2015 (10) TMI 1724 - AT - Central Excise

Denial of refund claim - Duty was paid whereas the activity was not amount to Manufacture - period of limitation - processing operations like punching, welding, trimming, drilling of holes, level cutting of edges and galvanizing in relation to erection of transmission tower - Held that - appellant s case is squarely covered by the decision of the Tribunal in the case of CCE, Hyderabad vs. Deepak Galvanising & Engg. Indus. P. Ltd. reported in 2008 (4) TMI 105 - CESTAT Bangalore Instant case relates to a period prior to 1.3.1988. Further, merely because specific entry was included viz. heading 73.08 that ipso facto does not mean that the process amounts to manufacture. The Revenue has to further prove that the process undertaken amounts to manufacture and also that the resultant products are marketable. Therefore, keeping in view all the facts and circumstances, we are of the considered view that the process undertaken by the appellant, viz. punching, welding, trimming, drilling of holes, level cutting of edges and galvanizing do not amount to manufacture. - activity carried out by the petitioner is not a manufacturing activity and the petitioner is entitled to refund of the duty paid during 1st March 1986 to 31st December 1986, then the refund claim of the petitioner shall be disposed of as per the provisions of Section 11B of the Central Excise Act. The adjudicating authority did not decide the question of refund as it has held the process as manufacture and liable to duty. Processes undertaken by the appellant do not amount to manufacture, therefore, we allow the appeal of the appellant and remand the matter back to the adjudicating authority to decide the refund claim of the appellant as per the directions of the Hon ble High Court under Section 11B of the Central Excise Act, 1944 - Decided in favour of assessee.

Summary

Issues:
Classification of processing operations as manufacture and refund claim rejection.

Analysis:
The appeal concerns the classification of processing operations like punching, welding, trimming, drilling of holes, level cutting of edges, and galvanizing as manufacture. The appellant, engaged in erecting transmission line towers, argued that these activities on duty-paid angles did not amount to manufacture. The dispute arose from the rejection of refund claims due to the processing operations being deemed as manufacturing activities.

The appellant challenged the order of the Commissioner (Appeals) on grounds of natural justice violation and non-consideration of submissions. The appellant contended that the processing of bought-out items did not result in a new item with a different character or use, citing various judgments to support their claim. They argued that the findings were contrary to Section 2(f) of the Central Excise Act, 1944.

On the other hand, the respondent argued that whether a process amounts to manufacture depends on the facts of each case. They maintained that the processes carried out by the appellant transformed the goods into parts used in transmission towers, poles, and welded masts, thereby constituting manufacture as per Section 2(f) of the Act. They cited relevant decisions to support their stance.

The Tribunal noted the arguments presented by both parties. It rejected the appellant's contention regarding the time limit for passing the order, finding a slight delay did not render the order illegal. However, the Tribunal agreed with the appellant's main argument that the processing operations did not amount to manufacture. Citing the definition of manufacture, the Tribunal emphasized that the process did not change the identity of the goods into a new product with distinct characteristics, as supported by precedent cases.

The Tribunal referenced a previous case where similar activities were held not to constitute manufacture. It also highlighted that the adjudicating authority's conclusion on excisability was legally incorrect based on prior decisions. Ultimately, the Tribunal allowed the appeal, remanding the matter to the adjudicating authority to decide the refund claim in accordance with the High Court's directions under Section 11B of the Central Excise Act, 1944.

In conclusion, the Tribunal ruled in favor of the appellant, determining that the processing operations in question did not amount to manufacture, thereby allowing the appeal and remanding the matter for further proceedings related to the refund claim.