2003 (8) TMI 269 - AT - Central Excise

Summary

Issues:
Whether the processes undertaken by the appellant on the machines received back from the buyers amount to manufacture.

Analysis:
In this appeal, the appellant, a manufacturer of equipment for the glass industry, undertakes repair, reconditioning, and overhauling of duty-paid machinery received back from buyers. The appellant's process involves dismantling, cleaning, segregating parts, and assembling them into mechanisms before fitting them back into the housing. The appellant argues that this overhauling process does not constitute manufacture, citing Rule 173H of the Central Excise Rules, 1944, and a previous tribunal decision. The appellant contests the duty demand for the period from 1996-97 to 2000-2001, claiming no suppression of facts and pointing to previous adjudication decisions supporting their position.

The appellant challenges the valuation method adopted by the department as arbitrary, emphasizing that the department failed to consider their submissions in this regard. On the other hand, the department argues that the process undertaken by the appellant amounts to manufacturing as they assemble new modules from old parts, losing the original goods' identity in the process. The department highlights instances where goods were received for overhauling after extended periods, supporting their contention that the process constitutes manufacture.

The tribunal considers the submissions from both sides and examines the nature of the process undertaken by the appellant. Referring to legal precedents, including Supreme Court judgments, the tribunal emphasizes that for a process to amount to manufacture, a new commercial commodity must emerge with a distinctive name, character, and use. The tribunal concludes that the process employed by the appellant does not result in a new commercial commodity coming into existence. It is noted that the modules remain modules after the process, and no new commodity is created. The tribunal cites previous tribunal decisions to support its finding that activities such as repairing machinery or reconditioning parts do not amount to manufacture. Consequently, the tribunal sets aside the impugned order and allows the appeal without considering the aspects of time-limit and valuation.