) and 25(1)(c) of the Central Excise Rules, 2002 and also in terms of Rule 27 of the Central Excise Rules, 2002.”

4.3 From the facts as stated in the above order in original, and the findings recorded the entire issue involved in the matter that needs to be considered is whether the matter in the present case squarely covered by the decision of the tribunal in case of Jain Irrigation System [2018 (14) GSTL 286 (T)]. In the said case tribunal has held as follows:

“2. Brief facts of the case are that the appellant-assessee is engaged in the manufacture of various types of pipes and irrigation system. The Department acted on an intelligence that the appellant was evading Central Excise duty in the manufacture and clearance of “green houses”, visited the factory premises on 11-12-2014 and carried out verification of the record. After scrutiny of the record resumed during the visit, and recording the statements of various personnel including Sh. Vijay Singhvi, Factory Manager and Authorised Signatory and Sh. D.I. Desarda, Sr. Vice President (Taxation), Department issued show cause notice dated 15-11-2016. After the due process of adjudication the impugned order came to be passed in which the adjudicating authority held that the appellant has manufactured and supplied “green houses” in ready to assemble condition to Rajasthan Horticulture Development Society, Directorate of Horticulture, Jaipur. The Central Excise duty on such goods to the extent of Rs. 3,20,99,394/- was demanded along with interest and penalty of equal amount. Penalty was also imposed to the extent of Rs. 50 lakhs on Sh. D.I. Desarda, Sr. V.P. (Taxation) and Rs. 10 lakhs on Sh. Vijay Singhvi, Factory Manager and A.S. under Rule 26 of the Central Excise Rules, 2002. Aggrieved by the impugned order, appeals have been filed by the assessee as well as the other company employees who have been penalised.

3. ………….

4. ……………

6. We have heard very elaborately the submissions from both sides and have carefully perused the appeal record. The appellant has received orders from the Government of Rajasthan for supply of green houses. Such green house are to be supplied to specific size for which orders have been placed. The appellant is required to assemble such green house at the specific site and handover the same. In the appellant’s factory some of the components required for such green house are fabricated. Such components include pipes, girders, columns, etc. The rest of the items required for putting together in green houses are procured from outside. These include minor components such as nuts, bolts, etc., and also major elements such as glass/polyfilm sheets which are required for use in the ceiling as well as wall of the green houses. It so happens that the value of bought out items are much more than that of the goods fabricated within the factory. Before proceeding further we reproduced below the competing tariff headings :

Tariff item			Description of goods
(1)			(2)
8424			Mechanical appliances (whether or not hand-operated) for projecting, dispersing or spraying liquids or powders; fire extinguishers, whether or not charged; spray guns and similar appliances; steam or sand blasting machines and similar jet projecting machines
8424	10	00	– Fire extinguishers, whether or not charged…
8424	20	00	– Spray guns and similar appliances…..
8424	30	00	– Steam or sand blasting machines and similar jet projecting machines…..
			– Other appliances :
8424	81	00	— Agricultural or horticulture………….
8424	89		— Other :
8424	89	19	— Painting equipment, including electrostatic phosphating and powder coating equipment
8424	89	20	— Industrial bellows….
8424	89	90	— Other………………………….
8424	90	00	– Parts……………………………
9406			Pre-fabricated buildings
9406	00		– pre-fabricated buildings
			26 E/630/2012,85046/2013 — Green houses :
9406	00	11	— Green house – in ready to assemble sets
9406	00	19	— Other……
			—- Other……
9406	00	91	— Pre-fabricated housing material….. .
9406	00	92	– Pre-fabricated construction for cold storage
9406	00	93	– Silos for storing ensilage………. .
9406	00	99	– Other……….

The appellant has claimed the benefit of Notification No. 12/2012, dated 17-3-2012 (Sl. No. 242). Such benefit is available for parts of mechanical appliances of a kind used in agriculture or horticulture. It is easily seen that the goods fabricated in the factory which are in the nature of pipes, girders, etc., do not merit classification under [Heading] 8424. Consequently, such claim of the appellant is without merit. However, the more significant issue is regarding whether the appellant has cleared green houses in ready to assemble form.

