2014 (1) TMI 727 - AT - Central Excise

Process amounts to manufacture or not under Rule 16 (2) of Central Excise Rules 2002 Motor vehicles cleared after repair and reconditioning with putting chassis on payment of duty Waiver of Pre-deposit Held that - There is factual dispute on the process undertaken by the applicant as to whether it would amount to manufacture or not under Rule 16 (2) of the Central Excise Rules 2002 the decisions relied upon by both the sides would be looked into at the time of appeal hearing in detail - the learned advocate produced a chart which shows that there is some chassis were exported and cleared under Central Excise Notification 108/95 and also they availed cenvat credit for some portion - It appears that the amount may be excluded from demand of duty - the applicant to directed deposit a sum of Rupees Two crores as pre-deposit upon such submission rest of the duty to be stayed till the disposal Partial stay granted.

Summary

Issues:
1. Whether the process undertaken by the applicant amounts to manufacture under Rule 16(2) of the Central Excise Rules, 2002.
2. Maintainability of the demand for an amount equivalent to CENVAT credit under Rule 16(2).

Analysis:
1. The applicant, engaged in manufacturing motor vehicle chassis, received duty paid chassis for repair and reconditioning, availing Cenvat credit under Rule 16 of Cenvat Credit Rules, 2004. The dispute arose regarding whether the process undertaken by the applicant constituted manufacturing activity under Rule 16(2) of the Central Excise Rules, 2002. The applicant argued that dismantling and rebuilding the chassis amounted to manufacture, citing precedents like Maruti Udyog Ltd. vs CCE New Delhi and Apollo Tyres Ltd. vs CCE Pune. The Revenue contended that dismantling or replacement of parts did not qualify as manufacture, referring to decisions in similar cases. The Tribunal found a factual dispute on the manufacturing aspect and directed the applicant to deposit a specified sum, pending further appeal proceedings.

2. The second issue pertained to the maintainability of the demand for an amount equal to the CENVAT credit availed under Rule 16(2). The applicant argued that there was no specific provision for such a demand and relied on legal precedents to support their position. The Revenue, however, cited decisions from other cases to justify the demand. The Tribunal acknowledged the conflicting views presented by both sides but directed the applicant to make a partial deposit, considering certain chassis were exported and cleared under a specific notification, which might impact the demand amount. The Tribunal granted relief on the predeposit of the balance tax, interest, and penalty pending appeal, subject to the specified deposit by the applicant.

In conclusion, the judgment addressed the issues of whether the process undertaken by the applicant constituted manufacture under Rule 16(2) and the maintainability of the demand for an amount equivalent to the CENVAT credit. The Tribunal found a factual dispute on the manufacturing aspect and directed a partial deposit by the applicant, considering certain exported chassis. The decision provided temporary relief on the predeposit pending appeal, emphasizing the need for further examination during the appeal hearing.