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2016 (11) TMI 96 - AT - Central ExciseExcisability of goods manufactured by the respondent - goods declared as non-excisable category - manufactured goods of iron and steel falling under Tariff Entry No. 7308.90 attracting duty of 15% - manufacturing activity - marketability of goods - the decision in the case of Electrical Hardware Industries 1997 (3) TMI 111 - HIGH COURT OF KERALA referred - Held that - The Tribunal in various decisions has held that activities like drilling, cutting, punching, bending, welding do not lead to the emergence of a new article and therefore would not constitute manufacture for the purpose of Central Excise Act, 1944, for eg; in CCE, Madras V Tamil Nadu electricity Board workshop 1998 (1) TMI 330 - CEGAT, NEW DELHI , Karnataka electricity Board V CCE 1999 (7) TMI 421 - CEGAT, CHENNAI . However, the Hon ble Apex court has set aside the decision of Tribunal in Karnataka Electricity Board case and remanded the matter in view of the judgement of Constitution Bench in the case of CCE, Aurangabad V M/s Benzo Chem Inds. P. Ltd. 2001 (4) TMI 927 - SUPREME COURT . The case laws relied upon by the Ld.AR, in particular the Kerala High Court judgement in electrical Hardware Industries case are squarely applicable to the issue in hand. Respectfully following the law laid down by apex court and other appellate forums, we hold that the demand is sustainable - appeal allowed - decided in favor of Revenue.
Issues: Classification of goods under Central Excise Rules, 1944; Excisability of manufactured goods; Marketability of goods; Manufacturing process and emergence of new articles.
Classification of Goods under Central Excise Rules, 1944: The case involved the classification of goods declared as non-excisable under Tariff Entry No. 7308.90 by the respondents, which the Assistant Commissioner, Eluru observed to be manufactured goods of iron and steel. The dispute arose when the respondents contended that the goods were not the result of any manufacturing activity and lacked marketability, citing legal precedents. The appellate process involved various orders, appeals, and remands by different authorities, leading to the final appeal before the CESTAT Hyderabad. Excisability of Manufactured Goods: The main ground of appeal by the department was that the respondents were the manufacturers and consumers of the goods in question, emphasizing the commercial identity of the goods in the market. The department argued that the essence of marketability is not based on demand or sale in the market but on the commercial identity of the goods. Legal authorities and judgments were cited to support the department's position, highlighting the importance of market recognition of the goods. Marketability of Goods: The respondents, on the other hand, argued that both the original authority and the Commissioner (Appeals) had thoroughly analyzed the facts and concluded that the proceedings against them should be dropped. The respondents emphasized that the goods were not commercially viable and lacked market demand, which led to the authorities dropping the proceedings. The department was given an opportunity to submit written arguments but failed to do so. Manufacturing Process and Emergence of New Articles: The Tribunal analyzed the fabrication process of the goods in question, involving activities like cutting, punching, bending, and welding. Legal precedents were cited to support the argument that such activities do not lead to the emergence of a new article and, therefore, do not constitute manufacturing under the Central Excise Act, 1944. However, the Tribunal referred to a Supreme Court decision and other appellate judgments to conclude that the demand for duty on the goods was sustainable, setting aside the impugned order and allowing the appeal filed by the revenue department. In conclusion, the judgment delved into the classification of goods under the Central Excise Rules, the excisability of manufactured goods, the marketability of the goods, and the interpretation of the manufacturing process in determining the liability for duty. The decision by the CESTAT Hyderabad favored the revenue department, emphasizing the commercial identity of the goods and the legal precedents supporting the demand for duty on the manufactured items.
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