7. The Heading 9406 of the Central Excise Tariff covers pre­fabricated buildings. In this connection, Note 4 to Chapter 94 is reproduced below for ready reference :

“Note 4 of the Chapter 94 of CETA 1985, provides that –

“4. For the purposes of heading 9406, the expression “pre­fabricated buildings” means buildings which are finished in the factory or put up as elements, presented together, to be assembled on site, such as housing or worksite accommodation, offices, schools, shops, sheds, garages or similar buildings.”

8. The HSN Explanatory Notes to 9406 has provided guidance as to the scope of pre-fabricated buildings. For ready reference the same is reproduced below :

“This heading covers pre-fabricated buildings, also known as “industrialised buildings of all materials.

These buildings, which can be designed for a variety of uses, such as housing, worksite accommodation, offices, schools, shops, sheds, garages and greenhouses, are generally presented in the form of :

– complete buildings, fully assembled, ready for use;

– complete buildings, unassembled;

– incomplete buildings, whether or not assembled, having the essential character of pre-fabricated buildings.

In the case of buildings presented unassembled, the necessary elements may be presented partially assembled (for example, walls, trusses) or cut to size (beams, joists, in particular) or, in some cases, in indeterminate or random lengths for cutting on the site (sills, insulation, etc.)

Presented separately, parts of buildings and equipment, whether or not identifiable as intended for these buildings, are excluded from the heading and are in all cases classified in their own appropriate headings”.

(Emphasis supplied)

9. To decide the correct nature of the goods supplied by the appellant, it is necessary to examine whether what has been supplied is pre-fabricated buildings in ready to assemble sets or only components of the pre-fabricated buildings.

10. The claim of the appellant before the adjudicating authority as well as in appeal is that only some of the components of the green houses has been fabricated in the appellant’s factory and cleared to the depot. Hence, other bought out items are received by the appellant in their depots. Finally, it is claimed that all the components are assembled at site where it become immovable property. Hence, it has been submitted that the appellant, at the most should be required to pay excise duty only on the components fabricated within the factory.

11. The investigation undertaken by the Department has established that the facts are different. Sh. V. Singhvi, Factory Manager and A.S. has admitted in his statement that all components required for the green houses are transported to the designated site in ready to assemble conditions. The Department has also established that the appellant has deliberately issued invoices for supply in two parts – one for the items fabricated in their factory and the other for the bought out items (commercial invoice).

12. The tariff entry 9406 00 11 covers the green houses in ready to assemble sets. It stands established that the supply which has been made is for green houses in ready to assemble condition. Such goods are specifically covered under the above tariff heading.

13. After careful examination of the entire case, we are convinced that the goods cleared by the appellant are classifiable under TI 9406 00 11 as green houses in ready to assemble sets and liable for payment of excise duty during the period under dispute. Such Central Excise duty is required to be paid on the entire value of the green houses i.e. including the value of both the components fabricated in the factory as well as those procured from outside. However, the appellant will be entitled to the benefit of Cenvat credit on goods procured from outside subject to verification of such entitlement on the basis of documents to be produced by the appellant. The Adjudicating Authority will allow such Cenvat credit after verification of documents which will be produced by the appellant, as per law.

14. It is also fairly well settled that the total consideration received is to be considered as cum-duty price and such benefit will be entitled to the appellant.

15. In view of the above discussions, demand for Central Excise duty under [Heading] 9406 made in the impugned order is upheld but with the modification that the appellant will be entitled to Cenvat credit subject to the verification of documents. They will also be entitled to the cum-duty price benefit which will be worked out and extended by the adjudicating authority.”

