2002 (6) TMI 595 - AT - Central Excise

Summary

Issues Involved:
1. Applicability of Section 4A of the Central Excise Act for determining the duty on lubricating oils cleared in bulk.
2. Whether re-packing amounts to manufacture.
3. Validity of the show cause notice and subsequent orders.
4. Provisional assessments and their impact on the case.

Issue-wise Detailed Analysis:

1. Applicability of Section 4A of the Central Excise Act:
The primary issue was whether the appellants were liable to pay duty on the goods sold after re-packing from the depot under Section 4A(1) of the Central Excise Act. The department contended that since the goods were sold at the depot in packaged form, they were subject to the provisions of Section 4A, which came into effect from 14-5-1997. The Commissioner (Appeals) upheld this view, stating that the goods were not sold at the factory gate but were stock transferred and sold from the depot in packaged form, making Section 4A applicable. The appellants argued that Section 4A was not applicable as the goods were cleared in bulk and re-packing did not amount to manufacture. The Tribunal majority concluded that since the goods were cleared in bulk and not covered by the Weights and Measures Act for MRP, Section 4A was not applicable.

2. Whether Re-packing Amounts to Manufacture:
The appellants contended that re-packing did not amount to manufacture during the disputed period (1-8-99 to 31-1-2000). The Tribunal noted that re-packing was not considered a manufacturing process until the Finance Act of 2000 introduced relevant provisions. The Tribunal referred to previous decisions, including the appellants' own case and the Savitha Chemicals case, which held that re-packing does not amount to manufacture and thus Section 4A was not applicable.

3. Validity of the Show Cause Notice and Subsequent Orders:
The appellants argued that the show cause notice was issued under Section 4A, but the order-in-original was passed under Section 4, which was upheld by the Commissioner (Appeals) under Section 4A. The Tribunal found that the original authority had indeed proceeded under Section 4A and had not traversed beyond the scope of the show cause notice. The Tribunal majority held that the show cause notice and subsequent orders were not valid as they incorrectly applied Section 4A.

4. Provisional Assessments and Their Impact on the Case:
The appellants claimed that the assessments were provisional during the disputed period, making the show cause notice and subsequent orders premature. The Tribunal observed that this plea was raised for the first time before them and was not presented before the original or lower appellate authority. Consequently, the Tribunal found no merit in this plea.

Conclusion:
The Tribunal majority set aside the impugned order, agreeing with the appellants that Section 4A was not applicable to the bulk clearances of lubricating oils, as they were not covered by the Weights and Measures Act for MRP. The Tribunal upheld the appellants' argument that re-packing did not amount to manufacture during the disputed period and that the show cause notice and subsequent orders were not valid. The appeal was allowed in favor of the appellants.