2009 (4) TMI 828 - AT - Central Excise

Summary

Issues:
1. Whether repacking and refinishing activities amount to manufacture under Chapter Note 4 of Chapter 62 of the Central Excise Tariff Act, 1985.
2. Whether the duty liability should be restricted to one year prior to the date of the show cause notice.
3. Whether the penalty imposed under Section 11AC is justified.

Analysis:

Issue 1:
The main issue in this case is whether repacking and refinishing activities constitute manufacture under Chapter Note 4 of Chapter 62 of the Central Excise Tariff Act, 1985. The respondents argued that they were new to the Central Excise Act and were unclear about the interpretation of these activities. The Commissioner (Appeals) upheld the duty liability but restricted it to one year prior to the show cause notice. The Tribunal referred to the Supreme Court's decision in a similar case and concluded that the activities did not amount to manufacture. The Tribunal found no evidence of intent to evade duty and ruled in favor of the respondent.

Issue 2:
Regarding the duty liability, the Revenue contended that the duty should apply for the entire period due to alleged suppression of facts by the respondent. The Tribunal analyzed the interpretation of Chapter Note 4 of Chapter 62 and noted that the Supreme Court had ruled in a similar context favoring the respondent. The Tribunal found no evidence of suppression of facts to evade duty and upheld the Commissioner (Appeals)'s decision to restrict the duty liability to one year prior to the show cause notice.

Issue 3:
The Revenue challenged the dropping of the penalty imposed under Section 11AC by the Commissioner (Appeals). The Revenue argued that the penalty should apply due to alleged suppression of facts and contravention of the Central Excise Act. The Tribunal reviewed the provisions of Section 11AC and the evidence presented. It found no evidence of intent to evade duty and upheld the decision to set aside the penalty imposed under Section 11AC while affirming the penalty under Rule 25 of the Central Excise Rules.

In conclusion, the Tribunal rejected the Revenue's appeal, stating that the impugned order was legally sound, and the appeal lacked merit. The Tribunal found in favor of the respondent on the issues of duty liability and penalty, based on the interpretation of relevant legal provisions and the absence of evidence of intent to evade duty.