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2021 (8) TMI 240 - AT - Central ExciseProcess amounting to manufacture or not - compression of carbondioxide received through pipelines and the subsequent filling into cylinders - Chapter Note 9 of Chapter 28 of the Central Excise Tariff Act 1985 - HELD THAT - It would now be necessary to examine the main contention raised by the learned counsel for the Appellant that since the order dated 21.07.2016 passed by the Principal Commissioner for the subsequent period attained finality, as no appeal was filed by the Department to assail the said order, the Department cannot now agitate that the activity undertaken by the appellant would amount to manufacture. A Division Bench of the Tribunal in ROSMERTA TECHNOLOGIES LTD. VERSUS COMMISSIONER OF CE ST, LTU DELHI 2019 (11) TMI 1573 - CESTAT CHANDIGARH , had an occasion to examine this contention. It was held that when for a subsequent period in the own case of the appellant it was held that service tax cannot be levied, which order had attained finality, the Department cannot be permitted to take a stand that service tax is leviable. The decision of the Supreme Court in COMMR. OF C. EX., MUMBAI VERSUS BOC (I) LTD. 2008 (4) TMI 46 - SUPREME COURT , where it was held that mere labeling or relabeling in the absence of any activity of repacking from bulk packs to retail packs would not render the product marketable directly to the consumer , would not be applicable in view of the subsequent decision of the Supreme Court in AIR LIQUIDE NORTH INDIA (P) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR 2011 (8) TMI 93 - SUPREME COURT and that the process undertaken by the appellant would amount to manufacture in view of the third requirement contained in Chapter Note 9 of Chapter 28 of the Tariff Act. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Whether the compression of carbon dioxide received through pipelines and subsequent filling into cylinders amounts to manufacture under Chapter Note 9 of Chapter 28 of the Central Excise Tariff Act, 1985. 2. Whether the appellant is entitled to Small Scale Industry (SSI) exemption under the Notification dated 01.03.2003. 3. The applicability of interest and penalties under rules 25 and 27 of the Central Excise Rules, 2002. Issue-wise Detailed Analysis: 1. Whether the compression of carbon dioxide received through pipelines and subsequent filling into cylinders amounts to manufacture under Chapter Note 9 of Chapter 28 of the Central Excise Tariff Act, 1985: The primary issue revolves around the interpretation of Chapter Note 9 of Chapter 28 of the Central Excise Tariff Act, 1985. The relevant Chapter Note states that "labeling and relabeling of containers or repacking from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer, shall amount to manufacture." The Tribunal had previously ruled in favor of the appellant, holding that the process of compressing carbon dioxide and filling it into cylinders did not constitute manufacture. This decision was upheld by the Supreme Court. However, the Commissioner, in subsequent orders, relied on the Supreme Court's decision in Air Liquide North India Pvt. Ltd. and the amendment to Chapter Note 9 to argue that the process did amount to manufacture. The Tribunal examined the Principal Commissioner’s order dated 21.07.2016, which concluded that the process did not amount to manufacture, and noted that this order had attained finality as no appeal was filed by the Department. Therefore, the Tribunal held that the Department could not take a different stand in these appeals. 2. Whether the appellant is entitled to Small Scale Industry (SSI) exemption under the Notification dated 01.03.2003: The Commissioner had denied the SSI exemption to the appellant on the grounds that the carbon dioxide gas was filled in cylinders bearing the identification marks/names of the buyers, rendering the product as branded goods. The appellant argued that the markings were only for compliance with the Explosives Act and did not constitute branding. The Tribunal, referencing the Principal Commissioner’s order and prior decisions, found that the appellant’s activity did not amount to manufacture and thus, the question of SSI exemption was moot. 3. The applicability of interest and penalties under rules 25 and 27 of the Central Excise Rules, 2002: The show cause notices issued to the appellant proposed to levy interest and penalties under rules 25 and 27 of the Central Excise Rules, 2002, based on the alleged manufacture. Since the Tribunal concluded that the appellant’s process did not amount to manufacture, the basis for imposing interest and penalties was invalid. Consequently, the Tribunal set aside the orders confirming the demands with interest and penalties. Conclusion: The Tribunal held that the process undertaken by the appellant did not amount to manufacture under Chapter Note 9 of Chapter 28 of the Central Excise Tariff Act, 1985. The Tribunal also noted that the Principal Commissioner’s order, which had attained finality, supported this conclusion. Therefore, the demands, interest, and penalties imposed by the Commissioner were set aside, and all fifteen appeals were allowed.
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