1998 (11) TMI 430 - AT - Central Excise

Summary

Issues:
1. Whether the activity of putting together various articles into a carton to form cable jointing kits amounts to manufacture under the Central Excise Act.
2. Whether the show cause notices issued to the appellant were hit by limitation under Section 11A of the Central Excise Act.

Issue 1: The primary issue in this case revolved around determining whether the process of assembling various articles into cable jointing kits constituted "manufacture" under the Central Excise Act. The appellant, engaged in producing these kits, argued that no manufacturing process was involved as there was no change in the character or use of the individual articles placed in the kit. The Commissioner and Commissioner (Adjudication) had held that the assembly of these kits led to the creation of a new excisable product, classifiable under a specific heading of the Central Excise Tariff Act. The appellant contested this classification, asserting that the show cause notices were also barred by limitation under Section 11A of the Central Excise Act.

Issue 1 Analysis: The appellant's counsel cited a judgment from the Andhra Pradesh High Court, which concluded that assembling various articles into cable jointing kits did not amount to manufacture as there was no transformation in the individual articles placed in the kit. The High Court emphasized that the articles retained their market identity and use, and the mere act of packaging them together did not change their essential character. The judgment also invalidated a circular by the Central Board of Excise and Customs that classified this activity as manufacture. The Tribunal, following the High Court's decision, ruled in favor of the appellant, setting aside the previous orders and allowing the appeals. The Tribunal found the facts of the present case to be identical to those considered in the precedent judgment, thus applying its ratio to the current situation and granting consequential relief to the appellant.

Issue 2: The second issue pertained to whether the show cause notices issued to the appellant were within the statutory limitation period prescribed under Section 11A of the Central Excise Act. The appellant contended that the notices were time-barred, raising objections regarding the initiation of proceedings beyond the specified timeframe.

Issue 2 Analysis: Although the judgment did not delve deeply into the issue of limitation under Section 11A of the Central Excise Act, it is evident that the primary focus was on the classification of the activity of assembling cable jointing kits as manufacture. The Tribunal's decision to set aside the orders and allow the appeals indicates that the issue of limitation may not have been a significant factor in the final determination of the case. The judgment primarily revolved around the interpretation of what constitutes manufacture under the Central Excise Act, as clarified by the Andhra Pradesh High Court's ruling and subsequent Tribunal decisions.