2016 (9) TMI 580 - AT - Central Excise

Excisability and chargeability - manufacture and clearance of Gas Conversion Kits without payment of duty and without following Central Excise procedures - Held that - the respondent has developed the design, manufacturing and selling of Gas Conversion Kits based on the imported Gas Conversion Kits. The adjudicating authority held that what was cleared are individual parts but it is found that the Gas Conversion Kits were cleared with brand name of Lovoto. Whereas the adjudicating authority held that the Gas Conversion Kit consists of one number each of vaporizer, Gas solenoid, petrol solenoid and tail assembly and the items do not lose their identity and there is no manufacturing activity involved. The goods are identified in the market as Gas Conversion Kits and consideration also received on not sale of parts but for the entire Gas Conversion Kits. Therefore, the Gas Conversion Kits cleared by the respondent amounts to manufacture and squarely covered under the definition of Section 2 (f) of the Central Excise Act. - Decided in favour of Revenue

Summary

Issues:
Manufacture and clearance of Gas Conversion Kits without payment of duty and without following Central Excise procedures.

Analysis:
The appeal was filed against the Order-in-Original passed by the Commissioner of Central Excise, involving the manufacture and clearance of Gas Conversion Kits without payment of duty and non-compliance with Central Excise procedures. The Commissioner confirmed duty under Section 11A(2) of the Central Excise Act, 1944, and confiscated goods with an option for redemption. Penalties were also imposed on the individuals involved. The appeal was specifically against the part of the order where it was held that Gas Conversion Kits manufactured and cleared by a specific individual were not excisable goods and not chargeable to excise duty.

The respondent did not appear or provide any intimation in multiple scheduled hearings, leading to the Revenue being directed to serve notice. The respondent was found absent at all provided addresses, prompting the appeal to proceed for disposal.

During the proceedings, it was noted that the respondent had also filed an appeal against the impugned order, but due to non-compliance with pre-deposit orders, their appeals were dismissed. The adjudicating authority had initially held that Gas Conversion Kits were not excisable goods, but upon review of records, it was found that the kits were developed, manufactured, and sold based on imported Gas Conversion Kits. The Gas Conversion Kits were cleared under a specific brand name and were identified and sold as complete kits, not as individual parts. The Tribunal concluded that the Gas Conversion Kits constituted manufacturing activity and fell under the definition of excisable goods under Section 2(f) of the Central Excise Act. Consequently, the portion of the Commissioner's order holding otherwise was set aside, and the Revenue's appeal was allowed.

In conclusion, the Tribunal found in favor of the Revenue, determining that the Gas Conversion Kits manufactured and cleared by the respondent amounted to manufacturing activity and were chargeable to excise duty, contrary to the initial ruling by the Commissioner.