2018 (4) TMI 1490 - AT - Central Excise

Manufacture - activity of laminating and coating and cutting and slit aluminium foil - Held that - there was process of conversion of aluminium foil into pharma foil by lamination or coating resulting into new and different product and the said activity amounts to manufacture - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Determination of whether the appellant's activities amount to "manufacture" for the purpose of claiming benefits under Notification No.56/2002-CE dated 14/11/2002.
- Adjudication of the demand for Central Excise duty raised by the revenue authorities based on the contention that the appellant's processes did not constitute manufacturing activities.

Analysis:
1. Issue: Determination of "Manufacture" for Benefit Claim
The appellant engaged in laminating, coating, cutting, and slitting aluminum foil to manufacture two products: Aluminum Blister Foil and Pharma Aluminum Foil laminated with polyethylene film. The appellant claimed benefits under Notification No.56/2002-CE dated 14/11/2002, seeking a refund of Central Excise duty paid. The revenue authorities disputed this claim, arguing that the appellant's processes did not amount to manufacturing. Show-cause notices were issued covering a period from January 2004 to December 2007, asserting that the Central Excise duty paid through PLA needed to be recovered. The issue was adjudicated in the impugned order-in-original.

2. Analysis of Appellant's Argument
The appellant contended that the definition of "manufacture" under Section 2(29BA) of the Income Tax Act, 1961, derived from the Supreme Court's ruling in Delhi Cloth and General Mills Ltd., involves a transformation resulting in a new and distinct object. Referring to Section 80-1B(4) of the Income Tax Act, the appellant highlighted the provision for industrial undertakings in industrially backward states, including Jammu & Kashmir, supporting their claim. Citing the High Court's decision in CIT Vs. Shri Inderjeet Kochhar, the appellant argued that the process of converting aluminum foil into Pharma Foil through lamination or coating constitutes manufacturing. The appellant relied on this precedent to challenge the original authority's finding that their activities did not amount to manufacturing.

3. Decision and Ruling
After hearing both parties and examining the records, the Tribunal noted the High Court of Delhi's ruling in the appellant's case, dated 31/08/2009, which confirmed that the appellant's activities indeed constituted manufacturing of pharmaceutical foil. Based on this precedent, the Tribunal set aside the impugned order-in-original, allowing the appeal. The appellant was deemed entitled to consequential relief as per the law.

This detailed analysis highlights the core issue of determining whether the appellant's activities qualified as "manufacture" for the purpose of claiming benefits under the relevant notification, emphasizing the legal interpretations and precedents relied upon by both parties to support their arguments.