9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (9) TMI 297 - AT - Central ExciseDuty demand - Manufacturing activity or repair activity - Assessee received defected compressors - Held that - there is clear distinction between the newly manufactured compressor and repaired one. It is also observed that if it is assumed that the repair claimed by the Appellant is not repair and it is a manufacture in terms of Section 2(f), then as per the nature of the product, there will be no concept of repair in respect of compressor and the like goods, for the reason that there can not be any process other than the process carried out by the Appellant in the present case for repair of the compressor. Obviously, if any defective compressor needs to be repaired, these very activities are required to repair the compressor - activity carried out by the Appellant on the defective compressor is clearly an activity of repair and by no stretch of imagination, it can be called as manufacture - Decided in favour of assessee.
Issues Involved:
1. Whether the activity of repairing defective compressors constitutes 'repair' under Rule 173H of the Central Excise Rules, 1944, or 'manufacture' under Section 2(f) of the Central Excise Act, 1944. 2. Whether the process of repairing defective compressors results in the creation of a new and distinct commercial product. Issue-wise Detailed Analysis: 1. Nature of Activity - Repair vs. Manufacture: The primary issue to be resolved is whether the activity performed by the Appellant on the defective compressors constitutes 'repair' as per Rule 173H of the Central Excise Rules, 1944, or 'manufacture' under Section 2(f) of the Central Excise Act, 1944. The Appellant argued that the defective compressors received from customers were repaired and returned without payment of excise duty, following the procedures under Rule 173H. The revenue contended that the process undertaken by the Appellant amounted to manufacturing, thereby making the repaired compressors liable to excise duty as newly manufactured goods. The Tribunal examined the processes involved, which included cutting open, dismantling, segregating, repairing parts, reassembling with some new parts, testing, painting, dehydrating, filling with refrigeration oil, and packing in new cartons. It was concluded that despite these extensive processes, the activity remained one of repair since the identity of the compressor as a compressor did not change. The Tribunal emphasized that a clear distinction exists between a newly manufactured compressor and a repaired one, as the latter involves working on an already manufactured and used product to restore its functionality. 2. Creation of New and Distinct Commercial Product: The Tribunal referred to various judicial precedents to determine whether the repaired compressors emerged as new and distinct commercial products. In the case of Shriram Refrigeration Industries Ltd. vs. CCE, it was held that the process of repairing compressors, which involved similar steps as in the present case, did not amount to manufacturing a new product. The Tribunal also referenced the Supreme Court's decision in Tecumseh Products India Ltd., which distinguished between the repair of compressors and the manufacture of new parts like stators used in repairs. The Tribunal noted that the Supreme Court upheld the view that the repair of compressors does not result in a new commercial product. Further, the Tribunal cited cases such as Sudhir Engineering Co. vs. CCE, Glass Equipment India Ltd. vs. CCE, and CCE vs. Samtel Color Ltd., where it was consistently held that unless a new commodity emerges from the repair process, it cannot be treated as manufacture. In these cases, the repaired items retained their original identity and did not transform into new commercial products. Conclusion: Based on the analysis of the processes involved and the judicial precedents, the Tribunal concluded that the activity carried out by the Appellant on the defective compressors is clearly an activity of repair and not manufacture. Consequently, the demand for excise duty on the repaired compressors was not justified. The Tribunal set aside the impugned order and allowed the appeal with consequential relief in accordance with the law.
|
