Cce, Delhi-I v. M/S. Crystal Corporation .

Per. B. Ravichandran :- The Revenue is in appeal against order dated 10/11/2006 of Commissioner (Appeals), Delhi I. The brief facts of the case are that the respondents are engaged in the design, fabrication, supply and installation of curtain wall/structural glazing i.e. fixation of a glass or an aluminium fagade over buildings, so as to impart on them an appearance of having their walls made up of glass or aluminium, as the case may be, around them. Certain investigations were carried out by the officers of DGCEI with reference to the activities of the respondent. On completion of investigation, proceedings were initiated against the respondent to demand Central Excise duty in respect of manufacture of glazed panels in connection with execution of various projects. The period involved is 2001-2002. The proceedings were concluded by Original Authority who confirmed Central Excise duty of Rs. 43,21,900/- on the respondent. He imposed equal amount of penalty under section 11ac of the central excise Duty, 1944 and again separately under Rule 173Q of Central Excise Rules, 1944. Further, penalties were also imposed under Rule 209A and Rule 210 readwith Rule 52A of Central Excise Rules, 1944. On appeal, vide the impugned order the Commissioner (Appeals) dropped the demand. He held that affixing duty paid processed and pre-cut glasses supplied by the client to the duty paid aluminium frames and panels with the help of sealant does not result in emergence of new product having new identity, character and use distinct from the inputs, namely, glass cut to size and aluminium frames of required dimensions. He concluded that the process undertaken by the respondent does not merit to be termed as manufacture in terms of Section 2 (f) of Central Excise Act, 1944 and as such no duty liability can be imposed on the respondent. Aggrieved by this order, the Revenue is in appeal.

2. The main grounds of appeal by Revenue can be summarized as below :-

(i) parts or structures have a unique and distinct identity different from that of its raw materials and thus parts are structures are marketable as per the judgment of Larger Bench of Honble Tribunal in the case of Mahindra & Mahindra reported in 2005 (190) E.L.T. 301 (Tri. LB). The Revenue, substantially relied on this decision to contest the findings in the impugned order. It was submitted that assembling of glazed panels at the site of the client amounts to manufacture and Central Excise duty is liable on such activity ;

(ii) for the purpose of execution of contract, the especially designed aluminium frames are fabricated on the ground at the site of the project from duty paid raw materials i.e. aluminium extrusions. The glass is fixed on such aluminium frames and that only thereafter such fully glazed panels are installed over the building. The duty paid panels used in the process of erecting curtain walls/ structural glazing are well known in market as separate commodity.

3. Learned AR elaborated the grounds of appeal and submitted that the impugned order is not sustainable. The learned Counsel for the respondent submitted that the impugned order examined the factual position relating to activities undertaken by the respondent in their factory premises as well as at the work site of the client. The duty paid frames and panels were brought to the work site and the glasses supplied by the client were fixed alongwith the frames to create the glass facade. The items used in such frames are specific to the designs and requirements of the client. These are made according to the exact specification as per the physical requirement of the building and they are affixed as per the designs already prepared. No new product emerges as a distinct marketable commodity in this process. The learned Counsel also submitted that the reliance placed by the Revenue on the decision of Tribunal in Mahindra & Mahindra (supra) is not appropriate. In the present case, the Revenue failed to establish what type of marketable distinct commodity is emerging before the same is permanently affixed to make glazed aluminium fagade fixed with glass. Simple reliance on the existence of a tariff entry cannot be reason for imposing duty.

