2020 (1) TMI 99 - AT - Central Excise

Process amounting to manufacture or not - appellant purchases lead ingots (purity of 99.5% or grade B ) and thereafter remove the same either without processing as such or after increasing the purity to 99.9% - allegation of Revenue is that the increase of purity from 99.5% to 99.9% amounts to manufacture and accordingly the product of the appellant are dutiable - HELD THAT - The learned Commissioner (Appeals) have erroneously observed that lead with 99.9% purity is classified under a separate entry which is not so, as is evident. Thus, the impugned order suffers from mistake of law and fact. Further, there is no test report on record in support of allegation of revenue. The demand raised by the authority below is misconceived - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the process of increasing the purity of lead ingots from 99.5% to 99.9% amounts to manufacture.

Analysis:
The case involved an appeal regarding the manufacturing process of lead ingots. The appellant purchased lead ingots of 99.5% purity, also known as grade 'B', and then processed them to increase the purity to 99.9%. The Revenue alleged that this process amounted to manufacture, making the appellant's products dutiable. During an inspection, various machines were found in the factory premises, and the partner of the firm explained the process of achieving 99.9% purity. The Revenue seized goods and a vehicle, alleging clandestine manufacturing and removal of dutiable lead ingots.

The show cause notice was contested, resulting in an order confirming duty, interest, penalties, and confiscation of goods. The appellants appealed this decision, citing a Tribunal case precedent. The Commissioner (Appeals) relied on a Supreme Court judgment involving a similar manufacturing process and concluded that the purity difference in lead ingots affected their marketability and classification under the Central Excise Tariff Act.

Upon hearing the parties and examining the case records, the Tribunal analyzed the relevant tariff headings and sub-heading notes. It was found that the Commissioner (Appeals) had erred in classifying lead with 99.9% purity under a separate entry. The Tribunal noted the absence of a test report supporting the Revenue's allegations and concluded that the demand raised was misconceived. Therefore, the impugned order was set aside, and the appeals were allowed, providing consequential relief to the appellants. The appeal of the partner was also allowed, and the demand against him was set aside.