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2022 (9) TMI 388 - AT - Central ExciseProcess amounting to manufacture - marketability - process to obtain Crumb Rubber Powder - demand for the period May 2008 to August 2009 raised through two SCN are time barred as issued beyond normal period or not - HELD THAT - The root of the entire dispute is settled by the Tribunal in appellant s own case GUJARAT RECLAIM RUBBER PRODUCTS LTD., ANKLESHWAR VERSUS COLLECTOR OF CENTRAL EXCISE CUSTOMS, BOMBAY 1983 (9) TMI 284 - CEGAT NEW DELHI where it was held that A simple act of crushing and powdering like this one should not in our opinion be taken to be synonymous with creation of a new product. It is true that crushing does change the physical form as, for instances, the specific surfaces increase considerably thereby allowing intimate mixture etc. etc. but except in very rare instances, the substance remains what it was. The product keeps its original character, molecular structure, chemical identity etc. etc. We are therefore, not satisfied that the demand for duty was sustainable. The matter was again disputed by Department for a subsequent period and Tribunal in it order in appellant s own case CCE. C., SURAT-I VERSUS GUJARAT RECLAIM RUBBER PRODUCTS LTD. 2005 (11) TMI 114 - CESTAT, MUMBAI has held in favour of the appellant holding that the said process does not amount to manufacture. The Commissioner (Appeals) has relied solely on Circular of CBEC explaining the definition of manufacture. It is found that when the issue regarding the exact identical process has been settled by Tribunal, not once but three times, still the Commissioner has totally ignored the same. Appeal allowed.
Issues:
- Whether the process of obtaining Crumbed Rubber Powder amounts to manufacture for the purpose of levying Central Excise duty? - Whether the demand raised through Show Cause Notices (SCNs) is time-barred? - Whether the order for recovery of interest and imposition of penalty is sustainable? Analysis: Issue 1: Process of Obtaining Crumbed Rubber Powder The appellant argued that the process of obtaining Crumbed Rubber Powder does not amount to manufacture as it does not create a new product, and there is no chemical reaction involved. They relied on previous judgments where it was held that the product remains the same even after grinding, and the process does not bring a new product into existence. The appellant contended that the demands for Central Excise duty are not sustainable as the lower authorities exceeded the scope of the SCN by focusing on the definition of 'manufacture' instead of 'Excisable Goods'. The appellant emphasized that the product's marketability does not affect its excisability, which solely depends on the act of manufacture. The Tribunal found that the issue had been settled in the appellant's favor in previous cases, where it was held that the process does not amount to manufacture. The Commissioner (Appeals) erred in ignoring these precedents and relying solely on a Circular of CBEC. Therefore, the Tribunal allowed the appeals based on the settled issue in the appellant's favor. Issue 2: Time-barred Demands The appellant argued that the demands raised through SCNs for the period May 2008 to August 2009 were beyond the normal period and thus time-barred. The Tribunal did not delve deeply into this issue in the summary provided, but it can be inferred that if the demands were found to be time-barred, they would not be sustainable. Issue 3: Recovery of Interest and Imposition of Penalty Since the Tribunal found that the demand for Central Excise duty was not sustainable due to the process not amounting to manufacture, it follows that the order for recovery of interest and imposition of penalty would also not be sustainable. The Tribunal did not provide a detailed analysis of this issue but concluded that since the demand was not sustainable, the consequential orders for interest and penalty would also be set aside. In conclusion, the Tribunal allowed the appeals filed by the appellant, holding that the process of obtaining Crumbed Rubber Powder does not amount to manufacture for the purpose of levying Central Excise duty. The Tribunal also implied that the demands raised through SCNs were time-barred and that the orders for recovery of interest and imposition of penalty were not sustainable due to the primary issue being decided in favor of the appellant.
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