2010 (6) TMI 468 - AT - Customs

Demand - Prima facie Section Note 6 to Section XVI of the Customs Tariff and Board s Circular relied upon by the appellants support the case of the appellants that the process undertaken by them amounts to manufacturing - Secondly, if the Department s view is held to be correct that no further manufacturing has been done, then no further duty would be payable on the finished goods - Hence taking into account the payment of about Rs. 33.00 Lakhs already made by the appellants as against the demand of Rs. 44.00 Lakhs - Balance amount of pre-deposit is waived accordingly

Summary

Issues:
1. Whether the process undertaken by the appellants amounts to manufacturing for the purpose of duty payment on imported goods?
2. Whether the duty demand made by the Department is correct in this case?

Analysis:
1. The appellant imported Cathode Ray Picture Tubes which were incomplete but possessed essential characteristics of finished goods. The appellant further processed these tubes and cleared them in the domestic tariff area after paying duty and obtaining necessary approval. The appellant argued that the process undertaken constitutes manufacturing, citing Section Note 6 to Section XVI of the Customs Tariff and a Board Circular. On the contrary, the Department contended that the imported tubes already had essential characteristics of finished goods, and thus, no further manufacturing was done. The Tribunal found that prima facie, the appellant's process could be considered manufacturing as supported by the legal provisions and circular cited. However, if the Department's view were correct, no additional duty would be payable on the finished goods.

2. Considering the conflicting arguments, the Tribunal observed that the duty paid by the appellant amounted to approximately Rs. 33.00 Lakhs, while the Department demanded Rs. 44.00 Lakhs. In light of this, the Tribunal decided to waive the requirement of the balance amount of pre-deposit during the appeal's pendency. This decision was based on the acknowledgment that if no further manufacturing was conducted as claimed by the Department, then no additional duty would be due on the goods. The Tribunal's ruling aimed to balance the interests of both parties pending a final determination on whether the process undertaken by the appellants constituted manufacturing for duty payment purposes.

This detailed analysis of the judgment highlights the key issues, arguments presented by both sides, legal provisions cited, and the Tribunal's decision to waive the balance amount of pre-deposit during the appeal process.