2006 (7) TMI 14 - AT - Central Excise

Central Excise - Manufacture - The process of cutting and slitting of steel sheet in coil form does not amount to manufacture - Demand and penalty set aside

Summary

Issues involved:
Interpretation of whether certain activities amount to manufacture for the purpose of Central Excise Duty liability.

Analysis:
The judgment dealt with the issue of whether certain activities undertaken by a company, namely decoiling, straightening, cutting, bending, and bundling of Bars and Rods, amount to manufacture, thereby making them liable to pay Central Excise Duty. The company argued that these activities do not constitute manufacture and, therefore, they should not be subject to the duty. The Commissioner referenced a Board's Circular stating that cutting and slitting of coils do not amount to manufacture, but the company primarily undertakes these processes. The Commissioner's attempt to differentiate pre and post-cutting activities to bring the company under the excise net was not accepted by the Tribunal.

The judgment also referred to a decision by the Delhi High Court, which held that the process of cutting or slitting steel sheets into specific sizes does not amount to manufacture unless a new distinct article emerges. This decision was further confirmed by the Supreme Court. Since the activities of the company in question were similar to those in the Delhi High Court case, the Tribunal set aside the order against the company and allowed their appeal, providing them with consequential reliefs.

Furthermore, since the company's appeal was allowed, the Tribunal found no justification for imposing any penalty on another company that had placed orders with the appellant company. Therefore, the appeals of the other company were also allowed. The judgment clarified the distinction between activities that constitute manufacture for Central Excise Duty purposes and provided a clear interpretation based on previous legal precedents.