PER: P.A. AUGUSTIAN

These Appeals are filed against Order-in-Original No. 03/CCE/2012 dated 31.05.2012 passed by the Commissioner of Central Excise, Customs & Service Tax, Mysore.

2. The issues involved in the present appeals are;

(i) whether the activities carried out by the Appellant amounts to manufacture; and

(ii) whether the demand can be confirmed by invoking the extended period of limitation is tenable.

3. The brief facts are M/s. Larsen & Toubro (ECC Division), the Appellant is engaged in construction and assembly of electrical equipment. They are awarded contract for execution of Rural Load Management System (RLMS), in Chikmagalur Division of Shimoga on a turnkey basis including supply of all equipment, material, testing and commissioning. The scope of work includes providing Rural Load Management unit consisting of programmable logic controller, moulded case miniature circuit breaker (MCCB), miniature circuit breaker (MCB), transformers, energy meter and others. As per the information gathered by the Preventive unit, investigation was taken up and consequently, a SCN was issued alleging that the appellant is manufacturing and clearing assembled RLMUs without payment of central excise duty and without following central excise procedures. Thereafter Adjudication authority as per the impugned order held that the activity of assembly of the RLMUs amounts to manufacture and confirmed demand with interest and also imposed penalty under various provisions of Central Excise Act, 1944. Further, penalty was also imposed on the Co-appellant. Aggrieved by said order, present appeals are filed.

4. When the appeals came up for hearing, the Learned Counsel for the Appellant draws our attention to the finding in the impugned order and submits that the above finding is factually incorrect. As per the impugned order, Adjudicating authority held that M/s. L & T., ECC Division, Kadur have sub-contracted the said work of assembly to M/s. SAR Engineering Services, Bangalore, who, in turn, have sub-contracted the said work to M/s. Surabhi Electricals, Kadur. All the raw materials / components required for the said assembly have been purchased by M/s. L & T. ECC Division, Kadur and neither M/s. SAR Engineering Services, Bangalore nor M/s. Surabhi Electricals, Kadur have purchased any raw materials / components. From the quotation / work orders of M/s. Surabhi Electricals, Kadur and M/s. SAR Engineering Services, Bangalore, it is seen that M/s. Surabhi Electrcials, Kadur have provided only manpower to M/s. L & T ECC Division, Kadur for assembly of components into the RLMUs. Thus, the adjudicating authority held that M/s. L & T. ECC Division, Kadur are the manufacturer of the assembled RLMUs in terms of Section 2(f) of the Central Excise Act, 1944.

5. In this regard, Learned Counsel draws our attention to the statement recorded on 19.01.2011 where to a specific question to explain the activities of M/s. SAR Engineering Services, it was stated that M/s. SAR Engineering Services started in 2007, they are consulting Engineers in Power Distribution and Automation for Electrical Systems, they do not have any branches. In addition to the above activities, they have been given a contract by M/s. L&T, ECC Division, Bangalore for installation /assembly of RLMS Components, PLC Programming, Testing and Commissioning of RLMS Box at Kadur. Further, it is stated that since 01.04.2010, they were given the contract of assembly of RLMS Unit by M/s. L&T Ltd., ECC Division, Bangalore and subcontracted the work of assembly of the said RLMS Units to M/s Surabhi Electricals, Kadur. All the components required for the assembly of the said RLMS Unit except for Programmable Logic Controller (PLC) have been supplied by M/s. L&T Ltd., ECC Division to M/s. Surabhi Electricals, Kadur under cover of delivery challans. They don’t have any of the delivery challans raised by M/s. L&T on M/s. Surabhi Electricals. M/s Surabhi Electricals, Kadur have assembled the various compo