2003 (3) TMI 182 - AT - Central Excise

Summary

Issues Involved:
1. Whether the panels of Aluminium Glass Curtain Wall emerge on account of manufacturing activity.
2. Who is the manufacturer: M/s. Aldowin or M/s. Balaji Hotels & Enterprises Ltd. (BH&EL).
3. Correct classification of the product.
4. Whether the demand of duty is time-barred.
5. Imposition of penalties on the appellants.

Summary:

1. Manufacturing Activity:
The Tribunal examined whether the process of assembling aluminium frames and glass sheets into aluminium glass panels constitutes manufacturing. It was held that a new product, aluminium glass panel, emerges from the process, satisfying the two-fold test laid down by the Supreme Court in U.O.I. v. J.G. Glass Industries Ltd., which determines if a different commercial commodity comes into existence and if the original commodity loses its identity.

2. Manufacturer Identification:
The Tribunal agreed with the Commissioner that M/s. Aldowin is the manufacturer. The contract clauses indicated that Aldowin was responsible for the entire process, including supplying labour and tools, and bore the risk of breakage beyond 2%. The Tribunal referenced the Supreme Court's decision in CCE, Baroda v. M.M. Khambatwala, which established that the supplier of raw materials is not the manufacturer.

3. Product Classification:
The Tribunal upheld the classification of aluminium glass panels under Sub-heading 7610.90 of the Central Excise Tariff Act, agreeing with the Commissioner that the aluminium frame provides the essential character to the product.

4. Time-Barred Demand:
The Tribunal found the demand for duty time-barred as the show cause notice was issued beyond the one-year period specified in Section 11A(1) of the Central Excise Act. The appellants had a bona fide belief that their activities did not amount to manufacture, supported by a previous Order-in-Appeal in a similar case. The Tribunal cited the Supreme Court's decision in Padmini Products v. CCE, which held that mere failure or negligence does not attract extended limitation.

5. Penalties:
Since the demand for duty was time-barred, no penalties were imposed on the appellants. However, the seized goods were liable for confiscation, and a fine of Rs. 2 lakhs was imposed for their redemption.

Conclusion:
All appeals were disposed of in the above terms, with the Tribunal directing the payment of a fine for the redemption of confiscated goods and holding that no penalties were imposable due to the time-barred nature of the duty demand.