Pranav B Prem

The New Delhi Principal Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that curtain glass or structural glazing affixed to buildings cannot be treated as “excisable goods” since it is immovable in nature and hence not liable to central excise duty. The Bench comprising Justice Dilip Gupta (President) and Technical Member P.V. Subba Rao was dealing with an appeal filed by the Revenue against an order of the Commissioner of Central Excise, Delhi-II, which had dropped central excise duty demands raised against M/s AGV Alfab Ltd., a construction contractor.

Also Read: NCLAT: Resolution Plan Cannot Be Set Aside On Valuation Objections Raised By Dissenting Financial Creditor, Appeals By Central Bank Dismissed

Case Background

The assessee, during the relevant period between September 2007 and December 2010, executed contracts for construction of curtain walls/structural glazing and aluminium cladding for various hotels, offices, and buildings. The process involved mapping building walls, fixing clamps, attaching vertical and horizontal aluminium sections, applying double-sided tapes, and permanently joining toughened customized glass panels with structural silicon.

Through this process, a curtain glass façade came into existence, forming part of the building structure. The assessee also manufactured some doors and windows in its premises. Based on five show cause notices, the department sought recovery of excise duty both on the doors and windows and on the curtain walls.

The Commissioner, after adjudication, held that the doors and windows manufactured in the factory were excisable goods. However, as the total turnover of such goods was below the exemption threshold, no duty demand was sustained. With respect to curtain walls, the Commissioner relied upon an earlier CESTAT decision in the assessee’s own case (2005 (186) ELT 451), which had held that curtain walls constructed at site were not “goods” capable of excise levy. Since curtain walls were fixed permanently to the building and could not be removed and reinstalled as such, they did not amount to manufacture of excisable goods. Accordingly, the demand was dropped.

Revenue’s Appeal

Challenging this order, the Revenue argued that:

1. Since the assessee paid sales tax on the value of curtain walls, it implied that goods had been sold prior to erection at site, and therefore excise duty was leviable.

2. The Commissioner failed to consider the assessee’s registration under service tax for fabrication and erection of curtain walls, which, according to Revenue, suggested that excise liability also existed.

3. The Commissioner overlooked that the earlier CESTAT ruling did not examine the issue of sales tax payment.

Tribunal’s Findings

The Tribunal rejected each of these contentions. It reiterated that sales tax is levied on sale or deemed sale of goods, and not on manufacture. Therefore, excise duty cannot be charged merely because sales tax was paid. On the Revenue’s contention regarding service tax, the Tribunal clarified that payment of service tax on works contracts has no bearing on excise duty. Excise duty is chargeable only if there is manufacture of movable goods. Since the curtain glass façade is created by permanently fixing glass and aluminium to the walls, it becomes part of the immovable property and cannot be considered as excisable goods.

The Bench observed: “It was already decided that no excisable goods came into existence in the process and the curtain glass cannot be removed and fixed elsewhere. For this reason, no central excise duty was payable on the curtain glass.” The Tribunal also noted that the earlier decision in the assessee’s case had attained finality as it was never appealed by the Revenue, and hence the Commissioner rightly followed judicial discipline in applying it.

Also Read: NCLAT New Delhi Rules, Once CoC Agrees To Release Personal Guarantees Upon Payment, Invocation Cannot Be Directed By Adjudicating Authority

Holding that no infirmity existed in the Commissioner’s order, the CESTAT upheld the dropping of duty demand on curtain walls and dismissed the Revenue’s appeal. The finding that doors and windows were excisable was not challenged by the assessee, but since their turnover was below the statutory threshold, no duty was payable on them either.

Appearance

Counsel for Appellant/ Department: Rakesh Aggarwal

Counsel for Respondent/ Assessee: Rajesh Jain, Ramashish and Tanya Sarawat

Cause Title: Commissioner of Central Excise, Delhi – II V. M/s AGV Alfag Ltd.

Case No: Exicse Appeal No. 2764 Of 2011

Coram: Justice Dilip Gupta [President], P.V. Subba Rao [Technical Member]