2005 (4) TMI 122 - AT - Central Excise

Summary

Issues:
1. Consideration of stay applications and disposal of appeals without pre-deposit.
2. Demand for duty and imposition of penalties based on findings in the impugned order.
3. Contention regarding the sustainability of the finding in view of a judgment of the High Court of Delhi.
4. Reference to a Circular issued by the department and a judgment of the Hon'ble Supreme Court.
5. Application of Circular dated 2-3-2005 of the Board and its relevance to the present dispute.
6. Sustainability of duty demand and imposition of penalties.

Analysis:
1. The Tribunal, after perusing the records and hearing both sides, decided to dispose of the appeals without the requirement for pre-deposit, as they were satisfied that the appeals themselves could be resolved without delay.

2. The demand for duty and penalties stemmed from the findings in the impugned order, which highlighted the conversion of CR/HR Coils into HR/CR sheets/plates resulting in the emergence of a new product with different characteristics and end uses. The Tribunal acknowledged the distinctiveness of the processed final product from the inputs, leading to the imposition of duty.

3. The legal counsel argued against the sustainability of the finding, citing a judgment of the High Court of Delhi that stated the processes in question did not amount to manufacture, thus negating the imposition of excise duty. Additionally, reference was made to a Circular issued by the department withdrawing a previous Circular that maintained a contrary position.

4. The Senior Departmental Representative (SDR) referenced a judgment of the Hon'ble Supreme Court in the case of Kores India Ltd., asserting that the appellant's activities amounted to manufacture, specifically relying on observations in Paras 10 to 14 of the judgment.

5. The specific issue at hand was found to be covered by a Circular dated 2-3-2005 of the Board, issued in response to the judgment of the Delhi High Court upheld by the Supreme Court. It was clarified that the judgment in the case of Kores India Ltd. had no application to the present dispute due to the Circular's relevance.

6. Ultimately, the Tribunal concluded that the demand for duty was not sustainable, leading to the quashing of the impugned order and allowing the appeals. It was emphasized that in the absence of duty demand, penalties could not be imposed, resulting in the resolution of the dispute in favor of the appellant.