4.5 The order of tribunal in case of Jain Irrigation was further rectified, by the order reported at 2019-TIOL-271-CESTAT-Del, in terms of Section 35 C (2) of the Central Excise Act, 1944. By the said order following has been held:

“2. The Ld. Counsel for the appellant/applicant states that they had taken the ground before this Tribunal of limitation, that the extended period of limitation is not applicable. We find that such ground has been recorded by this Tribunal in para 4 (vi) of the order. However, we find that in the operative part of the order there is no discussion on the applicability of the extended period, neither there is any categorical rejection of such ground. We further find that the Tribunal have recorded that there is no malfide on the part of the appellants and is a simple case of classification dispute as it is evident from the finding recorded by this Tribunal. Further this Tribunal have also allowed the Cenvat Credit on the inputs/input services as applicable. Further directed that the appellant-company shall be entitled to cum duty benefit. In this view of the matter we are convinced that there is an error on the part of this Tribunal in not deciding the issue of limitation. Under the facts and circumstances we appreciate the error on record. Further considering the facts and circumstances and the rival .contentions we hold that the issue involved, as held by this Tribunal in the Final Order is simply of classification and/or interpretation. Accordingly, we hold that the extended period of limitation is not available to revenue and accordingly the demand shall be limited to normal period of limitation only.

3. Further we also find that there is no discussion with regard to penalty imposed on the appellant-company. In view of the facts and circumstances we allow this ground and hold that no penalty is imposable on company under Section 11AC of the Central Excise Act. The Ld. Counsel have relied on following case laws:-

a. For error on face of record, COMMISSIONER OF C. EX. & CUS., VALSADV/S ATUL LTD. 2016 (332) ELT 97 (Guj.) = 2016-TIOL-36-HC-AHM-CX.

6. It is well settled by series of decisions that a contention though taken but not decided by the Tribunal would give rise to the scope for rectification. Under the circumstances, the Tribunal was justified in entertaining contention which was raised by the assessee at the outset but not decided by the Tribunal while rendering its judgment on appeal. If that be so, the only question which remains to be decided is, whether while entertaining such a contention the Tribunal committed any legal error? Here also, we do not find any force in the contention of the Revenue. As asserted by the assessee and held by the Tribunal, the assessee had made ail necessary declarations and, clearances were made with concurrence of the Department. There was no misdeclaration or a willful misstatement with a view to avoiding duty. The invocation of extended period of limitation, therefore, was rightly held not permissible. Tax Appeal is therefore, dismissed.

b. For limitation-Ground not decided. On scope of doubt, interpretational issue- PADMINI PRODUCTS V/s COLLECTOR OF C. EX 1989 (43) E.L.T. 195 (S.C.) = 2002-TIOL-289-SC-CX .

c. No positive evidence of tax evasion, no deliberate act-COLLECTOR OF CENTRAL EXCISE V/s CHEMPHAR DRUGS & LINIMENTS 1989 (40) E.L.T. 276 (S.C.) = 2002-TIOL-266-SC-CX .

d. On personal penalty-where appellant is working as on employee, not having any independent existence, no motive can be attributed.-Z. U. ALVI v/s COMMISSIONER OF C. EX., BHOPAL, Bhopal. 2000 (117) E.L.T. 69 (Tribunal) = 2002-TIOL-281-CESTAT-DEL .

6. So far the other two appellants are concerned namely, Vijay Singhvi and D.I. Desarda who were the employees of the company and have been visited with penalty as noticed by Tribunal in Para 2 of the Final Order. However, we find that in the aforementioned final order, neither there is any discussion with respect to their appeals nor there is any express rejection of their appeals. Thus, we are satisfied that appeals of the two individuals need to be considered and decided, Upon hearing the parties and considering the findings of the Tribunal in the Final Order we find that there is no finding of any contumacious conduct against the said employees/applicants.

5. In this view of the matter we recall the Final Order with respect to these two appellants and further allow their appeals, setting aside the penalties imposed on them. Accordingly the appeals of Vijay Singhvi and D.I. Desarda stand allowed with consequential benefits.”

4.6 Thus we find that the order of tribunal as rectified by the order referred above has allowed the relief to the extent of setting aside the demand made by invoking the extended period of limitation, allowing the benefit of cum duty price and the CENVAT credit as admissible in respect of the goods on which the duty has been sought to be demanded. Orders also set aside the penalty imposed under Section 11 AC on the company and also the penalties imposed on the employees of the company. It is the submission of revenue that the issue is squarely covered by the said decision and if we have to hold that this order to be squarely applicable to the facts of present case these benefits as have been claimed by the appellants in the present case needs to be allowed.

