2012 (5) TMI 410 - AT - Central Excise

Availability of Cenvat Credit - Manufacturing process - Section 2(f) of central excise - fabrication of Steel Tubular Poles - process of cutting MS black pipes according to the required length, swaging of the pipes, the pipes of different diameters are then welded and then painting of the same in the steel tube section. - held that - the processes of swaging and welding carried out by the applicant result into manufacture of tubular poles and pipes of different sizes within Section 2 (f) of CEA, 1944. - prima facie case for total waiver of pre deposit of duty and penalty.

Summary

Issues: Application for waiver of pre-deposit of Cenvat credit, Education Cess, Secondary & Higher Education Cess, and penalty imposed under Section 11AC of the Central Excise Act, 1944.

Analysis:
1. Manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944:
The case revolved around the question of whether the processes carried out by the appellants, involving swaging and welding of pipes to manufacture steel tubular poles, constitute "manufacture" within the definition of Section 2(f) of the Central Excise Act. The Revenue contended that the processes did not amount to manufacture, leading to the issuance of a show cause cum demand notice for recovery of CENVAT credit and penalties. The adjudicating authority upheld the demand and penalty, stating that the processes did not meet the definition of manufacture under the Act.

2. Appellant's Argument and Legal Precedents:
The appellant's consultant argued that the processes of swaging and welding should be considered as manufacture based on legal precedents. Reference was made to the judgment of the Hon'ble Apex Court in the case of Prachi Industries, where it was held that swaging constitutes manufacture under Section 2(f) of the Central Excise Act. Additionally, the consultant distinguished another judgment involving welding processes, emphasizing that in the present case, both swaging and welding were employed to manufacture tubular poles, meeting the definition of manufacture under the Act.

3. Revenue's Contentions:
On the contrary, the Revenue, represented by the Commissioner, maintained that the processes employed by the appellant did not result in a distinct commodity with a distinct character and use. It was argued that the pipes remained pipes even after the processes, thus failing to qualify as a process of manufacture under the Act. The Commissioner reiterated the findings of the adjudicating authority in this regard.

4. Tribunal's Decision and Legal Analysis:
After hearing both parties and examining the records, the Tribunal referred to the judgment in Prachi Industries to determine the manufacturing nature of swaging and welding processes. The Tribunal found that the processes carried out by the appellant, including swaging and welding, resulted in the manufacture of tubular poles and pipes of different sizes within the scope of Section 2(f) of the Central Excise Act. Relying on the legal precedent and the distinction made in previous judgments, the Tribunal concluded that the appellant had established a prima facie case for the waiver of pre-deposit of duty and penalty. Consequently, the pre-deposit of duty and penalty were waived, and the recovery thereof stayed during the appeal's pendency.

This comprehensive analysis of the judgment highlights the key legal issues, arguments presented by both parties, relevant legal precedents, and the Tribunal's decision based on the interpretation of the Central Excise Act.