2005 (10) TMI 182 - AT - Central Excise

Summary

Issues:
1. Whether the process of importing pagers and programming them amounts to manufacturing under the Central Excise Tariff Act, 1985.
2. Whether the retraction of a statement by the General Manager regarding the manufacturing process is valid.
3. Whether the imported pagers can be considered complete products or require programming to function as pagers.
4. Whether penalties imposed on the Director and General Manager are justified.
5. Whether the value of clearance should be treated as cum-duty price.

Analysis:

Issue 1:
The appellant imported pagers and engaged in programming them in their factory. The Revenue argued that this process constitutes manufacturing under Note 6 of Section XVI of the Central Excise Tariff Act, 1985. The appellant contended that they only repacked and relabeled the imported pagers, which did not amount to manufacturing. The Tribunal found that the imported pagers required programming to function as pagers, and as admitted by the General Manager, the programming was done in the factory. Therefore, the activity of programming the imported pagers was considered manufacturing, and the demand was upheld.

Issue 2:
The General Manager retracted his statement regarding the manufacturing process, claiming it was made under coercion. The Tribunal noted that the retraction occurred after six years and did not absolve the appellant of liability. Given the detailed statement provided by the General Manager initially, the retraction was deemed invalid, as he was aware of the processes undertaken on the imported pagers in the factory.

Issue 3:
The appellant argued that they imported complete pagers and only repacked and relabeled them post-import. However, the Tribunal found that the imported pagers required programming to be used as intended. As per Section Note 6 of Section XVI, since the pagers were programmed in the factory before use, the activity amounted to manufacturing. Therefore, the demand was confirmed based on this understanding.

Issue 4:
Regarding penalties imposed on the Director and General Manager, the Tribunal found no evidence of intent to evade duty payment. As a result, the penalties on the Director and General Manager were set aside. The penalty amount was reduced to Rs. 5 lakhs, considering the facts and circumstances of the case.

Issue 5:
The Revenue appealed the treatment of the value of clearance as cum-duty price. The Tribunal referred to a precedent set by the Hon'ble Supreme Court in a previous case, where it was established that the issue was settled. Consequently, the Revenue's appeal was dismissed, upholding the treatment of the value of clearance as per the established precedent.