2023 (10) TMI 109 - AT - Central Excise

Valuation of manufactured goods - process amounting to manufacture or not - assessable value arrived by the appellant on re-engraving of duty paid cylinders supplied by the customers free is in accordance with the provisions of Central Excise Valuation (Determination Of Price Of Excisable Goods) Rules, 2000 or not - demand of differential duty - HELD THAT - This issue has been settled by the Larger Bench of this Tribunal in the case of JSS. PRINTING INDUSTRIES PVT. LTD. VERSUS COMMR. OF C. EX., CALCUTTA 2000 (10) TMI 63 - CEGAT, COURT NO. II, NEW DELHI where it was held that the work carried out to re-engrave the rollers second, third or fourth time, as the case may be, will not amount to process of manufacture. However, this issue has not been brought before the authorities below. The appeals be remanded to the adjudicating authority to consider the judgment of the Larger Bench of this Tribunal directing discharge of service tax on the activity of re-engraving of Rotogravure Printing Cylinders under Business Auxiliary Service . Appeal allowed by way of remand.

Summary

Issues Involved:
The issues involved in this case are the determination of assessable value on re-engraving of Rotogravure Printing Cylinders and whether the process amounts to manufacture for the purpose of levying duty.

Issue 1: Assessable Value Determination
The appellant engaged in re-engraving of Rotogravure Printing Cylinders using old cylinders base shells supplied by customers free of cost. The appellant determined the value of the final product based on the value shown in challans/invoices received from customers or by adopting a specific rate per 1000 sq. mm. Show cause notices were issued alleging that the assessable value determined by the appellant was incorrect, leading to demands for duty on the differential value. The demands were confirmed by the authorities below, resulting in appeals before the Commissioner (Appeals) and subsequently before the Tribunal.

Issue 2: Manufacturing Process
The appellant contended that the process of re-engraving of duty-paid cylinders did not amount to manufacture and therefore should not be leviable to duty. The appellant cited a judgment by the Larger Bench of the Tribunal in a similar case, where it was held that re-engraving of Rotogravure Printing Cylinders did not result in manufacture. The appellant argued that this judgment was not considered by the authorities below when passing the impugned orders. Additionally, the appellant highlighted that the Assistant Commissioner had directed the discharge of service tax on the re-engraving process, which was not brought to the notice of the lower authorities.

The Tribunal noted that the issue of whether re-engraving of duty-paid cylinders amounts to manufacture had been settled by the Larger Bench in a previous case, a judgment that was also followed by the Mumbai Bench in the appellant's own case for their Navi Mumbai unit. However, this crucial issue had not been presented before the authorities below during the proceedings. In the interest of justice, the Tribunal decided to remand the appeals to the adjudicating authority for reconsideration. The adjudicating authority was directed to take into account the judgment of the Larger Bench, the Mumbai Bench's decision in the appellant's case, and the communication from the Belapur Commissionerate directing the discharge of service tax on the re-engraving activity. The Tribunal emphasized that all issues should be kept open and the appellant should be given a reasonable opportunity for a hearing. Consequently, the appeals were allowed by way of remand to the adjudicating authority for further consideration.