2008 (1) TMI 295 - HC - Central Excise

Respondent had received raw materials like masticated rubber and carbon black etc. for manufacture of strips tyres and return to the suppliers goods become complete marketable only after further processing done at raw material supplier s premises - Department s view that the goods processed at the premises of the respondent (job worker) were fully manufactured goods so they should have paid the full duty, is not acceptable revenue appeal dismissed

Summary

Issues:
Interpretation of Rule 57F(2) [now Rule 57F(3)] of the Central Excise Rules, 1944.
Consideration of contradicting statements and misrepresentation of facts.
Applicability of a Larger Bench decision in a specific case.
Compliance with Rule 57F(2) regarding modvat availing and job work processes.

Interpretation of Rule 57F(2) [now Rule 57F(3)] of the Central Excise Rules, 1944:
The case involved the Commissioner of Central Excise appealing against the order of the CESTAT regarding the classification of goods processed by a respondent. The Department contended that the goods were fully manufactured and duty should have been paid upon clearance. However, the CESTAT, considering various manufacturing activities and legal provisions, held that the goods were not fully manufactured at the job worker's hands but at the primary manufacturer's premises. The Tribunal's decision was supported by the definition of "manufacture" under the Central Excise Act and a Supreme Court judgment. The High Court concurred with the Tribunal's findings, emphasizing that activities like deflashing and testing by the primary manufacturer were crucial in the manufacturing process, aligning with Rule 57F(2)/57F(3) requirements.

Consideration of contradicting statements and misrepresentation of facts:
The appellant raised concerns about contradicting statements and a lack of concrete evidence before the Tribunal. However, the High Court found that the Tribunal's factual findings were supported by the activities outlined in the case, indicating that the manufacturing process was not fully completed by the job worker. The Court also referenced the Supreme Court's interpretation of the definition of "manufacture," emphasizing that ancillary activities are considered part of the manufacturing process. Consequently, the Court upheld the Tribunal's decision, dismissing the appeal.

Applicability of a Larger Bench decision in a specific case:
The appellant questioned the Tribunal's reliance on a Larger Bench decision concerning duty liability of processed fabrics, arguing its inapplicability to the present case. However, the High Court, after thorough analysis, determined that the Tribunal's conclusion was correct based on the activities performed by the primary manufacturer and the job worker. The Court found no legal question warranting further consideration, leading to the dismissal of the appeal.

Compliance with Rule 57F(2) regarding modvat availing and job work processes:
The appellant contended that the respondent violated Rule 57F(2) by not undertaking necessary processes to avail modvat credit. The High Court, after reviewing the case details and the Tribunal's order, agreed that the primary manufacturer and job worker had distinct roles in the manufacturing process, with critical activities being conducted by the primary manufacturer. Consequently, the Court upheld the Tribunal's decision, emphasizing the importance of following Rule 57F(2) requirements for modvat availing and job work processes.