2015 (3) TMI 733 - HC - Central Excise

Excisability of the respondent s product custom pack - Whether in the facts and circumstances of the case, the process carried out by the assessee will amount to manufacture or not - Held that - The appellant has placed reliance on the decision of the Apex Court in the case of FEDDERS LLLOYD CORPORATION LTD. VS. COMMISIONER OF CENTRAL EXCISE, MUMBAI reported in 2007 (12) TMI 8 - SUPREME COURT OF INDIA wherein the definition of the word manufacture as laid down in Section 2(f) of the Central Excise Act has been considered and the law laid down by the Apex Court is clear that process will result in alteration or change in the fact leading to production of a commercially new article as a manufacture. In the instant case, the Tribunal has recorded its finding of fact that the product is only pack and no new product is manufactured by the respondent assessee and therefore no excise duty could be levied. Therefore, the decision of the Apex Court is no help to the appellant as only packaging of product is being done of the goods which are manufactured by the assessee. - No merit in appeal - Decided against Revenue.

Summary

Issues:
Excisability of the product "custom pack" - Whether the process amounts to manufacture or not.

Analysis:
The dispute in this case revolved around the excisability of the product "custom pack." The appellant contended that the activities undertaken by the respondent resulted in the emergence of a new manufactured product attracting excise duty. The appellant relied on documents showing the manufacturing flow chart of the customs pack, claiming that the respondent had previously declared the customs pack as a manufacturing activity. On the other hand, the respondent argued that they were only manufacturers of Heart Valve and ECG electrodes, not of the customs pack. The Commissioner of Central Excise & Customs held that the process amounted to manufacture, leading to the creation of a new product known as "custom pack," thus attracting excise duty and penalty.

The Tribunal, however, had differing opinions on the matter. The Judicial Member agreed with the Commissioner, stating that the product constituted a new commercially different commodity, while the Technical Member believed it was merely packing goods and did not result in a new product. As a result of this disagreement, the matter was referred to a Third Member, who concluded that the process of cutting tubing and packing it for heart surgery did not result in the creation of a new product. The Third Member's decision was based on the absence of a new commercially different commodity emerging from the process, aligning with the Technical Member's view.

The appellant challenged the Tribunal's decision, citing a Supreme Court case that defined "manufacture" as the production of a commercially new article resulting from an alteration or change in the facts. The Tribunal's finding that no new product was manufactured by the respondent led the court to dismiss the appeal, ruling in favor of the assessee. The court held that since only packaging of the goods was being done, and no new product emerged, excise duty could not be levied.