JUDGMENT
P.G. Chacko, Member (J)
1. The appellants had, under an agreement dated 16-10-1986 entered into with M/s. Shri Someshwar Farmers’ Co-operative Spinning Mills Ltd. (in short, M/s. Someshwar),
agreed to execute the work of providing, fabricating, erecting and roofing or factory building” for M/s. Someshwar at Laxmeshwar in accordance with the drawings, specifications and bills of quantities prepared by the latter’s architects. They executed the work and raised bill dated 1-10-87 for an amount of Rs. 38,48,330.13 and received the payment. After investigative steps including scrutiny of the appellants’ records, recording of statements of representatives of the appellant-firm and M/s. Someshwar etc., the department issued show cause notice (SCN) dated 31-3-92 through the Additional Collector proposing to recover from the appellants an amount of Rs. 1,19,232/- as duty of excise on fabricated steel structures viz. purlins, trusses etc. (valued at Rs. 38,48,330/-) allegedly manufactured at the site of M/s. Someshwar and removed during 1987-88 without complying with CE requirements. The SCN alleged against the appellants ‘suppression of the manufacturing activity with intent to evade payment of duty’ and invoked the extended period of limitation prescribed under the proviso to Section 11A(1) of the Central Excises and Salt Act, 1944 (CESA) for demanding duty as above. It, further, proposed to impose penalties on the appellants and M/s. Someshwar respectively under Rules 173Q and 209A of the Central Excise Rules (CER) 1944. The SCN was contested by both the noticees. The Collector of CE who adjudicated the dispute confirmed the above demand of duty against the appellants and imposed on them a penalty of Rs. 2,500/-under Rule 173Q(1). The present appeal is against the Collector’s order.
2. Examined the records and heard both sides.
3. Shri B.L. Narasimhan, ld. Counsel for the appellants, raised a jurisdictional objection at the outset. According to him, the SCN ought to have been issued by the Collector himself in view of the Supreme Court’s ruling in CCE v. Oil and Natural Gas Commission [1998 (103) E.L.T. 3 (S.C)]. When queried with reference to the definition of ‘Collector’ under Rule 2 of the CER, 1944 (which rule at the material time had defined ‘Collector’ so as to include Additional Collector also within its meaning). ld. Counsel argued that the definition was meant only for purposes of the CE Rules. Referring to the demand of duty, he submitted that the SCN allegation that the appellants had suppressed facts before the department with intent to evade payment of duty was not supported by any evidence and, therefore, the extended period of limitation was not invocable against the party. In this connection, the Counsel relied on the Supreme Court’s decision in Cosmic Dye Chemical v. CCE [1995 (75) E.L.T. 721 (S.C.)]. He contended that the entire demand of duty was time-barred. He further pointed out that the adjudicating authority did not consider, and record any finding on, the question whether the demand of duty was barred by limitation. On the merits of the case. Ld. Advocate submitted that duty was demanded on the entire factory building (shed) constructed by the appellants as contractors for M/s. Someshwar. The building was an immovable property and hence not excisable. Even otherwise, structures like trusses and purlins erected at site were permanently attached to earth and were not marketable goods that could be excised under Section 3 of the CESA and chargeable to duty under CSH 7308.90 of the CET Schedule as alleged by the Revenue. The Counsel also contended that fabrication of the structures did not amount to manufacture. He relied on this Tribunal’s Final Order No. 342/2000-B, dated 7-6-2000 passed in Appeal No. E/2347/2000-B
CCE v. DCM Engineering Products [2001 (133) E.L.T. 194 (T).
4. Ld. JDR, Shri M.P. Singh cited Rule 2 of the CER, 1944 and urged to reject ld. Counsel’s preliminary objection as to jurisdiction of the Additional Collector to issue the SCN. He submitted that the definition of ‘Collector’ under Rule 2 was applicable to the term used in the Act also. He further argued that the appellants, having participated in the adjudicatory proceedings, were estopped from raising such a jurisdictional objection. In this connection, the DR relied on the Madras High Court’s decision in A.C.C., Tuticorin v. Court of the Consumer Disputes Redressal Forum [2000 (121) E.L.T. 604 (Madras)]. On the limitation issue, however, he conceded that the Commissioner did not give any finding in the Impugned order. Adverting to the main issue involved in the case, ld. DR submitted that the demand of duty was not on the entire building but on the structural parts viz. trusses, purlins, etc. fabricated by the appellants at M/s. Someshwar’s site. He contended that the fabrication of the said parts by cutting, drilling, welding, etc. yielded marketable goods different from the raw materials and hence the activity amounted to manufacture. In this connection, the DR quoted the meaning of ‘fabrication’ from McGraw-Hill Dictionary of Scientific and Technical Terms (5th Edition). The dictionary provided the meaning as “the manufacture of parts, usually structural or electromechanical parts”. The DR also relied on the Tribunal’s decision in Richardson and Cruddas Ltd. v. CCE [1988 (38) E.L.T. 176] in support of his contention that the fabrication activity undertaken by the appellants at site amounted to manufacture. Ld. DR further submitted that the suppression of such activity by the party before the department was obviously with intent to evade duty inasmuch as they had never had a case that they had bona fide believed that the activity did not amount to manufacture. Therefore, the extended period of limitation was rightly invoked in this case. The DR wanted the appeal to be rejected.
