2005 (6) TMI 445 - AT - Central Excise

Summary

Issues:
1. Dispensing with payment of duty and penalty ordered by the Commissioner.
2. Interpretation of the term 'factory' under the Central Excise Tariff Act.
3. Applicability of previous judgments in similar cases.
4. Decision on waiver of pre-deposit and compliance with Section 35F of the Act.

Analysis:
1. The case involved the appellant seeking dispensation from paying duty and penalty amounting to Rs. 2,45,92,972/- and Rs. 10 lacs respectively, as ordered by the Commissioner. The appellant, engaged in manufacturing lead and zinc concentrates, had availed Modvat/Cenvat credit on goods from Chapters 84 and 85 of the Central Excise Tariff Act, treating them as capital goods used in their mines for obtaining raw materials. The Commissioner found the capital goods were used in the mines, not within the factory for final product manufacturing.

2. The appellant argued that the process of mining for raw materials constituted manufacturing within the definition of 'factory' under Section 2(e) of the Act. Citing various legal precedents, the appellant contended that even activities like digging out rock material for subsequent manufacturing in the factory premises should be considered part of the manufacturing process. However, the Tribunal noted that in a previous order, it had held that the mines were not part of the factory, indicating a narrower interpretation of the term 'factory' in the context of manufacturing processes.

3. The appellant relied on judgments such as Ardeshi H. Bhiwandiwala v. State of Bombay, Union of India v. Hindustan Zinc Ltd., Grauer & Weil (India) Ltd. v. CCE, Baroda, and CCE v. Rajasthan State Chemical Works to support their argument. However, the Tribunal found that these precedents did not align with the specific circumstances of the case, especially regarding the location and nature of the manufacturing activities conducted by the appellant. The Tribunal emphasized the distinction between mere extraction of raw materials and actual manufacturing processes within the factory premises.

4. Ultimately, the Tribunal rejected the appellant's plea for waiver of pre-deposit, stating that the appellant failed to establish a strong case for dispensation from the payment obligations. The Tribunal directed the appellant to deposit the due amount within eight weeks, failing which the appeal would be dismissed for non-compliance under Section 35F of the Act. The compliance deadline was set for 26th August 2005, with the judgment being dictated and pronounced on 22nd June 2005.