2018 (2) TMI 67 - AT - Central Excise

Manufacture - fixing images in the Pre Sensitized Aluminum Litho Plates using CTP technique by adopting various processes - whether the process amounts to manufacture - time limitation - Held that - the appeal of the Revenue can be disposed of on limitation aspect - Though the Revenue has contended in the memorandum of appeal that the Commissioner (Appeals) should not be considered the limitation aspect as the time bar plea raised for the first time before him. However, we find the above contention of the Revenue is factually incorrect in as much as the limitation plea was raised by the respondent before the original adjudicating authority. On merits also, there is no evidence raised by the Revenue as regards any suppression or mis-statement by the respondents, with an intention to evade payment of duty. If the department s own senior officer of the level of Commissioner (Appeals) has held in favour of the assessee on the issue of manufacture, we cannot find any fault with the assessee for entertaining the same belief - In the absence of any evidence to the contrary that such duty has not been paid by them with malafide intention, we are of the view that the extended period of limitation cannot be invoked by the Revenue and the appellate authority has rightly extended the benefit to the assessee. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Whether the activity undertaken by the respondent amounts to manufacturing activity.
2. Whether the demand raised by invoking a larger period of limitation is sustainable.

Analysis:
1. The appeal was filed by the Revenue against the order of the Commissioner (Appeals) granting relief to the respondents on the main legal issue of whether the activity undertaken by them constitutes manufacturing. The respondents were engaged in fixing images in Pre Sensitized Aluminum Litho Plates using the CTP technique. The Tribunal found that the process involved exposure to light and development, converting the plates into lithographic plates. The Tribunal noted that the CTP process was a modern method different from the traditional negative/positive film process. The activity of converting the plates was done within the factory and sold to clients, with no further processing required on the CTP plates. The Tribunal concluded that the activity did not amount to manufacturing, as the plates had distinct character and use from the pre sensitized aluminum plates. Therefore, the appeal on the main legal issue was decided in favor of the respondents.

2. The Revenue had also challenged the order on the ground of limitation. The Tribunal observed that the limitation plea was raised by the respondent before the original adjudicating authority. Additionally, there was no evidence of suppression or misstatement by the respondents to evade duty. The Tribunal noted that the issue of whether the activity amounted to manufacture was debatable and that the assessee could not be faulted for believing it did not. Without evidence of malafide intention or non-payment of duty, the Tribunal held that the extended period of limitation could not be invoked by the Revenue. Consequently, the appeal on the limitation aspect was also rejected in favor of the respondents.

3. The cross-objection filed by the respondent was disposed of as written submissions. The Tribunal pronounced the order in open court, concluding the case.