2004 (8) TMI 437 - AT - Central Excise

Summary

Issues:
1. Duty demand and penalty on job work activities
2. Classification of activity as 'manufacture' under Central Excise Act, 1944
3. Application for waiver of pre-deposit requirements and stay of recovery

Analysis:
1. The appellants were engaged in the lamination of HDPE fabrics with LDPE on a job work basis and faced duty demand and penalties following a show cause notice. The adjudicator concluded that the job work activity amounted to 'manufacture' under the Central Excise Act, 1944. The Commissioner and the learned DR supported this view citing the decision in Laminated Packagings (P) Ltd. v. CCE. However, the appellants' consultant highlighted a lack of material to support this conclusion, referencing a finding in the impugned order. At a prima facie stage, the Tribunal relied on the Supreme Court's decision in Meltex (I) Pvt. Ltd., emphasizing the onus on the department to prove 'manufacture,' which was not demonstrated. Consequently, the Tribunal granted a full waiver of pre-deposit requirements and ordered a stay of recovery pending further hearing.

2. The Tribunal acknowledged the distinction between unlaminated and laminated fabrics in common trade parlance, as noted in the impugned order. The appellants' consultant argued that the lack of material to support the conclusion of 'manufacture' was a crucial factor. The Tribunal, in line with the Meltex (I) Pvt. Ltd. decision, required the department to fulfill the onus of proving 'manufacture,' which was not met at the prima facie stage. Therefore, the Tribunal granted the waiver and stay of recovery based on this assessment.

3. Both parties were granted the liberty to apply for an early hearing if desired. The applications were disposed of with the decision to grant full waiver of pre-deposit requirements and stay of recovery until further proceedings.