2004 (9) TMI 521 - AT - Central Excise

Manufacture - Tariff entry - Change during process - Appeal to Appellate Tribunal - Valuation

Summary

Issues: Duty demand and penalty for manufacturing aluminium without discharging Central Excise duty, Valuation of goods, Classification of goods manufactured

Duty Demand and Penalty:
The judgment addresses a duty demand of over Rs. 20 lakhs and an equal penalty imposed on the appellant for manufacturing aluminium from assorted aluminium waste and scrap without discharging Central Excise duty. The appellant argued that no manufacturing occurred as they procured scrap from the market and converted it into scrap, emphasizing that the resultant product was still scrap. The appellant contended that the processes involved did not create new goods with distinct identities. However, the tribunal disagreed, stating that the process resulted in obtaining new aluminium metal from scrap through melting, creating entirely new material in name, identity, and use. The tribunal held that recycling scrap into primary metal constitutes manufacturing, rejecting the appellant's argument based on the Customs and Central Excise Tariff classification. The tribunal emphasized that the question of manufacture is determined by the facts of each case, and since there was a conversion of scrap into original metal, it constituted manufacturing.

Valuation of Goods:
The appellant challenged the valuation of goods, arguing that the value was incorrectly determined at Rs. 75/- per kg instead of Rs. 70/- per kg. The tribunal agreed with the appellant, stating that the value should be Rs. 70/- per kg as per the Panchanama, and for previous years, valuation should consider all evidence on record. The tribunal clarified that sale prices should be treated as cum-duty price, not assessable value, and directed the reworking of value and duty based on this principle.

Classification of Goods Manufactured:
The appellant claimed to have carried out two different processes resulting in two different materials classified as 'W' for cleaned scrap and 'Y' for aluminium slabs. However, the tribunal found no merit in this argument, noting that the appellant never raised this distinction before the authorities or in the books. The tribunal observed that the entries in the books did not support such a classification, as they only mentioned quantities under 'Y' and 'W,' with the weight of each piece indicating slabs, not assorted scrap pieces. Therefore, the tribunal rejected the appellant's contention regarding the manufacturing of two categories of products.

Penalty Imposition:
The tribunal deemed the penalty imposed on the appellant as excessive and reduced it to Rs. 5 lakhs. The appeal was allowed in the terms mentioned in the judgment, addressing the duty demand, valuation of goods, and classification of goods manufactured.