2006 (3) TMI 458 - AT - Central Excise

Summary

Issues Involved:
Identification of manufacturing process for excisable goods; Classification of coated pipes under Central Excise Tariff Act, 1985; Application of duty and penalties; Interpretation of Tribunal's decision in Tega India Ltd. case and Board's Circular No. 17/88; Comparison with Commissioner's order on similar activities in other units; Binding effect of CBE&C Circular dated 1-6-88; Determination of manufacturing activity in coating process; Justification for holding the activity as manufacture; Relevance of Supreme Court's decision on coated and uncoated pipes; Acceptance of Commissioner's order on similar activities in other units.

Detailed Analysis:
The case involves the identification of a manufacturing process for excisable goods, specifically coating of M.S. Pipes, leading to the emergence of a new commercial commodity. The Commissioner confirmed a substantial duty demand and imposed penalties against the appellant, alleging manufacturing activity resulting in a new product classification under the Central Excise Tariff Act, 1985. The appellant's factory in Visakhapatnam is engaged in various types of coating processes, such as Three layer Polyethylene Coating, Coal Tar Coating, Internal Coating of liquid epoxy, Concrete Coating, and Fusion bonded epoxy coating.

After completing adjudication proceedings, the Commissioner determined that the activity constitutes manufacture, resulting in a new excisable product under heading 73.04 of the Schedule. The appellant challenged this decision, citing reliance on previous Tribunal decisions, Board Circular No. 17/88, and a Commissioner's order on similar activities in other units, which did not amount to manufacture. The Circular dated 1-6-88 by CBE&C also provided guidance on processes like cement mortar coating and epoxy/bitumen painting, stating they do not amount to manufacture.

The Tribunal referred to the Tribunal's decision in Tega India Ltd. case and the Supreme Court's ruling, emphasizing that activities like fixing, rubberizing, and painting pipes do not amount to manufacture. The Supreme Court clarified that headings 7303 and 7304 of the Central Excise Tariff Act do not differentiate between coated and uncoated pipes. Given the settled legal position, the Tribunal found no justification for considering the appellant's activity as manufacture, especially since a Commissioner's order on other units had already held the activity not amounting to manufacture.

In light of the above discussion and legal precedents, the Tribunal set aside the impugned order, allowing all appeals with consequential relief to the appellants. The decision was pronounced in court on 24-3-2006, highlighting the importance of established legal principles and consistency in interpreting manufacturing activities for excisable goods.