2018 (4) TMI 464 - AT - Central Excise

CENVAT credit - goods claimed to have been procured for export - case of Revenue is that there is no manufacture as defined in section 2(f) of Central Excise Act, 1944 - Held that - Though the original authority has rendered an elaborate analysis of the law and the reason for not accepting the contention of the noticee, the manner in which the first appellate authority has set that finding aside, leaves room for doubt about the extent of scrutiny of the rival claims that was undertaken. It is proper that the impugned order, in the absence of adequate justification, be set aside and remanded back to the first appellate authority - appeal allowed by way of remand.

Summary

Issues:
1. Appeal against the decision of the Commissioner of Central Excise (Appeals) setting aside the order requiring payment of Central Excise duty, interest, and penalty.
2. Interpretation of the definition of 'manufacture' under the Central Excise Act, 1944.
3. Reliance on judicial precedents such as the decision of the Hon'ble High Court of Madras and the Hon'ble Supreme Court.
4. Determination of whether the process undertaken by the appellant amounts to 'manufacture' as per the Central Excise Tariff Act, 1985.

Analysis:
1. The appeal by Revenue challenges the decision of the Commissioner of Central Excise (Appeals) setting aside the order for payment of Central Excise duty, interest, and penalty imposed on the respondent. The original authority had required the respondent to pay duty and penalty for availing CENVAT credit on goods procured for export, which was deemed not to constitute 'manufacture' under section 2(f) of the Central Excise Act, 1944.

2. The appeal of Revenue relies on the Hon'ble Supreme Court's decision in Satnam Overseas Ltd v. Commissioner of Central Excise, New Delhi, emphasizing that for a process to be considered 'manufacture,' the original identity of the product must undergo transformation to become a distinct new product. This principle was reiterated from the decision in Empire Industries Ltd v. Union of India.

3. The respondent contends that the process undertaken amounts to 'manufacture' by referencing note 6 of section XVI of the Schedule to the Central Excise Tariff Act, 1985. They rely on judicial precedents such as Laminated Packings (P) Ltd v. Commissioner of Central Excise to support their argument that the process qualifies as 'manufacture.'

4. The first appellate authority found that the processing undertaken by the appellant, including fabrication, re-coiling, cutting, and welding, met the definition of 'manufacture' under the Central Excise Act, 1944. The goods processed were exported under bond, complying with legal formalities, and bringing in foreign exchange. However, the Appellate Tribunal noted concerns regarding the extent of scrutiny by the first appellate authority and remanded the case back for further review.

This detailed analysis of the judgment highlights the key issues, legal interpretations, reliance on precedents, and the decision to remand the case for additional examination, providing a comprehensive overview of the legal proceedings.