2023 (7) TMI 46 - AT - Central Excise

Levy of penalty u/r 26 of the Central Excise Rules, 2002 - Process amounting to manufacture - procuring imported and indigenous various parts of LPG/CNG Kits and clearing the same after affixing their brand name under the description of Kit Assembly - extended period of limitation - HELD THAT - The Learned Commissioner while confirming agreed with the submission of appellant about admissibility of CENVAT credit, but he left the work of quantum of CENVAT credit to Jurisdictional Assistant/Deputy Commissioner and Pursuant to the Commissioner s directions, the Deputy Commissioner vide letter dated 14.03.2013 had worked out admissible CENVAT credit at Rs. 1,64,68,644/-. However on 25.03.2013 the Deputy Commissioner issued another letter rectifying the error of mentioning the incorrect amount of admissible CENVAT credit in previous letter dated 14.03.2013 and confirmed that the admissible CENVAT Credit was Rs. 1,70,17,818/- for the period - in the present matter appellant also claimed the benefit of cum-duty price which was denied by the learned Commissioner on the ground that no evidence of inclusion of excise duty in the price charged from the buyer has been produced by the Appellant before him - The benefit of the same is liable to be extended to the appellant. In the case of NATIONAL PLYWOOD IND. LTD. VERSUS COLLECTOR OF C. EX., SHILLONG 1998 (6) TMI 386 - CEGAT, CALCUTTA the benefit of cum duty was extended to them and the price was considered to be cum-duty prices - the appellants are entitled to the benefit of cum-duty price. The demand of duty is accordingly to be re-quantified. The quantification of the demand needs to be re-worked out by the Ld. Commissioner. The penalties imposed on the appellants are also needs to be re-determined based upon the duty that has to be worked by the adjudicating authority. Since in the impugned matter quantification of demand itself was not properly done, we do not comment on the merit of the case and the same is kept open - matter remanded to Ld. Commissioner that first re-quantify the duty demand after considering the benefit of CENVAT credit and cum-duty price claimed by the appellant and pass afresh order. Appeals are allowed by way of remand to the adjudicating authority.

Summary

Issues involved:
The issues involved in this case are whether the activity of the Appellant constitutes "manufacture" under Section 2(f) of the Central Excise Act, 1944, and whether the Appellant is liable to pay duty for the period from 2007-08 to 2009-2010.

Details of the Judgment:

Manufacture Activity:
The Appellant was procuring imported and indigenous parts of LPG/CNG Kits, affixing their brand name, and clearing the kit assembly. A show cause notice was issued for recovery of duty, interest, and penalty. The Commissioner held the Appellant's activity as manufacture, confirming duty demand, interest, and imposing penalties. The Appellant argued that no new product emerged, as they only packed parts in a box for installation in a motor vehicle, which does not constitute manufacture. The Appellant cited judgments supporting their stance on excise duty liability.

Estoppel and Tax Liability:
The Appellant contended that paying duty for sales to OEMs does not indicate manufacturing activity, citing the Union Carbide India Ltd. case. They argued against estoppel in tax laws and challenged the duty liability for sales made to traders and dealers. The Appellant also claimed the demand was time-barred and disputed the invocation of the extended period of limitation.

Cum-Duty Price Benefit:
The Commissioner confirmed CENVAT credit but left the quantification to the Deputy Commissioner. The Appellant claimed the benefit of cum-duty price, which was initially denied due to lack of evidence of excise duty inclusion in the price. However, the Appellant was entitled to this benefit based on previous Tribunal decisions, and the demand of duty needed to be re-quantified.

Remand and Directions:
The Tribunal set aside the impugned order, remanding the matter to the Commissioner for re-quantifying the duty demand considering CENVAT credit and cum-duty price claimed by the Appellant. The penalties imposed were also to be re-determined based on the re-quantified duty. The de novo adjudication process was directed to be completed within three months from the date of the order.

This judgment highlights the interpretation of "manufacture" under the Central Excise Act, the applicability of excise duty, challenges to tax liability, and the entitlement to benefits such as cum-duty price. The Tribunal's decision emphasizes the need for a thorough re-evaluation of duty demand and penalties, ensuring a fair and accurate assessment of the Appellant's activities.