2016 (1) TMI 477 - AT - Central Excise

100% EOU - scope of the term manufacture as per EXIM - demand of excise duty on the indigenously procured goods and custom duty on the imported goods on the ground that goods procured indigenously and imported were exported as such and was not used in the manufacture - Notification No. 52/2003-Cus., dated 31-3-2003 and Central Excise Notification No. 22/2003-C.E - The appellant time and again made categorical submission that goods indigenously procured and imported were exported after re-packing and labelling and the activity of repacking/labelling is amounting to manufacture as per the EXIM Policy. Held that - From the definition, it is very clear that the manufacture means not only covered the activity which brings into, existence new product but it also includes independent activity such as re-packing, lebelling, etc. From the above definition it is very clear that if the imported goods or indigenous goods procured by the appellant has undergone the process of repacking and labelling/re-labelling as claimed and submitted by the appellant, then it cannot be said that the goods exported by the appellant is without carrying out manufacture activity. Commissioner have not given any emphasized on the aspect of re-packing and labelling/re-labelling as manufacture. The Commissioner has also not discussed in his order whether the re-packing and labeling has taken place and in what manner. - Commissioner has not dealt with submission the made by the appellant on the issue of Revenue neutrality - Matter remanded back.

Summary

Issues:
1. Denial of Notification No. 22/2003-C.E. and Notification No. 52/2003-Cus.
2. Violation of conditions for availing duty exemptions.
3. Definition of "manufacture" under EXIM Policy.
4. Discrepancy in the adjudication process.

Analysis:
1. The case involved appeals against the denial of Notification No. 22/2003-C.E. and Notification No. 52/2003-Cus. The appellant, an export-oriented unit, faced a show cause notice proposing the demand of excise and customs duty along with penalties for allegedly violating the conditions of the notifications.

2. The central issue was the violation of conditions for availing duty exemptions under the notifications. The appellant was accused of exporting goods without using the imported or indigenously procured raw materials in the manufacturing process, thus breaching the actual user condition of the notifications.

3. The interpretation of the term "manufacture" under the EXIM Policy played a crucial role in the case. The appellant argued that activities such as re-packing and re-labeling should be considered as manufacturing under the broader definition provided in the policy, which includes processes beyond traditional manufacturing.

4. The discrepancy in the adjudication process was highlighted, as the adjudicating authority did not adequately consider the appellant's submissions regarding the re-packing and re-labeling activities. The appellate tribunal found that if such activities were indeed carried out, they would constitute manufacturing as per the EXIM Policy, potentially entitling the appellant to the benefit of the duty exemptions.

In conclusion, the tribunal remanded the matter to the original adjudicating authority for a fresh assessment, emphasizing the need to examine the factual aspects of re-packing and re-labeling. The appellant was granted the opportunity to substantiate their case with relevant documents, and the appeals were allowed by way of remand, ensuring a fair reevaluation of the case.