2005 (12) TMI 419 - AT - Central Excise

Summary

Issues:
1. Whether the process of cutting and guniting on duty paid steel pipes amounts to a process of manufacture requiring duty payment and penalty.
2. Whether the invocation of a larger period for duty payment is valid.
3. Whether the appellants are entitled to a full waiver of pre-deposit and a stay on recovery pending appeal.

Analysis:
1. The appellants were required to pre-deposit a substantial amount for the appeal concerning the cutting and guniting process on duty paid steel pipes. The Revenue contended that this activity constitutes a process of manufacture, warranting duty payment and penalty. The Counsel argued that a previous order supported their position based on a Board's circular, and distinguished a cited case where duty was imposed due to pipe manufacturing. The Tribunal found the appellants had a strong case on the time bar issue, as previous proceedings were dropped, and on merits, as guniting alone does not qualify as a manufacturing process according to the Board's circular. Consequently, the Stay Application was granted with a full waiver of pre-deposit, and recovery stayed pending appeal.

2. The SDR opposed the Counsel's plea, asserting that the cutting and guniting process creates new goods, necessitating duty payment. Both authorities had detailed findings on invoking a larger period for duty. However, the Tribunal sided with the appellants, emphasizing the Board's circular from 1988 stating that guniting alone does not constitute manufacturing. The Tribunal distinguished the cited case where duty was imposed for both manufacturing and guniting, concluding that the appellants had a strong case against duty payment, leading to the Stay Application's approval.

3. The Tribunal, after careful consideration, found the appellants had a strong case on the time bar issue and the merits of the manufacturing process. Given the likelihood of success in the appeal, the Tribunal granted a full waiver of pre-deposit and stayed recovery pending appeal. Due to the significant amounts involved, the appeal was scheduled for an expedited hearing on 30th March 2006 to resolve the matter promptly.