The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, has dismissed an appeal filed by the Revenue against a 2011 order that dropped excise duty demands on curtain wall glazing and aluminium cladding executed by a construction contractor.
The bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) held that excise duty can only be levied if “manufacture” of goods is established. Sales tax is levied on either sale or deemed sale of goods and not on manufacture. Central excise duty cannot be charged merely because sales tax is paid. Curtain wall glazing, once affixed, becomes an immovable structure and cannot be treated as excisable goods.
The case concerned five show cause notices issued to a Delhi-based contractor for the period September 2007 to December 2010. The department sought to levy central excise duty on fabricated doors, windows, and large-scale curtain wall structures installed on commercial buildings and hotels.
While the Commissioner of Central Excise had earlier held that doors and windows manufactured in the factory were excisable, the turnover was found to be below the threshold limit, exempting them from duty. On curtain walls, however, the Commissioner relied on an earlier 2004 CESTAT ruling involving the same contractor, which had categorically held that such structures were not “manufactured goods” but part of a works contract executed on-site.
The Revenue, in its appeal, argued that The contractor paid sales tax on curtain walls, implying a sale of goods before erection. The assessee was registered under service tax for fabrication and erection, and excise duty could also apply. The previous tribunal decision did not consider sales tax payments.
The tribunal also dismissed the Revenue’s contention regarding dual taxation, noting that service tax on works contracts operates independently of excise duty, which requires the emergence of a new marketable product.
Concluding that the Commissioner had rightly followed judicial discipline in dropping the duty, CESTAT upheld the order and dismissed the department’s appeal.
Case Details
Case Title: Commissioner of Central Excise, Delhi – II Versus M/s AGV Alfag Ltd.
Case No.: Excise Appeal No. 2764 Of 2011
Date: 22.08.2025
Counsel For Appellant: Rakesh Aggarwal, Authorized Representative (DR)
Counsel For Respondent: Rajesh Jain, Shri Ramashish and Ms. Tanya Sarawat
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