2013 (7) TMI 597 - AT - Central Excise

Manufacture Activity gave rise to distinct product Held that - By an apparent look, the raw material suggests that without undertaking processing thereof no finished goods can be produced since finished goods exhibits altogether a different look quite distinct from raw material which is visible to naked eye - Difficult to agree with the appellant that there was no manufacture done - Activity carried out by the appellant amounts to manufacture which gave rise to the finished goods which was liable to excise duty Decided against the Assessee. Penalty Held that - For the difficulty of interpretation of law and technicality of examination involved, penalty imposed is waived Decided in favor of Assesse.

Summary

Issues involved: Determination of whether the activity amounts to manufacture for excise duty liability and waiver of penalty.

Analysis:

1. Manufacture for Excise Duty Liability:
The judgment revolves around the determination of whether the appellant's activity amounts to "manufacture" for the purpose of excise duty liability. The Tribunal examined the raw material and finished goods presented before them. It was observed that the finished goods exhibited a distinct identity and marketability compared to the raw material. The Tribunal noted a structural change by touch between the raw material and the finished goods, indicating a processing activity that transformed the raw material into a marketable form. The Tribunal concluded that the appellant's process of converting raw material into finished goods, falling under Chapter 84, constituted manufacturing. Therefore, the Tribunal held that excise duty was payable on the finished goods at the prevailing rate during the relevant period.

2. Waiver of Penalty:
Considering the complexity of the interpretation of law and the technical examination involved in the case, the Tribunal decided to waive the penalty that was imposed. The waiver of penalty was justified based on the difficulty of interpreting the legal provisions and the technical nature of the examination conducted during the proceedings. The Tribunal's decision to waive the penalty was a result of the specific circumstances of the case, acknowledging the challenges faced by the appellant in understanding and complying with the legal requirements.

In conclusion, the Tribunal partially allowed the appeal, determining that the appellant's activity constituted manufacture subject to excise duty liability. The waiver of penalty was granted due to the complexities involved in the case. The judgment emphasizes the importance of examining the physical characteristics and marketability of goods to determine the applicability of excise duty, while also considering the technical and legal complexities that may impact the imposition of penalties.