The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed excise duty demand and observed that the Activity of galvanizing is manufacture under the Central Excise and Tariff Act, 1985.
The appellant is in appeal against the impugned order, wherein the demand of Central Excise duty has been confirmed against the appellant on the presumption that the Service Tax activity undertaken by the appellant amounts to manufacture, therefore, they are liable to pay excise duty.
An investigation was conducted against the appellant for the period 2006-07 to 2011-2012 (upto December 2010) and on the basis of the investigation it was revealed that the activity of galvanizing by the appellant amounts to manufacture and they are not paying duty thereon and they are paying Service Tax. As the appellant is liable to pay duty on their manufactured goods by the act of galvanizing the same. In these set of facts, a show cause notice dated 21.04.2011 was issued to the appellant to demand duty on the activity of galvanizing.
The Counsel for the appellant appeared and submitted that in this case, the demand against the appellant is not sustainable as the facts which are not in dispute that the appellant is manufacturing structural items and paying duty thereon on their manufacture and for goods falling under chapter 73 the appellant has undertaken job-work under Notification No.214/86 dated 25.03.1986 and cleared the same to principal manufacturer, who paid duty thereon.
Further, the appellant undertook the activity of galvanizing the goods falling under chapter 72, and the appellant is paying Service Tax thereon. The appellant is also undertaking the activity of erection, commissioning and installation of towers etc. and paying Service Tax thereon.
A Two-Member Bench comprising observed that “We find that the activity of galvanizing of the items falling under chapter 72 amounts to manufacture was introduced w.e.f. 08.04.2011 through Chapter (V) of the Finance Act, 2011. 11. As during the impugned period, galvanization of the items falling under chapter 72 of the CETA did not amount to manufacture, in that circumstances, the appellant is not liable to pay duty on galvanizing activity of the goods falling under chapter 72 of the Tariff Act during the impugned period.”
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