2015 (10) TMI 154 - AT - Central Excise

Denial of refund claim - payment of duty whereas it was held that process like cutting, drilling would not amount to manufacture - Held that - When the Order in Dodsal s case 2000 (8) TMI 93 - SUPREME COURT OF INDIA was within the knowledge of the department while order of dismissal of their appeals was passed by Apex Court in Civil Appeal 2006 (11) TMI 633 - SUPREME COURT , Revenue did not make any mention before the Hon ble court that its appeals may also be tagged with the matter in Collector of Central Excise, Jaipur Vs Man Structurals Ltd. reported in 2001 (4) TMI 87 - SUPREME COURT OF INDIA referred to larger bench. In absence of any mention by Revenue, the judgment of the Hon ble Supreme Court in Civil Appeal reached to finality. This can be said following the ratio laid down by apex court in Kunhayahmmed Vs State of Kerala reported in 2000 (7) TMI 67 - SUPREME Court explaining the doctrine of merger. Accordingly, in view of the ratio laid down therein, Revenue has no scope further to agitate the self same issue against the appellant on self same fact contrary to the doctrine of res judicata. Therefore, it can unambiguously be stated that the activity carried out by the appellant does not amount to manufacture and goods coming out of the activity carried out by it is not classifiable under Heading 7308 2011 - Refund allowed. CENVAT credit shall only be admissible on inputs used in any other activity resulting in duty liability other than the impugned activity. There shall not be levy of interest or penalty for no levy of duty ordered by this order. Reversal of input credit if any required under law be made within a month of receipt of this order and learned Adjudicating Authority informed as to the same within two weeks thereof. - refund shall be made in accordance with law subject to verification of the deposit particulars. - Decided in favour of assessee.

Issues Involved:
1. Denial of refund sanctioned by the Adjudicating Authority.
2. Demand of duty on the same issue for which refund was granted.
3. Classification of the appellant's activities under Tariff Heading 7308.90.
4. Admissibility of CENVAT credit.
5. Liability of duty on scrap sold by the appellant.

Detailed Analysis:

1. Denial of Refund Sanctioned by the Adjudicating Authority:
The appellant, M/s. Tamil Nadu Electricity Board (TNEB), filed refund applications for different periods on the grounds that the duty paid under protest was refundable since their activities did not amount to manufacture. The Adjudicating Authority sanctioned these refunds based on previous Tribunal decisions that cutting and drilling activities did not constitute manufacturing. Revenue, however, appealed against these refund orders, and the Commissioner (Appeals) reversed the decision, denying the refunds. The appellant then approached the Tribunal, which stayed the operation of the Commissioner's orders.

2. Demand of Duty on the Same Issue for Which Refund was Granted:
Revenue issued show-cause notices demanding duty for the same periods and issues for which refunds had been granted. The Adjudicating Authority confirmed these demands, and the Commissioner (Appeals) upheld these orders. The appellant contended that their activities did not amount to manufacture, as previously adjudicated by the Tribunal and upheld by the Supreme Court. The Tribunal noted that the issue had already been settled in favor of the appellant in previous judgments, including those by the Supreme Court, and ruled that the demands were not sustainable.

3. Classification of the Appellant's Activities Under Tariff Heading 7308.90:
The Tribunal reiterated that the activities carried out by the appellant, which involved cutting angles and channels and punching holes, did not amount to manufacture. This was consistent with previous Tribunal decisions and the Supreme Court's dismissal of Revenue's appeals on this issue. Therefore, the goods were not classifiable under Tariff Heading 7308.90, and the appellant's activities did not attract duty.

4. Admissibility of CENVAT Credit:
The Tribunal addressed the issue of CENVAT credit in appeals E/41368/2013 and E/41369/2013. Since the activities did not amount to manufacture, the appellant was not entitled to CENVAT credit on inputs used in these activities. However, the Tribunal allowed CENVAT credit for inputs used in any other duty-liable activities. The Tribunal ordered the reversal of input credit where required and directed the refund of pre-deposits made by the appellant, subject to verification.

5. Liability of Duty on Scrap Sold by the Appellant:
In appeal E/10229/2004, the Tribunal examined whether the scrap sold by the appellant was liable to duty. It concluded that since the scrap was not manufactured by the appellant, it was not subject to duty. This appeal was also allowed in favor of the appellant.

Conclusion:
The Tribunal ruled in favor of the appellant on all issues, maintaining that the appellant's activities did not constitute manufacturing, thereby nullifying the duty demands and upholding the refunds. The Tribunal also clarified the admissibility of CENVAT credit and ruled that the scrap sold by the appellant was not liable to duty. The appeals were allowed, and the stay applications and miscellaneous applications were disposed of accordingly.

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