2005 (10) TMI 21 - AT - Central Excise

Central Excise Contention that programming of pagers were not amounting to manufacture dismissed (2) Penalty (3) Evidence (4) Demand

Summary

Issues:
1. Whether the process undertaken by the appellant amounts to manufacture under Note 6 of Section XVI of Central Excise Tariff Act, 1985.
2. Whether the imported pagers are being brought to the factory for programming, labeling, and packing, and if this activity amounts to manufacture.
3. Whether the retraction of the statement made by the General Manager is valid and whether the process undertaken by the appellant constitutes manufacture.
4. Whether the penalties imposed on the Director and General Manager are justified.
5. Whether the value of clearance should be treated as cum-duty price.

Analysis:

1. The appellant imported pagers and also manufactured pagers. A show cause notice (SCN) was issued alleging that the imported pagers were brought to the factory for programming, amounting to manufacture under Note 6 of Section XVI of the Central Excise Tariff Act, 1985.

2. The appellant argued that they imported complete pagers and only repacked and relabeled them in their factory, which does not constitute manufacture. They contested the reliance on the General Manager's statement, claiming it was retracted due to coercion. They also cited a decision of the Hon'ble Bombay High Court to support the validity of the retraction.

3. The revenue contended that the General Manager admitted to bringing imported pagers to the factory for programming, labeling, and packing. They argued that the process of programming the imported pagers amounted to manufacture under Section XVI of the Central Excise Act, 1985.

4. The Tribunal found that the retraction of the General Manager's statement after six years on the ground of coercion was not valid. As per Section Note 6 of Section XVI, since the pagers required programming before use, the activity undertaken by the appellant amounted to manufacture. The penalty was reduced, and personal penalties on the Director and General Manager were set aside due to lack of evidence of intent to evade duty.

5. The Revenue's appeal regarding the treatment of the value of clearance as cum-duty price was dismissed, citing a precedent set by the Hon'ble Supreme Court in a previous case involving Maruti Udyog Ltd.

This comprehensive analysis of the judgment provides a detailed overview of the issues involved and the Tribunal's findings on each matter.