2004 (2) TMI 473 - AT - Central Excise

Summary

Issues:
- Whether the product 'Electro Static Water Treatment Units' qualifies as machinery for the production of a commodity for attracting a concessional rate of duty.

Analysis:
1. The appeal raised the issue of whether the appellant's product, 'Electro Static Water Treatment Units' (ESWTU), should be considered as machinery for the production of a commodity to avail a concessional rate of duty. Both the adjudicating authority and the Appellate Authority had rejected the contention of the assessee.

2. The Commissioner (Appeals) analyzed the product and concluded that it is designed to prevent material deposits and system deterioration, aiming to maximize system life span. The product is not marketed or traded as machinery for commodity production. The Commissioner emphasized that treated water remains water and the process does not amount to 'manufacture' under Section 2(f) of the Central Excise Act, 1944.

3. The appellant argued that a previous order favored them, and they should be eligible for duty exemption under Notification No. 46/94. They claimed their product falls under Chapter sub-heading 8543.00 as machinery for commodity production, specifically 'water.' The appellant cited Chapter Note 2 under Chapter 22, asserting that their water treatment process aligns with the definition of 'manufacture.'

4. The opposing view contended that the Commissioner (Appeals) correctly applied the law, dismissing the appellant's reliance on Chapter Note 2 under Chapter 22. The note pertains to mineral waters, which the appellant does not handle. Therefore, it was argued that the note does not apply to the appellant's process.

5. The appellant does not manufacture water but uses the product for descaling purposes. As the product does not fall under Chapter Heading Nos. 2201 and 2202 for mineral or aerated waters, the reliance on Chapter Note 2 under Chapter 22 was deemed invalid. Consequently, the process undertaken by the appellant's product does not constitute 'manufacture.'

6. The Tribunal upheld the Commissioner (Appeals)' decision to deny the concessional rate of duty under Notification No. 46/94 to the appellant, stating that the product did not qualify as machinery for the production of a commodity.

7. Consequently, the appeal was dismissed, affirming the denial of the concessional rate of duty to the appellant.