2009 (8) TMI 1060 - AT - Central Excise

Summary

Issues:
1. Challenge to order demanding duty, interest, and penalty on imported needles.
2. Contention on whether sterilization of needles amounts to manufacture.
3. Calculation of duty and abatement of Cenvat credit.
4. Interpretation of legal precedents on the identity change of products post-sterilization.
5. Justification for granting stay on the impugned order.

Analysis:

Issue 1:
The appellants contested the order demanding duty, interest, and penalty on imported needles used in manufacturing medical instruments. The Commissioner upheld the demand, citing sterilization and packing post-import as constituting manufacture under the Central Excise Act, 1944.

Issue 2:
The main contention revolved around whether sterilization of needles constitutes manufacture. The appellants argued that sterilization merely improves hygiene and does not create a new product, thus not amounting to manufacture. The Department countered, stating that the process changes the product's identity, making it marketable for specific purposes.

Issue 3:
The calculation of duty was disputed by the appellants, who claimed errors in the assessment. They argued that duty should be based on the cum-duty price and sought abatement of Cenvat credit on inputs if sterilization is deemed manufacturing.

Issue 4:
Legal precedents were cited by both parties to support their arguments on the identity change of products post-sterilization. The appellants relied on decisions emphasizing that the processed article must be distinct in identity from the original commodity to constitute manufacture.

Issue 5:
The Tribunal considered previous decisions related to sterilization and manufacturing activities by the appellants. It noted that the process gave a distinct identity to the needles, making them marketable for specific purchasers. The Tribunal found no justification to grant a stay on the impugned order, aligning with the Department's view on sterilization constituting manufacture.

In conclusion, the Tribunal directed the appellant to deposit a specified amount within a set period, waiving the duty, interest, and penalty claimed under the impugned order. The stay application was disposed of accordingly, pending compliance.