2019 (6) TMI 553 - AT - Central Excise

SSI Exemption - ball bearings - Process amounting to manufacture or not - deemed manufacture - Department has been of the view that the appellant has sold the entire quantity of UBL branded packed, re-packed ball bearing to M/s Vikas Automobiles Pvt. Ltd. and who in turn has sold such procured ball bearings from the appellant either to the actual industrial users or in the retail market - HELD THAT - The issue is before us for consideration is whether the ball bearings which have been cleared by the appellant through M/s Vikas Automobiles Pvt. Ltd. and who has further sold the same to the retailers can be assessed as per the provisions of the Section 4A by taking into account the MRP value of the ball bearings by considering the same as parts of automobiles which are mentioned under Notification No. 11/2006-CE (NT) dated 25/05/2006. The matter is no longer res-integra as this Tribunal in the case of AKS Bearing Ltd. and others vs. CCE, Jaipur 2018 (10) TMI 387 - CESTAT NEW DELHI has decided the issue where it was held that the ball bearings are not included under relevant notifications issued under section 4A of the Central Excise Act, 1944 and therefore, same cannot be considered for assessment on the basis of MRP value. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Whether the activity of packing, re-packing, labeling, and pasting of retail sale price on ball bearings amounts to manufacture and is leviable to excise duty.
2. Whether the ball bearings cleared by the appellant through another entity can be assessed based on the Maximum Retail Price (MRP) under Section 4A of the Central Excise Act, 1944.
3. Whether the ball bearings can be considered as parts of automobiles for the purpose of MRP-based assessment.

Analysis:
1. The appellant was engaged in activities like packing, re-packing, and labeling ball bearings with a brand name. The Department alleged that the appellant sold these ball bearings to another entity, which further sold them to retailers, exceeding the SSI exemption limit for certain financial years. The Department issued a show cause notice demanding excise duty, interest, and penalties. The order-in-original confirmed the charges, which were upheld by the Commissioner (Appeals). The issue revolved around whether these activities constituted manufacture and whether the MRP value should be considered for assessment.

2. The Tribunal examined the relevant provisions of Section 4A of the Central Excise Act, 1944, and notifications related to MRP-based valuation. The appellant argued that since their product was classifiable under a different chapter, the demand post a specific date should be set aside. The Tribunal noted that the notifications for MRP-based assessment specifically covered parts, components, and assemblies of automobiles, but ball bearings were not explicitly included. It was observed that bearings were not considered parts of automobiles under the Central Excise Tariff, and the Department failed to provide evidence of sales to automobile manufacturers. Relying on legal precedents, the Tribunal concluded that ball bearings were not covered under the relevant notifications for MRP-based assessment.

3. The Tribunal referenced a case law to emphasize that the specific use of an article does not determine its classification for tax purposes. Drawing parallels with a previous decision, the Tribunal held that the impugned order lacked merit and set it aside, allowing the appeals. The judgment highlighted that the Department had stretched the law to include ball bearings under MRP-based assessment without sufficient evidence, ultimately ruling in favor of the appellant based on legal principles and precedents.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the order-in-appeal and allowing the appeals based on the lack of merit in the Department's arguments regarding the MRP-based assessment of ball bearings as parts of automobiles.