2007 (4) TMI 483 - AT - Central Excise

Summary

Issues involved: Interpretation of the term "manufacture" u/s 2(f) of the Central Excise Act, 1944 for goods produced by slitting process in an S.E.Z. Unit and eligibility for concessional rate of duty under Notification No. 2/95-C.E. when goods are sold to the domestic tariff area.

Summary:

Issue 1: Interpretation of "manufacture" under Section 2(f) of the Central Excise Act, 1944:
The appellants, an S.E.Z. Unit, imported paper items, slit them into different sizes, and exported part of it as permitted by the Development Commissioner. The remaining portion was sold in the domestic tariff area, with duty paid at a concessional rate under Notification No. 2/95-C.E. The impugned Order stated that the slitting process did not constitute "manufacture" u/s 2(f) of the Act, leading to denial of the concessional duty rate for goods going to the domestic tariff area.

Issue 2: Eligibility for concessional rate of duty under Notification No. 2/95-C.E.:
The appellants argued that a liberal interpretation should include slitting in the definition of "manufacture" for S.E.Z. Units, supported by a Board's Circular and previous Tribunal decisions. They highlighted the Development Commissioner's approval and the EXIM Policy allowing sale of slitted paper in the domestic tariff area. Citing relevant case laws, they contended for the application of a liberal interpretation of the term "manufacture."

Judgment:
The Tribunal found merit in the appellants' submissions, considering the Board's Circular and precedent decisions. They held that a liberal interpretation of "manufacture" should apply to the appellants' S.E.Z. Unit, overturning the impugned Order. Consequently, the appeals were allowed, affirming that the concessional rate under Notification No. 2/95-C.E. cannot be denied for the goods in question.

Conclusion:
The Tribunal's decision favored the appellants, emphasizing the need for a broad interpretation of "manufacture" in the context of S.E.Z. Units and upheld their eligibility for the concessional duty rate under the specified Notification.