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2019 (11) TMI 1578 - AT - Central ExciseProcess amounting to manufacture or not - processes carried out by the appellant on the imported Arcofon branded plates resulted into manufacture or not - extended period of limitation - Cenvat credit of the CVD component of the import duty paid on the wear plates - HELD THAT - The Learned Commissioner after analyzing the purchase order and sale invoices raised by the appellant on their customers observed that the appellant was required to supply the goods to the customers as per their design and requirement and the product sold by the appellant, is having a distinct size and shape different from that of imported wear plates . The Customers placed orders on the appellant for the impugned goods of various shapes and sizes required, for different types of machine parts and appellant had supplied the same as per the drawing and design mentioned in the respective purchase order by individual customer for its use as parts of a particular machine. Therefore, the activity of the appellant is not just mere trading but involved converting the imported wear plates into various shapes and sizes as per the requirement of the customers by subjecting into various processes, like cutting, welding, drilling etc. resulting into different commodity having distinct character, name and use - Applying the principles of twin test in determining excisibility of a product when subjected to various processes as laid down in a series of judgments of the Hon ble Supreme Court namely, MOTI LAMINATES PVT. LTD. VERSUS COLLECTOR OF CENTRAL EX., AHMEDABAD 1995 (2) TMI 67 - SUPREME COURT , UNION OF INDIA VERSUS DELHI CLOTH GENERAL MILLS CO. LTD. 1997 (5) TMI 49 - SUPREME COURT , CADILA LABORATORIES PVT. LTD. VERSUS COMMR. OF CENTRAL EXCISE, VADODARA 2003 (2) TMI 65 - SUPREME COURT , the Learned Commissioner concluded that in the present case, the processes i.e. cutting, drilling, welding etc. on the imported wear plates resulted into a new product which can no more be called as a mere wear plates, but having a distinct name, character and use as part of the machinery, which is marketable and is marketed by the appellant as parts of machines only. The Learned Commissioner has correctly arrived at the conclusion that the processes undertaken by the appellant on the imported wear plates results into manufacture and the activity undertaken by the appellant on the imported wear plates cannot be considered as mere trading activity, hence rightly confirmed the duty demanded for clearance of the said goods after undertaking the process of drilling, cutting and welding etc. in their factory premises. Extended period of limitation - HELD THAT - The Department visited the factory of the appellant way back in 2004 and undertook analysis of the process undertaken by the appellant on the imported wear plates. In response to Department s query, the appellant submitted their reasons about the durability of imported plates after undertaking the process of cutting, drilling, welding etc., in contrast to their own branded manufactured wear plates, however the Department did not take any action after recording the statement of the concerned plant manager and a letter written by the appellant on 24-10-2004. The appellant was allowed to continue to clear the imported Arcofon plates without payment of duty after carrying out the process of cutting, drilling, welding etc. in various shapes and sizes as per the customer s requirement. It is in 2007, the Department issued the show cause notice alleging suppression and mis-statement of facts. We do not find any basis in invoking extended period of limitation when the appellant in its endeavor to justify, not to discharge duty on imported Arcofon wear plates in the year 2004, explained his stand on the issue and the Department did not take any action as they were not clear about the issue of dutiability on such activity undertaken on the imported plates - the demand should be confined to the normal period of limitation. Also, as the issue relates to interpretation of law, imposition of penalty on the appellant is unwarranted and cannot be justified - penalties also do not sustain. Cenvat credit of the CVD component of the import duty paid on the wear plates - HELD THAT - The appellant though claimed benefit of Cenvat credit on inputs before the adjudicating authority, but could not place requisite documents to satisfy the Commissioner about the quantum of credit admissible to them, accordingly the adjudicating authority has rejected their claim. The matter is remanded to the adjudicating authority to re-determine the duty liability for normal period and examine the admissibility of Cenvat credit of duty paid on the inputs on production of relevant documents - Appeal is allowed by way of remand.
Issues:
1. Whether the processes carried out on imported plates constitute 'manufacture' and are liable to duty. 2. Can the demand be confirmed invoking the extended period of limitation? 3. Are the appellants entitled to avail Cenvat credit of the CVD component of the import duty paid on the wear plates? Analysis: Issue 1: Manufacture and Duty Liability The appellant imported hard faced plates and carried out processes like cutting, welding, and drilling on them. The contention was that these processes did not result in a new product but merely prepared the plates for specific customer requirements. The appellant argued that the processes did not amount to 'manufacture' and hence no duty was payable. The Commissioner, however, analyzed purchase orders and invoices, concluding that the processes transformed the imported plates into distinct products tailored for specific machines. Citing Supreme Court judgments, the Commissioner determined that the activities amounted to 'manufacture,' resulting in a new marketable product different from the original plates. The duty demand was confirmed for the cleared goods after processing. Issue 2: Extended Period of Limitation The Department visited the appellant's factory in 2004 and examined the processes on the imported plates. Despite explanations provided by the appellant, no action was taken by the Department until a show cause notice was issued in 2007, invoking suppression and misstatement of facts. The Tribunal found no justification for invoking the extended period of limitation, as the Department had not acted on the issue earlier. The demand was limited to the normal period, and the penalty was deemed unwarranted. Issue 3: Cenvat Credit The appellant claimed Cenvat credit on the CVD paid on the imported plates but failed to provide sufficient evidence to support the claim. The Tribunal noted that if the appellant could produce satisfactory evidence, the adjudicating authority should reevaluate the admissibility of the Cenvat credit on the imported plates. The matter was remanded for the re-determination of duty liability for the normal period and a reassessment of the Cenvat credit eligibility based on relevant documentation. In conclusion, the appeal was allowed by way of remand for further examination and determination of duty liability and Cenvat credit eligibility based on the presented evidence.
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