5. In rejoinder, ld. Advocate pleaded for the benefit of Modvat credit on inputs under Rule 57A of the CER, 1944 as also for abatement of duty from sale price in determining assessable value in terms of Section 4(4)(d)(ii) of the CESA, 1944 and the Tribunal’s Larger Bench decision in Sri Chakra Tyres Ltd. v. CCE [1999 (108) E.L.T. 361 (T) = 1998 (32) RLT 1] in the event of the structural being held to be chargeable to duty.
6.1. We have considered the submissions. Ld. Counsel’s jurisdictional objection will be rejected as barred by estoppel. A jurisdictional objection has to be raised at the earliest opportunity. Such opportunity was available to the appellants when the SCN was served on them. They did not challenge the Additional Collector’s jurisdiction while replying to the SCN, nor did they choose to do so before the adjudicating authority later. They have not raised any jurisdictional objection even in this appeal. The appellants, having submitted to, and acquiesced in, the jurisdiction of the departmental authorities, are estopped from challenging it as they did through Counsel at this stage, as rightly submitted by ld. DR. The High Court’s decision cited by the DR seems to support this view. In that case, the Assistant Commissioner of Customs had petitioned the High Court against an order passed by the Consumer Disputes Redressal Forum (CDRF). The challenge was mainly on the ground that the CDRF had no jurisdiction to pass the order against the petitioner. The High Court rejected the jurisdictional objection, after finding
that the Customs Department had submitted to the jurisdiction of the CDRF and participated in its process of enquiry.
6.2. It appears from the SCN read with annexures thereto that the duty of Rs. 1,19,232/- was demanded only on the structural parts of the factory shed viz. trusses, purlins, etc. These structural were admittedly fabricated from steel sheets, angles, channels, etc. by the process of cutting, drilling, welding, etc. The appellants have no case that the fabrication of each of these structural was performed piece by piece over the RCC columns so that, at every stage of the fabrication, the fabricated material could be said to be fixed to the earth through the RCC columns. They have pleaded that the factory shed/building was erected piece by piece or step by step. This plea cannot be taken to mean that each truss and each purlin were fabricated piece by piece over the RCC columns. It appears that the appellants have not effectively rebutted the Collector’s finding that the trusses and purlins were fabricated first and then erected over the RCC columns. These structural were different in name and use from the steel sheets, angles and channels from which they were fabricated. As the fabrication was done in accordance with architectural specifications, the fabricated structural were different in character from the raw materials. These commercially distinct goods emerged from the fabrication activity which amounted to ‘manufacture’ under Section 2(f) of foe CESA. Going by the McGraw-Hill meaning of ‘fabrication’, one cannot reasonably say that there is no manufacture in fabrication. The case of DCM Engg. Products cited by ld. Advocate is distinguishable on facts. The fabricated structural in question were classifiable under CSH 7308.90 of the CET Schedule during the material period and the same would be excisable, if found marketable. We find that, on the question of marketability, the Collector has not recorded any finding. In the absence of such finding his conclusion that the structurals were excisable cannot be upheld in view of the Supreme Court’s ruling in CCE v. Man Structurals Ltd. [2001 (130) E.L.T. 401 (S.C.) = 2001 (44) RLT 113 (S.C)].
6.3. On the limitation issue, which was contentiously raised before him, ld. Collector has not recorded any finding as fairly admitted by ld. DR. We further observe that the appellants had, in their reply to the SCN, pleaded for treating the sale price of the goods as cum-duty price and for abatement of the duty element in computing the assessable value of the goods in terms of Section 4(4)(d)(ii) of the Act. Ld. Collector has, apparently, not considered this plea. Ld. Advocate has submitted that, in the event of denial of SSI exemption to the goods, the appellants will have a claim for the benefit of inputs-credit under Rule 57A. It appears that this claim was not before the adjudicating authority.
7. In the light of our findings recorded above, we set aside the order of the adjudicating authority and allow this appeal by way of remand directing that authority :-
(a) to decide afresh on the issue of excisability of the structurals in question after examining, and recording a reasoned finding on, the question whether the structurals were marketable; (b) to examine, and record a reasoned finding on, the question whether the demand of duty was time-barred; (c) to consider the appellants' claim under Section 4(4)(d)(ii) of the Act and decide thereon in the light of the Tribunal's decision in Sri Chakra Tyres (Supra); (d) To consider whether the benefit of Modvat credit of the duty paid on the inputs used for fabrication of the structural in question could be granted to the appellants if they are found to be ineligible for SSI exemption in respect of the structurals; and (e) to give the party a reasonable opportunity of being heard, before passing final (speaking) order.