2004 (8) TMI 495 - AT - Central Excise

Summary

Issues: Challenge to confirmation of Central Excise duty demand and penalty imposition by Commissioner (Appeals) on M/s. Pragati Silicones Ltd.

Central Excise Duty Demand and Penalty Imposition:
M/s. Pragati Silicones Ltd. contested the confirmation of Central Excise duty demand and penalty imposition by the Commissioner (Appeals) under Order-in-Appeal No. 26/04. The company, engaged in manufacturing motor vehicle parts and providing electroplating job work services, received duty-paid plastic mouldings for electroplating from component suppliers under job work challans. While they cleared the electroplated mouldings after paying Central Excise duty only on job charges, the authorities contended that the value of plastic components should have been included in the assessable value for Central Excise duty discharge. The appellant argued that electroplating does not constitute manufacturing as it does not result in a new commercial product's emergence. They highlighted that no duty is required to be paid by the job worker under Rule 4(5) of the Cenvat Credit Rules, 2002. After considering both parties' submissions, the Tribunal allowed the appeal filed by the appellants, ruling that the electroplating process undertaken by them does not amount to manufacturing since it does not lead to the creation of a new product. Citing the precedent set by the Supreme Court in Union of India & Ors. v. Delhi Cloth & General Mills Co. Ltd. & Ors., the Tribunal emphasized that manufacturing must result in a new commercial product distinct from the initial one. As electroplating did not produce a new product with a different name, character, or use, the Tribunal concluded that no duty was liable to be paid by the appellant, thereby allowing the appeal.

This detailed analysis of the judgment provides insights into the legal arguments, precedents, and conclusions drawn by the Appellate Tribunal CESTAT, New Delhi regarding the challenge to Central Excise duty demand and penalty imposition by M/s. Pragati Silicones Ltd.