2001 (9) TMI 214 - AT - Central Excise

Summary

Issues Involved:
1. Whether the process of rubberising and re-rubberising amounts to a process of manufacture.
2. Whether the demands are barred by time.

Issue-Wise Detailed Analysis:

1. Whether the process of rubberising and re-rubberising amounts to a process of manufacture:

The primary issue in this case was whether the process of rubberising and re-rubberising old and new spindles constitutes a process of manufacture under Section 2(f) of the Central Excise Act, 1944. The Commissioner held that it did, requiring the assessee to pay the demanded duty. This decision was based on distinguishing previous judgments, including the Apex Court's ruling in the case of Lathia Industrial Supplies Co. Pvt. Ltd. v. CCE, which held that re-rubberising and relining of old and used vessels did not amount to manufacture. The Commissioner also referenced other cases like Industrial Linings Bombay and Saraswathi Industrial Syndicate Ltd., distinguishing them on various grounds.

The assessee's counsel argued that the issue was already settled in their favor by multiple judgments, including the Apex Court's decision, and that there were no changes in the tariff notes to consider the process as manufacturing. They cited the Tribunal's majority order in CCE, Bombay v. Industrial Rollers Corporation, which applied the Apex Court's ratio, confirming that such activities do not amount to manufacture. This view was reiterated in the case of Lebracs Rubber Lining Pvt. Ltd., where it was held that without specific chapter or section notes defining such activities as manufacture, the process could not be considered as such.

The Tribunal, upon careful consideration, concluded that the Commissioner's attempt to distinguish the Apex Court and Tribunal judgments was not in line with judicial discipline. It noted that the Revenue had not amended the relevant section or chapter notes to include rubberising and re-rubberising as manufacturing activities. Thus, the Tribunal granted waiver of pre-deposit and stayed the recovery, ultimately setting aside the Commissioner's order and allowing the appeal.

2. Whether the demands are barred by time:

The second issue was whether the demands were barred by time. The Commissioner had rejected the plea that the demands were time-barred. However, the assessee argued that the Apex Court had long established that the said process does not amount to manufacture, thus there was no justification for invoking a larger period.

The Tribunal noted that the issue had been consistently decided in favor of the assessee in similar cases, indicating no cause for invoking the larger period. The Tribunal held that even on the grounds of limitation, the assessee succeeded, further supporting the decision to set aside the Commissioner's order.

Conclusion:

The Tribunal found that the process of rubberising and re-rubberising does not amount to manufacture, as established by multiple judgments, including those of the Apex Court. Additionally, the demands were barred by time, reinforcing the decision to set aside the Commissioner's order and allow the appeal with consequential relief as per law.