2002 (12) TMI 351 - AT - Central Excise

Summary

Issues:
1. Whether the activities undertaken by the appellant amount to manufacture for the products to be subject to excise duty.
2. Whether the demand of duty and penalty imposed by the Commissioner is valid.
3. Whether the extended period of limitation for demanding duty is invocable.
4. Whether the appellant's intention to evade payment of duty is established.
5. Whether the processes undertaken by the appellant amount to manufacture for all the disputed items.
6. Whether the duty amount payable needs to be recomputed.
7. Whether penalty imposition is necessary after determining the excise duty payable.

Analysis:
1. The appellant, engaged in fabrication activities, argued that their processes did not amount to manufacture and that they were under the bona fide belief that they were liable to pay duty only on job charges. The Commissioner imposed duty and penalty, contending that the activities resulted in goods with distinct characteristics. The appellant also raised issues regarding the time-limit for demanding duty and the SSI exemption Notification.

2. The appellant detailed the processes for the disputed items - Outer Door Assembly, Carline, and Bottom Side Wall Assembly. They argued that the processes did not create new commercial products with distinct characteristics, especially for the Outer Door Assembly, where further finishing operations were done by RCF. The appellant emphasized that the processes did not meet the criteria for manufacturing as per relevant legal provisions.

3. The Senior Departmental Representative argued that the processes undertaken by the appellant transformed the materials into distinct products, attracting excise duty. They also contended that the extended period of limitation for demanding duty was applicable due to non-disclosure of material costs by the appellant. The representative highlighted the intention to evade payment of duty based on statements and invoices.

4. The Tribunal analyzed the processes undertaken by the appellant for each item in question. While they found that the Carline and Bottom Side Wall Assembly processes amounted to manufacture, they ruled that the Outer Door Assembly processes did not meet the criteria. The Tribunal referenced the two-fold test for determining manufacture and noted that the Outer Door Assembly did not result in a new commercial product.

5. Regarding the invokability of the extended period of limitation, the Tribunal found that the appellant had not disclosed the exclusion of material costs in the assessable value to the Department. They referenced legal precedents and held that the extended period was not applicable for demanding duty beyond a certain date. The Tribunal emphasized the importance of disclosing all relevant information for excise duty assessment.

6. The Tribunal directed the matter back to the Adjudicating Authority to recompute the duty amount payable by the appellant based on the observations made in the order. They left the decision on penalty imposition to the Adjudicating Authority after determining the excise duty amount payable by the appellant. The appeal was disposed of with these directions.