2026-VIL-429-CESTAT-CHE-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise – Scope of Manufacture - The appellant converted colour-coated/galvanised steel sheets in coil form into profiled roofing sheets by processes such as decoiling, roll-forming, profiling, crimping and cutting - Whether the activity undertaken by the appellant amounts to "manufacture" under Section 2(f) of the Central Excise Act, 1944 – HELD - The activity undertaken by the appellant results in a substantial and irreversible transformation of flat steel sheets into profiled roofing sheets possessing enhanced structural strength, functional utility and a distinct commercial identity - Manufacture is not confined to a single act but is the cumulative effect of a series of operations leading to the emergence of the final product. It is also settled that the test of manufacture does not require the input product to become unusable for its original purpose; what is required is acquisition of a distinct commercial identity. In the present case, profiled roofing sheets are marketed, priced and demanded as a separate class of goods in the construction industry - The impugned activity amounts to "manufacture" within the meaning of Section 2(f) of the CEA, 1944 - The cases relied upon by the appellant are distinguished on the ground that they dealt with cases where the processes were superficial or incidental and the original commodity retained its essential identity without the emergence of a new commercially distinct product - The Order-in-Appeal is upheld and the appeal is dismissed - Valuation of Job-work - Applicability of Valuation under Section 4 of the CEA, 1944 read with Rule 10A of the Central Excise Valuation Rules, 2000 – The appellant undertook manufacture on job-work basis using raw materials supplied by traders and cleared the finished profiled roofing sheets back to such suppliers - Whether valuation under Section 4 of the Central Excise Act, 1944 read with Rule 10A of the Central Excise Valuation Rules, 2000 is applicable – HELD - Once manufacture is established, valuation of the goods cleared by the appellant on job-work basis is correctly governed by Section 4 of the Central Excise Act, 1944 read with Rule 10A of the Central Excise Valuation Rules, 2000. The appellant's plea that valuation should be confined only to job charges is contrary to both statutory provisions and settled law. Acceptance of such a plea would defeat the very object of Rule 10A and lead to systematic undervaluation of excisable goods manufactured on job-work basis. The valuation methodology adopted by the Department, based on the sale price of the goods by the suppliers in the open market, is legally sound and sustainable in principle - Extended period of limitation - The Department invoked the extended period of limitation under Section 11A(4) of the Central Excise Act, 1944 - Whether the extended period of limitation is invokable – HELD - The appellant suppressed material facts relating to valuation with intent to evade payment of duty. Despite undertaking manufacture of a distinct excisable product, the appellant discharged duty only on job-work charges, excluding the value of raw materials supplied by traders, which formed a substantial part of the assessable value. Such non-disclosure of the full assessable value in respect of job-work clearances, coupled with payment of duty only on job-charges, amounts to suppression of material facts with intent to evade duty. Accordingly, the invocation of the extended period of limitation under Section 11A(4) of the Central Excise Act, 1944 is upheld - Penalty - The Department imposed penalty under Section 11AC of the Central Excise Act, 1944 - Whether the imposition of penalty is sustainable – HELD - Once the ingredients for invoking the extended period under Section 11A(4) are satisfied, the imposition of penalty under Section 11AC follows as a statutory consequence. The same facts and evidence which justify invocation of the extended period equally satisfy the statutory requirements for imposition of penalty under Section 11AC. Accordingly, the imposition of penalty under Section 11AC of CEA, 1944 is upheld.
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