4. We have heard both the sides and perused the appeal records. We note that the Revenue is substantially relying on the decision of the Tribunal in Mahindra & Mahindra (supra) and the existence of tariff entry 7610 to contest the findings in the impugned order. The admitted facts are that the respondent were engaged in the manufacture of blank aluminium panel out of anodized aluminium extrusions in their factory at Bhiwadi. They were also engaged in design fabrication, supply and installation of curtain wall/structural glazing by building glass facades system over buildings by which the external face of the building is enclosed with glass/metal so as to given appearance that the walls are made up of glass/aluminium. The glass facades were built by unitized system, semi-unitized/grid unitized systems and stick system. The impugned order examined elaborately the processes undertaken by the respondent. First, the desired system was conceptualized by creating a design and on approval of the client, aluminium extrusions are procured, surface finished and sent to the site of the concerned project. Individual aluminium frames of the fagade are fabricated on the ground at site. The glass is fixed thereupon with silicon sealant. Thereafter, such fully glazed panels are installed over the building with brackets, nuts and bolts as per the pre-determined sequence and design. There is no dispute in respect of activities undertaken by the respondent. The individual components i.e. aluminium frames and pre-cut glasses are nothing but parts and components of aluminium glass frame fagade. They are designer made and cannot be put into use in any other fabrication. In other words, the aluminium frames cut to specific dimension and the glass cut to specific dimension are nothing but components and parts of glazed panels. Their assembly and erection in the civil structure does not create a new commercially marketable product. We note that Revenue has not brought out any evidence on the aspect of common marketability of specific designed components before they are affixed in the civil structure. The impugned order is only contested with reliance on the decision of the Tribunal in Mahindra & Mahindra (supra). The impugned order categorically records that the proposition that affixing of aluminium frame and glass results in a new product namely glazed panel is ill-founded. It is recorded that the glazed panel with glass does not serve any purpose other than the purpose served by the aluminium frames/glass cut to size. As these items were specifically cut as per the design and are affixed in civil structure the marketability of the product has to be established. The impugned order also recorded the terms of the work order to state that there is an indivisible work contract for installation of curtain wall on the existing structure. There is no order for purchase of glazed panels. Upon fabrication the curtain wall of glass becomes part of civil construction. In such situation it is not sustainable to hold that there is a marketable new product emerging in between.

5. The Revenue heavily relied on the decision of the Tribunal in Mahindra & Mahindra (supra). We note that in the said decision the Tribunal was dealing with tax liability on the activity of making structures of Iron and Steel under Tariff Heading 7308. It was held that parts of structures are prepared and disassembled, the members thereof will be angles, roads etc. prepared for use in such structure. These are not angles or plates merely cut or drilled. These are identifiable articles of types of parts of structures covered under heading 7308. The Revenue is drawing a parallel to the present case based on the above said decision. We note the facts of the present case have been clearly recorded in the impugned order and are not in dispute. We note that from the show cause notice it is clear that the duty demand is on glazed panels alleged to have been manufactured by the appellant at site. Para 18.1 of the notice, in fact, indicates that the new product, glazed panels, are emerging at site and in para 4, the value for excise levy is taken for the whole glazed panels including glass supplied free of cost by the client. It is clear from the averments made in the show cause notice that the Department sought to charge Central Excise duty on glazed panels. We note that such panels emerge stage by stage upon fabrication with bolts, nuts and brackets on the building. The said glazed panels are fabricated and fixed simultaneously as part of civil structure. There is no new marketable product as glazed panel emerging in between in the whole process. It is also clearly recorded in the impugned order that there is no purchase order for such glazed panels by the clients in the present case. In other words, the indivisible works contract talks about installation of glazed panels/curtain wall and not supply of any glazed panels. We find that the ratio followed in Mahindra & Mahindra (supra) has no application to the facts of the presenting case. The Revenue is not correct in relying on the said decision in contesting the findings of the Commissioner (Appeals) in the impugned order.

6. After careful consideration of the grounds of appeal and the findings in the impugned order, we find no merit in the appeal by the Revenue warranting interference with the said order. Accordingly, the appeal by Revenue is dismissed. (Order pronounced in open court on 11/01/2017.) (Justice Dr. Satish Chandra) President (B. Ravichandran) Member (Technical) EX/3193 of 2007