4.7 From the perusal of the order of the tribunal in case of Jain Irrigation, it is evident that the said order has decided the issue of classification of the goods and has not decided the issue in respect of the manufacture. The order is totally silent on this aspect, which goes to the root of the matter i.e. whether the activities undertaken by the appellant would amount to manufacture or not. The issue of manufacture was not even argued before the tribunal in the that case and hence the order to that extent is sub silentio. Appellants have in the present case challenged the demand on the ground that activities undertaken by them do not amount to manufacture. In the case before us records suggest that the appellants are procuring raw material such as pipes, nuts, bolts, GI sheets etc. from outside and are carrying out processes such as cutting, bending, drilling, welding etc. so as to give proper shape to this raw material for installation of greenhouse/poly house. The MD of the company has informed that after processing the bought out items they are cleared along with some bought out items to the customer’s site for erection of greenhouse/ polyhouse/ agriculture shed. In other words, the polyhouse/ green house is put up as elements to be assembled at site. It is therefore apparent that the claims of the appellants that they are just purchasing materials and selling the same & that they merely collect bought out duty paid items and supply them is not correct in as much as these goods are thereafter assembled and installed at the customer site by the appellant to bring into existence the “greenhouse”. Commissioner has in para 27 and 28 of his order elaborately referred to the documents and records to arrive at the findings that the goods supplied were essentially complete set of components for erecting and installing the greenhouse.

4.8 Shri C M Sane, Managing Director of the Appellant, has in statements relied upon by the revenue stated as follows:

Relevant portion from statement dated 31.1.2008 of Mr. C. M. Sane is extracted below:

“Q1. Please explain the activities of your company

Ans. We buy raw materials like pipes, nuts, bolts, G.I. sheets, etc and sell them to various farmers, who intend to have polyhouse/ shade houses for their agricultural purposes. There are certain government jobs, where we provide services of erection and installation of greenhouses/shade houses, with raw material supplied.

Q 8. Are you aware that the item, “Greenhouse’ is classifiable under the chapter subheading 94060011 of the Central Excise Tariff Act, 1944?

Ans. I am aware that the item, ‘Greenhouse’ is classifiable under the chapter subheading 94060011 of the Central Excise Tariff Act, 1944. However, as per my opinion, we supply some of the elements of the structure used for agricultural purpose, which is known as polyhouse. In true sense, greenhouse can never be manufactured inside any factory/godown. These are independent parts cut and bent to the required size and sent to the site for erection purpose. On the site, after land development, the pit is excavated and the pipes are fixed with the help of concrete, on which the structure is erected uprightly. Some of the materials like polythene, aluminium sections, angles, etc. are used on site without any modification being carried on them. They are bought out items. Actually, a greenhouse comes into existence only after the setting up of irrigation system, bed preparations, fumigation and plantation, and it becomes an immovable property, which cannot be dismantled, shifted or sold as a commodity. Before these processes, it is only a protective shelter. The greenhouse cannot be dismantled without complete damage to the polythene cover, shade net, gutters and nuts/ bolts. Our contribution to the entire greenhouse is only 25 to 30%. Hence, we feel that our activity, which is restricted to mere cutting and bending of pipes, without any change in the basic characteristics and content of the material, does not amount to manufacture and what emerges is not an excisable product. In this connection, we shall be making a detailed submission to your office, explaining how our activity is not excisable.

Relevant portion from statement dated 14.5.2009 of Mr. C. M. Sane is extracted below:

“Q1. Please explain the method of dispatch of material from you to the customers and the pattern of invoicing to them.

Ans. The material dispatched to the customers is in the form of raw material procured by us. Most of the material is not processed. Out of around 20 items used for polyhouse, 15 items like polythene sheets, shade net, nuts, bolts, most of the pipes, wire etc. are sent as it is without any process. These items are already excise duty-paid and no CENVAT credit is availed by us. The processes we carry out are bending, drilling and cutting of few pipes, which do not in any way change the form, identity and content of the material. In many cases, the material is directly sent from the supplier’s end to the site, where minor processes like dripping, bending are done. In majority of the cases, the raw material is supplied to the customers without any process being carried out by us. Whenever we carry out assembly or erection of polyhouses, in those cases, we do carry out processes like bending, drilling, cutting, etc. at our end.

