2002 (6) TMI 246 - AT - Central Excise

Summary

Issues Involved:
1. Whether the appellant was engaged in the manufacture of excisable goods.
2. Whether the demand of Central Excise duty and penalty imposed by the adjudicating authority was justified.

Issue-Wise Detailed Analysis:

1. Engagement in Manufacture of Excisable Goods:

The primary issue in the appeals was whether the appellant was engaged in the manufacture of excisable goods. The appellant argued that they started a manufacturing unit in Nasik in May 1989 and were engaged in trading activities prior to that. They maintained that the premises at Creative Industrial Estate, Byculla, Mumbai, were used for storing goods and not for manufacturing. The appellant contended that the presence of minimal tools such as soldering irons, cutters, and screwdrivers did not indicate manufacturing activities. They emphasized that the goods were bought in a condition ready for sale and were merely cleaned and tested casually before supply. They argued that the adjudicating authority's conclusion was based on assumptions and lacked concrete evidence. The appellant referenced several legal precedents, including Hawkins Cookers Ltd. v. CCE and O.R.G. Systems v. CCE, to support their claim that without a finding of a new product coming into existence, it could not be held that a manufacturing process had been undertaken.

2. Justification of Demand and Penalty:

The Revenue countered that the premises were found operational during a visit on 15-3-90, and various components and tools were present, indicating assembly activities. They argued that the appellants were manufacturing and assembling computerized telex systems and EPABX systems. The Revenue relied on statements from employees and other documents such as orders, delivery challans, and invoices to support their claim. They cited legal precedents like Majestic Auto Ltd. v. CCE and Triveni Engineering & Industries Ltd. v. CCE to argue that the assembly of components into a finished product amounts to manufacture.

Tribunal's Findings:

The Tribunal considered submissions from both sides and emphasized that excise duty is levied on goods produced or manufactured. They found merit in the appellant's argument that merely not producing all evidence does not imply that the goods were manufactured by them. The Tribunal noted the lack of statements from the four ladies allegedly involved in assembly work and observed that the evidence provided by the Revenue was insufficient to prove manufacturing activities. The Tribunal highlighted that the appellant's accountant and storekeeper consistently stated that the goods were traded and not manufactured. They concluded that the Revenue failed to prove that the impugned goods were manufactured or assembled by the appellants.

Conclusion:

The Tribunal set aside the impugned order and allowed both appeals, concluding that the Revenue did not succeed in proving the appellant's engagement in manufacturing excisable goods.