2016 (7) TMI 634 - AT - Central Excise

Manufacture - eligibility of notification Notification no. 23/2003-CE dated 31.02.2003 - concessional rate of duty - both the authorities have held that the activity of the appellant does not amount to manufacture - duty of excise demand - Held that - Though the ld. Advocate for the appellant have contested that the activity adopted by them amounts to manufacture in terms of the law declared by the Tribunal in the case of Unitech International Ltd. Vs. UOI (2012 (10) TMI 499 - CESTAT, AHMEDABAD ), but we are of the view that if even if as per the stand adopted by the Revenue, as regards the activity not amounting to manufacture is accepted by us, we really fail to understand as to how the duty of excise can be confirmed against the appellant. Admittedly, excise duty is leviable on goods manufactured and if there is no manufacturing activity involved, as held by the lower authorities, for the purpose of denying the benefit of exemption notification, how the excise duty can be confirmed by applying the full rate of the same value of activity. Even as per the Revenue there is no manufacture and if that be so, no excise duty demand can stay.

Summary

Issues:
1. Whether the segregation of scrap amounts to manufacture for the purpose of availing exemption under a notification?
2. Whether the appellant is liable to pay the differential duty demanded by the Revenue for scrap cleared during a specific period?

Analysis:

Issue 1:
The appellant, a 100% EOU, imported mixed metals scrap without paying Customs duty. The imported scrap was segregated and processed to manufacture ingots, with some scrap cleared in DTA at a concessional duty rate under a notification. The Revenue contended that the segregation did not constitute manufacturing, thus denying the benefit of the notification. The original adjudicating authority upheld the duty demand, interest, and penalty, rejecting the appellant's claim that segregation amounted to manufacture. The Commissioner (A) also dismissed the appeal on similar grounds.

Issue 2:
Both authorities concluded that the appellant's activity did not amount to manufacturing, thus disqualifying them from the concessional duty under the notification. Despite the appellant citing legal precedents, including the Unitech International Ltd. case, to argue that their activity constituted manufacturing, the Tribunal found no justification for confirming excise duty when no manufacturing activity was established. The Tribunal highlighted that excise duty is leviable on manufactured goods, and without manufacturing, the duty demand cannot be upheld. Consequently, the Tribunal set aside the impugned orders, allowing the appeal and granting relief to the appellant.