2019 (11) TMI 295 - AT - Customs

Levy of Anti-Dumping duty - import by SEZ unit to DTA, after manufacturing activity - import of various types of Narrow Woven Fastening Tape Hook and Loop - tapes so imported by the respondents subsequently underwent the process of slitting and cutting into various sizes and by converting the same to Velcro, the same were cleared in the DTA - process amounting to manufacture or not - if the activity under taken by the appellant amounts to manufacture, no Anti Dumping Duty is attracted. HELD THAT - To constitute manufacture, it is not necessary that huge lengthy technical processes are undertaken and it is sufficient if the resultant product is having a distinct name, character and use is commercially known differently than the raw material. In other words if by application of labour and skill, the object is transformed to the extent that it is commercially known differently, with the persons who deal with it, it has to be held that manufacture has taken place. Also, Revenue has not advanced any arguments to show that the resultant product i.e. Velcro is not known differently in the market than the running length tapes imported by the respondents. There are no reasons to take a view different than the one taken by the Commissioner (Appeals) - appeal dismissed - decided against Revenue.

Issues:
1. Non-service of notice of hearing to the respondents by the department.
2. Classification of imported goods and liability to pay Anti Dumping Duty.
3. Determination of whether the process undertaken by the importer amounts to manufacture.
4. Application of legal principles to ascertain if a new product has come into existence.
5. Evaluation of evidence and probabilities to determine the manufacturing activity.
6. Comparison of goods to establish distinctiveness for Anti Dumping Duty.

Issue 1: Non-service of notice of hearing to the respondents by the department

The appeal was filed by the Revenue against the order passed by the Commissioner (Appeals). The department was directed to serve the notice of hearing to the respondents, and failure to do so would have led to the dismissal of the appeal. Despite the absence of proof of serving the respondents, the appeal was decided on its merits.

Issue 2: Classification of imported goods and liability to pay Anti Dumping Duty

The dispute revolved around the classification of Narrow Woven Fastening Tape Hook and Loop imported by the respondents under Chapter 54. The goods were cleared on payment of customs duty, but no Anti Dumping Duty was paid. The question was whether the process of slitting and cutting the tapes into Velcro amounted to manufacturing, thereby exempting them from Anti Dumping Duty.

Issue 3: Determination of whether the process undertaken by the importer amounts to manufacture

The Revenue contended that the process of slitting and cutting did not constitute manufacturing, making the importer liable for Anti Dumping Duty. The Commissioner (Appeals) observed that the burden of proof lay with the investigating authority to establish any distinctiveness between the imported goods and the cleared goods. The legal position was considered, emphasizing that a commercially known different product coming into existence suffices to constitute manufacture.

Issue 4: Application of legal principles to ascertain if a new product has come into existence

Legal principles were applied to determine whether the process undertaken resulted in the creation of a new product with a distinct name, character, and use. The judgment referenced various cases to establish that even if the inputs and final product fell under the same tariff heading, a different identifiable commercially known product could still be deemed to have been manufactured.

Issue 5: Evaluation of evidence and probabilities to determine the manufacturing activity

The judgment emphasized the need for evidence and probabilities to be evaluated for both sides to prove their stance in determining the manufacturing activity. The standard of proof in such proceedings was highlighted as preponderance of probabilities, where the evidence presented by each side was assessed to ascertain the prevailing stance.

Issue 6: Comparison of goods to establish distinctiveness for Anti Dumping Duty

The Commissioner (Appeals) noted that the resultant product, Velcro, was known differently in the market than the imported tapes, indicating a manufacturing process. The Revenue failed to provide arguments to counter this finding, leading to the rejection of their appeal based on the established legal principles and lack of evidence to prove otherwise.

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