Q2. How do you carry out erection/assembly? What are the activities you carry out at sites for bringing polyhouses into existence? Do you have your own labourers?

Ans. In order to complete the contract of polyhouse, land is developed, excavation is done and civil foundations are made. Various pipes are kept upwards upon the foundation and assembly of other pipes is done with nuts and bolts. Then, the polythene and shade nets are locked on the structure. Then, the polyhouse comes into existence, and it becomes immovable property, which cannot be removed from the original location. Afterwards, the farmer himself carries out bed preparation, spreading of soil and chemicals, lays out irrigation systems and does plantation, and the Greenhouse comes into existence. In case of dismantling, the entire polyhouse will be damaged polythene and shade nets will be torn. The damaged structure will only fetch scrap value. We carry out erection/assembly only for Government establishments, where we supply the material and carry out the erection/assembly also. In other cases, we only supply material without any process.

Q8. Do you have anything more to say?

Ans. I want to reiterate that our activity is merely sale of raw material, which is second sale, which is out of Central Excise ambit. Some of the so-called processes do not fall under the definition of excisability. The polyhouse cannot be fabricated or made at our location and it comes into existence at the customers’ premises/land. The polyhouse is not a pre-fabricated building. It cannot be assembled or be in a ready to assemble state anywhere outside the customers’ premises. The smallest polyhouse measures 560 square meter, i.e. 6030 square feet. Such a structure cannot be assembled anywhere outside the agricultural land and needs to be assembled at the erection site only. Moreover, I feel the assembly and erection is a process of making the polyhouse ready and will not attract service tax.”

4.9 We also take note of the para 17 of the order in original No P1/JC/52/CEX/2010 dated 15.11.2010 issued by the Joint Commissioner, Central Excise Pune 1 Commissionerate, which has been upheld by the Commissioner (Appeal), wherein following has been observed:

“17. I find that the assessee have been issued separate show cause notices for relevant period, one for demanding Excise duty and another for demanding service tax. Issue for demand of Service tax on erection commissioning and installation services is already decided by the Additional Commissioner C.Ex. Pune I, vide OIL No. PI/ADC/Service Tax/08/10 dated 25.3.2010. I find that issue regarding Excise duty and Service tax has mixed up in the written submissions of the assessee. As the issue regarding service tax has already been decided by the Additional Commissioner, C.Ex., Pune I vide aforesaid OIO, I do not consider the arguments concerning the service tax, for the purpose of this case.”

4.10 The issue whether the activities undertaken by the appellants do amount to manufacture of Prefabricated building – Green House or not is a question of fact and needs to be ascertained from the facts available on the records. In the paper book filed along with the appeal, appellants have enclosed a number of purchase order and invoices which were in reference to the supply of raw material, and the material. In fact there are no purchase orders/ invoices for the supply of Green House. No clear cut findings have been rendered by any authority on this aspect. Further whether appellants are paying service tax in respect of the erection and commissioning activities undertaken at the site, is also not very clear. Joint commissioner has in para 17 of his order referred above has recorded the factum of issuance of notice demanding service tax and its adjudication. But do not records anything further. All these facts need to be ascertained and final view needs to be taken in the matter for ascertaining whether the activities undertaken by the appellant amounted to manufacture of prefabricated building – green house.

4.11 In the case of Srihari Greenhouse Pvt Ltd. Final Order No A/87817-87818/2018 dated 29.10.2018, Mumbai Bench has in similar set of facts observed as follows:

