Mohan Steels Corporation, G Mahesh, Rajendra Prasad Agarwal, Srujan Kumar, Ankit Agarwal, Ashish Kumar Jain, GVH Sambasiva Rao, M Srinivasa Gupta, K Ramesh Babu Versus CCCE & ST, Hyderabad-IV, CCT, Medchal – GST
Central Excise
2019 (3) TMI 34 – CESTAT HYDERABAD – TMI
CESTAT HYDERABAD – AT
Dated:- 28-2-2019
E/30306/2017, E/31246-31254/2017 – A/30273-30282/2019
Central Excise
Mr. M.V. Ravindran, Member (Judicial) And Mr. P. Venkata Subba Rao, Member (Technical)
Shri P. Rosi Reddy, Advocate for the Appellants
Shri B. Guna Ranjan, Superintendent/AR for the Respondents.
ORDER
Per: P.V. Subba Rao.
1. All these appeals are involve the same issue and hence are being disposed of together. The main appeal in this case is by the appellant M/s Mohan Steels Corporation (MSC) in appeal E/30306/2017 and other appeals are against co-noticees with respect to confiscation of the goods seized from their premises and the imposition of penalties.
2. Heard both sides and perus
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out of steel sheets which they purchased from M/s JSW Steel Ltd and have not discharged excise duty on them. Accordingly, a show cause notice dated 30.06.2015 has been issued to the appellant seeking to recover appropriate amount of Central Excise duty invoking extended period of limitation on the profiles manufactured and cleared by them along with interest. It was also proposed to impose penalties under Sec.11AC of Central Excise Act.
4. Learned counsel for the appellant submits that they are engaged in trading of JSW steel sheets. These sheets come in large coils which they need to uncoil, cut into sizes required by the customers and sell them. It is not in dispute that such cutting of sheets into smaller sheets does not amount to manufacture. In some cases, they also take these sheets and put them through a machine to corrugate them (create profiles) before selling them. They do not dispute that they are undertaking this activity. He, however, submits that this activity was well w
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corrugation does not amount to manufacture but it was a service which they were rendering to their clients as per their requirement. They were collecting service charges for corrugation and have been paying service tax on such charges. The payment of service tax on these services under the head 'business auxiliary services' has been duly reflected in all their ST-3 returns.
5. Learned counsel would, therefore, submit that the department cannot allege that they have suppressed or wilfully misstated or violated any Act or Rules with an intention to evade payment of duty. Therefore, the entire demand covering the period January, 2013 to October, 2014 issued vide show cause notice dated 30.06.2016 is completely time barred. He, therefore, submits that:
(a) The activities which are undertaken cannot be held as amounting to manufacture.
(b) Even if it is held that the activities amount to manufacture, these activities are completely within the knowledge of the department and have been dec
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gained anything by evading payment of duty.
(e) As the demand itself is not sustainable, neither will the demand of interest nor imposition of penalties sustain.
(f) As the demand on the main appellant is not sustainable, the proposals for confiscation of goods and imposition of penalties on the co-noticees also do not sustain.
6. Learned departmental representative reiterates the arguments in the impugned orders and asserts that it is now well settled that in the case of Proflex Systems [2017 (353) ELT 142 (Gujarat)] that the sheets in coils and those cut and corrugated to make them suitable for use of making roofs are distinct commodities and they cannot be said to be the same. This decision of the Hon'ble High Court of Gujarat has been upheld by the Hon'ble Supreme Court in the case of Proflex Systems v Commissioner [2017 (355) ELT A83]. As a new distinct commodity as known to the market has come into existence, the corrugated roofs so manufactured by the appellant from the shee
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ought any clarification from the department whether this activity amounts to manufacture. It was incumbent upon the appellant to have disclosed the true nature of the activities and pay excise duty which they have not done. Therefore, the demand for excise duty and interest as well as the confiscation an penalties are liable to be upheld.
7. We have considered the arguments on both sides and perused the records. The short issues to be decided are as follows:
(1) Whether the appellant has undertaken an activity which amounts to manufacture in uncoiling the sheets, cutting them to sizes and corrugating them into form to be used as roofs.
(2) Whether the appellant is liable to pay excise duty on such activity.
(3) Whether a demand can be raised invoking extended period of limitation.
(4) Whether confiscation of the goods from the appellants is sustainable and
(5) Whether penalties can be imposed upon the appellants.
8. On the first issue, we find that the appellant has purchased st
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e find that the appellant was registered with the Central Excise department both as a trader and also as a service provider. He has been paying service tax as a service provider on the corrugation part of his work. The service tax payable on the corrugation is 12% of the service charges which he collected for such corrugation. He has been reflecting this activity in the ST-3 returns under these circumstances we find it inconceivable that even with minimum scrutiny of the service tax returns, the range could not be aware of the nature of the activity undertaken by him on which he is paying service tax. The contention of the learned departmental representative that he has not declared the nature of goods correctly in the invoices does not carry their case any further because the invoices were anyway not required to be submitted with the ST-3 returns. However, when a return is filed with the range officer or when registration is taken from the range officer, it is not inconceivable that t
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