2018 (6) TMI 243 - AT - Central Excise

Manufacture - the appellants engaged in the manufacture and clearance of circular diffusers and jet diffusers by removing of core, powder coating and reassembling of diffuser with core and clearing them as final products to their customers - it was alleged that the activity do not amount to manufacture - Excise duty demand - Held that - appellant s case is squarely covered by Tega India Ltd. 2004 (2) TMI 61 - SUPREME COURT OF INDIA , where it was held that in Circular dated 9th February, 1994 the Board has also clarified that galvanized pipes and tubes continued to be covered by the expression Tubes and Pipes and galvanization does not amount to manufacture - the activity performed by the appellants in respect of circular diffusers and jet diffusers do not amount to manufacture - demand set aside - appeal allowed - decided in favor of appellant.

Issues:
Manufacture of aluminium ventilation equipments, Central Excise duty recovery, Appeal against Order-in-Original, Applicability of Central Excise duty on manufacturing process, Interpretation of activities as manufacture under Central Excise Act, Waiver of penalty and interest, Absence of counsel during proceedings.

Manufacture of Aluminium Ventilation Equipments:
The case involved M/s. Air Master Equipments India Pvt. Ltd. engaged in the manufacture of aluminium ventilation equipments. The issue arose when the Headquarters Preventive Unit found that the appellants were engaged in the manufacture and clearance of circular diffusers and jet diffusers by removing core, powder coating, and reassembling the diffusers with core. The Assistant Commissioner of Central Excise issued a show-cause notice for recovery of Central Excise duty, which was confirmed by Order-in-Original No.23/2007. The Commissioner (A) held that the process undertaken by the appellants amounted to manufacture, attracting Central Excise duty. The appellants appealed against this decision.

Central Excise Duty Recovery and Appeal:
The appellants preferred an appeal before the Commissioner of Central Excise (Appeals-II), Bangalore, challenging the duty demanded. The Commissioner (A) confirmed the duty demanded but reduced the penalty. The appellants further appealed against this decision, arguing that the process undertaken did not amount to manufacture under the Central Excise Act. The Bench stayed the recovery of the confirmed amounts pending the appeal.

Applicability of Central Excise Duty on Manufacturing Process:
The key question was whether the activities of removing cores, powder coating, and reassembling diffusers undertaken by the appellants constituted manufacture under the Central Excise Act. The appellants contended that the process did not result in the manufacture of commercially distinct or excisable products, relying on legal precedents highlighting that mere coating or application of extra processes may not amount to manufacture under certain circumstances.

Interpretation of Activities as Manufacture under Central Excise Act:
The Bench analyzed the facts and grounds of appeal, noting that the appellants purchased circular diffusers without powder coating and subcontracted the powder coating process. It was observed that apart from reassembling, no other activity resulting in the manufacture of distinct products was carried out by the appellants. Citing legal precedents, the Bench held that the activities performed by the appellants did not amount to manufacture, thereby allowing the appeal and granting consequential relief.

Waiver of Penalty and Interest:
The appellants also sought waiver of penalty and interest, referencing specific legal decisions supporting their plea. However, the final decision did not explicitly address this aspect, focusing primarily on the manufacturing process and the applicability of Central Excise duty.

Absence of Counsel during Proceedings:
Throughout the proceedings, including multiple listing dates, the counsel for the appellant did not appear. Despite the absence of representation, the Bench proceeded with passing the orders due to the limited scope of issues and the relatively small amount involved in the case.

This detailed analysis of the judgment highlights the central issues surrounding the manufacturing process of aluminium ventilation equipments, the interpretation of activities as manufacture under the Central Excise Act, and the ultimate decision of the Bench in allowing the appeal based on the non-fulfillment of the criteria for manufacturing.

← Previous Next →