“4. Learned Chartered Accountant Shri Suresh Singh for the appellant has submitted that the assessee-appellant was procuring various raw materials, namely, GI pipes, GP sheets, aluminium sections, polythene sheets, shading nets, from various traders. In their workshop, process of cutting, bending, drilling and pressing of pipes as per required shapes and sizes were carried out, and thereafter, these pipes were transferred to the site of the customer where the Greenhouse/Polyhouse were erected and commissioned. He has contended that at the site, besides assembly of various parts of Greenhouse/Polyhouse, they also undertake laying down of foundation, fabrication, erection, polythene shed/net fitting, cutters of required length, etc. He has further contended that in some cases the customers provide the entire material and the assessee-appellant only supervise the work of erection and commissioning of the fabricated material at site. He has further contended that for the period 2006-2007 and 2007-08 the show cause notice was issued to them for recovery of service tax on the labour charges received towards erection and commissioning of Greenhouse/Polyhouse at various sites belonging to the customers. It is his contention that since their activity does not result into ‘manufacture’ of excisable goods viz. “Greenhouse”/ “Polyhouse” and whatever services rendered by them by way of erection and commissioning, applicable service tax was paid by them pursuant to the adjudication order, therefore, demanding duty again on the assembly of Greenhouse/Polyhouse at site considering that such activity amounts to “manufacture” would result into charging tax twice on the same activity/goods. He has fairly submitted that the adjudication order dated 25/10/2011 confirming the service tax liability was passed subsequent to the present impugned order.

5. Per contra, Learned Authorised Representative for Revenue has submitted that, though the appellant were engaged in the manufacture of greenhouse/poly house, but they failed to discharge appropriate excise duty on the same during the relevant period. The Learned Authorised Representative has further submitted that appellant used to split the total price/consideration into two invoices; in one invoice they used to reflect the value of the material and in the second invoice, the cost of labour for erection and commissioning of the materials fabricated in their factory and cleared to their site. It is his contention that both the invoices are raised simultaneously and mostly on the same day for clearance of Greenhouse/Polyhouse which attracts classification under Chapter sub-heading 9406 0019 of Central Excise Tariff Act, 1985 and definitely exigible to duty. Regarding service tax on erection and commissioning charges recovered from the customers, the Learned Authorised Representative for Revenue submits that it is not clear from the records whether the service tax is paid separately on the items procured by the customers of the assessee-appellant or it is the pre-fabricated items which were assembled at site by the appellant. To ascertain the said facts, he has no objection in remanding the matter to the adjudicating authority for scrutinizing of the same.

6. We find, the short issue in the present appeal for determination is, whether the assessee-appellant during the relevant period manufactured Greenhouse/Polyhouse which attracts classification under tariff item 9406 0019 of the Central Excise Tariff Act, 1985 and liable to duty accordingly. It is the contention of the Revenue that the assessee-appellant received raw material at their factory and after carrying out necessary processes on the raw materials brought out the Greenhouse/Polyhouse and cleared the same in knocked down condition to the site for assembly where ultimately the Greenhouse/Polyhouse were erected. The assessee-appellant, on the other hand, claimed that they have carried out only the job of erection and commissioning for which service tax has been discharged by them on the bought out materials, subjected to processes which does not amount to manufacture. Therefore, the allegation of the department that the greenhouse/poly house were assembled at site resulting into manufacture of excisable goods falling under chapter-sub-heading 9406 0019 of Central Excise Tariff Act, 1985 is unsustainable. From the records, we find that separate show cause notices were issued to the appellant, for the same period, demanding service tax on the activity of erection and commissioning of Greenhouse and Polyhouse at site and the same was confirmed on adjudication. The appellant has admitted and service tax discharged along with interest on the said activity of erection and commissioning of Greenhouse/Polyhouse at site. From the records it is not clear whether the service tax was paid on separate activities or it is a part of assembling of Greenhouse/ Polyhouse at site out of the fabricated item cleared from their factory. To ascertain the aforesaid position, thus it is prudent to remand the matter to the adjudicating authority. Consequently the impugned order is set aside and the matter is remanded to the adjudicating authority for denovo adjudication. Needles to say a fair opportunity of hearing be extended to the appellant-assessee. Since the main issue is remanded to the adjudicating authority the Revenue’s appeal on penalty also remanded to the adjudicating authority.”

4.12 In view of the above in our view the matter needs to be remanded back to the original authority to reconsider the issue of manufacture and for recording the findings.

5.1 The appeals are allowed by way of remand.

5.2 Since the matters are quite old original authority should in the remand proceedings adjudicate the matter within three months of receipt of this order, after allowing opportunity of hearing to the appellants.

(Order pronounced in the open court on 01.11.2022)