2005 (2) TMI 627 - AT - Central Excise

Summary

Issues:
1. Whether the conversion of sheets by cutting/slitting of HR/CR coils amounts to manufacture.
2. Applicability and binding nature of Board's Circulars and C.B.E. & C. Circulars on Revenue.
3. Granting dispensation of duty and penalty based on previous orders and interpretations.

Analysis:

Issue 1:
The primary issue in this case is whether the conversion of sheets by cutting/slitting of HR/CR coils constitutes manufacturing. The appellant argued that as per Board's Circular No. 584/21/2001-CX, such conversion amounts to manufacture if the resultant product is classifiable under a different sub-heading of the Central Excise Tariff. Additionally, the Appellate Commissioner (Appeals) in a previous order held that this process is incidental to the completion of a manufactured product, allowing Modvat credit on the items used. The Revenue did not challenge this order, indicating its finality.

Issue 2:
The second issue revolves around the binding nature of Board's Circulars and C.B.E. & C. Circulars on Revenue. The appellant relied on a Supreme Court judgment that established the binding nature of these circulars on Revenue, even if they provide a different interpretation than the Court. In this case, the Board's Circular clarified that slitting of HR/CR coils into sheets amounts to manufacture, further supporting the appellant's argument for dispensation of duty and penalty.

Issue 3:
Lastly, the issue of granting dispensation of duty and penalty based on previous orders and interpretations was considered. The Tribunal acknowledged the binding nature of Board's Circulars on Departmental Authorities, as highlighted by the Supreme Court. Considering the arguments presented and the previous order by the Appellate Commissioner (Appeals), the Tribunal found that the appellants had made a strong case for dispensation of duty and penalty. Consequently, the Tribunal dispensed with duty and penalty until further orders, scheduling the case for a hearing on a specific date.

In conclusion, the judgment by the Appellate Tribunal CESTAT, Kolkata addressed the issues of manufacturing through conversion of sheets, the binding nature of circulars on Revenue, and the dispensation of duty and penalty based on previous interpretations and orders. The decision favored the appellant, granting dispensation of duty and penalty until further orders, emphasizing the importance of Board's Circulars and legal interpretations in such cases.