2013 (2) TMI 571 - AT - Central Excise

Waiver of pre-deposit - Stay of recovery - Manufacturers of laboratory equipment - Cleared the same on payment of excise duty - equipment cleared to the customers are returned back - Rule 16 of Central Excise Rules, 2002 - Repair - recondition - re manufacture - AO argued that goods are cleared after repair/reconditioning, etc. the activity does not amount to manufacture and, therefore, the appellant should have reversed the original credit taken - Held that - Following the decision in case of MARUTI UDYOG (2002 (8) TMI 155 - CEGAT, COURT NO. II, NEW DELHI) The statement of facts made in the show-cause notice does not lead to any conclusion that the activity undertaken by the appellant does not amount to manufacture. In favour of assessee

Summary

Issues:
1. Appeal and stay application against order-in-appeal dated 30/04/2012.
2. Whether dismantling and salvaging parts for reuse constitutes manufacture for excise duty purposes.
3. Reversal of credit for activities not amounting to manufacture.

Issue 1: Appeal and Stay Application
The appeal and stay application were filed against order-in-appeal No. YDB/34/2012 dated 30/04/2012 passed by the Commissioner (Appeals) Mumbai. The appellant, a manufacturer of laboratory equipment, sought consideration for their case.

Issue 2: Manufacture for Excise Duty
The appellant cleared equipment to customers, some of which were returned and dismantled. Usable parts salvaged were reused in manufacturing similar equipment, with unusable parts sold as scrap. The department contended that this activity did not amount to manufacture, requiring reversal of original credit taken. The lower appellate authority upheld the demand, leading to the current appeal.

Issue 3: Reversal of Credit
The appellant argued that reusing salvaged parts in manufacturing constituted manufacture, thus not necessitating credit reversal. Citing a Tribunal judgment in a similar case, the appellant sought a stay of dues. The department disagreed, asserting that the activity was merely repair, not manufacture. Upon review, the Tribunal found that the appellant's activity did amount to manufacture, as salvaged parts were used in creating new equipment. Consequently, the Tribunal granted a waiver of pre-deposit of dues and stayed recovery during the appeal process.

In conclusion, the Tribunal ruled in favor of the appellant, determining that the salvaging and reuse of parts for manufacturing constituted a manufacturing activity, warranting a waiver of pre-deposit of dues.