2009 (4) TMI 186 - AT - Central Excise

Contention of the appellant-assessee is that the food processing line is not a manufacturing activity and does not bring about new product and therefore not excisable - Commissioner in the impugned order by merely referring to a description of the machinery has held that each individual machine was connected with pipes and power and the same has resulted in food processing line. The Commissioner has not considered the same in accordance with the guidelines laid down under the Circular No. 58/1/2002-CX. dated 15-1-2002 - In the result without expressing our views on any of the points sought to raised in the matter and all the issues being kept open the appeals are allowed the impugned order is set aside and the matter is remanded to the Commissioner to decide the same de novo bearing in mind Circular No. 58/1/2002 dated 16-1-

Summary

Issues:
Jurisdiction of Commissioner of Central Excise, Indore over manufacturing activity carried out beyond its territory; Classification of food processing line as manufacturing activity and excisability; Application of Circular No. 58/1/2002-CX guidelines in determining excisability; Requirement of de novo consideration by Commissioner in light of Circular guidelines; Additional issues related to classification, limitation period, penalty, Modvat credit, cum-duty price, territorial jurisdiction.

Jurisdiction Issue:
The appeals arose from an order by the Commissioner of Central Excise, Indore, holding that manufacturing activity carried out beyond its jurisdiction falls outside its purview. The Commissioner confirmed a duty demand of Rs. 23,64,409 and a penalty, while rejecting the appellant's contention that the food processing line is not a manufacturing activity. The Commissioner also confirmed a duty demand on specific machinery and imposed penalties under relevant provisions.

Classification Issue:
The main controversy centered on whether the food processing line constitutes manufacturing activity and is excisable, particularly considering Circular No. 58/1/2002-CX. The Commissioner concluded that the interconnected machines forming the food processing unit amount to manufacturing under Section 2(f) of the Central Excise Act, 1944. The Commissioner applied Rule 2(a) of tariff laws, holding that goods in incomplete condition can attain the character of finished goods, justifying duty levies on the assembled food processing unit.

Circular Guidelines Application Issue:
The appellant argued that Circular No. 58/1/2002-CX provides criteria to determine excisability, emphasizing the capability of goods to be shifted and sold without dismantling. The Circular distinguishes between goods that can be moved as a whole and those requiring dismantling for transportation. The Tribunal noted that the Commissioner did not apply these guidelines due to their unavailability at the time of the decision, prompting a remand for a fresh assessment in line with the Circular.

De Novo Consideration Issue:
Given the subsequent issuance of Circular guidelines, the Tribunal deemed it necessary to allow parties to present relevant facts regarding the manufacturing activities for a proper decision. The matter was remanded to the Commissioner for a fresh determination, emphasizing the need to apply Circular guidelines in assessing excisability.

Additional Issues:
The Tribunal highlighted various issues to be addressed by the Commissioner post the determination of manufacturing activity, including product classification, limitation period invocation, penalty imposition, Modvat credit allowance, cum-duty price treatment, and territorial jurisdiction considerations. The Tribunal allowed the appeals, set aside the impugned order, and remanded the matter for a comprehensive reconsideration by the Commissioner in light of Circular guidelines and observations made.