2024 (5) TMI 460 - AT - Central Excise

Process amounting to manufacture or not - tilting, separating and pressing with hydraulic press - Revenue submitted that the respondent has manufactured foot oil, pressed wax and paraffin wax by applying hydraulic press and the products are marketable as separate commodities - HELD THAT - The respondent has imported slack wax and residue wax. Slack wax and residue wax both have oil content varying from 30 to 70% and the respondent only separated those by tilting the drums, where 90% of the oil was emptied and separated. About 10% of the oil was separated by squeezing for which a pressing machine was used by the respondent. It is observed that the separation or emptying the drum and separating the oil from the slack wax and residue wax does not involve any process amounting to manufacture. No machinery or equipment was utilized for the purpose of such separation - the process undertaken by the respondent cannot be considered as a process amounting to manufacture as defined in Section 2(f) of the Central Excise Act, 1944. Thus, no process amounting to manufacture as defined under Section 2(f) of the Central Excise Act, 1944 has been undertaken by the respondent in the process of separation of foot oil, pressed wax and paraffin wax from the slack wax and residue wax imported by them. Thus, the findings of the Ld. Commissioner (Appeals) in the impugned order is agreed with and it is held that no process amounting to manufacture as defined under Section 2(f) of the Central Excise Act, 1944 has been undertaken by the respondent. The respondent also relied upon the decision of the Tribunal in the case of KERALA MINERALS METALS LTD. VERSUS COMMISSIONER OF C. EX., KOCHI 2007 (4) TMI 38 - CESTAT, BANGALORE and the decision of the Tribunal Kolkata in the case of INDIAN RARE EARTHS LTD. VERSUS COMMISSIONER OF C. EX., BBSR-I 2001 (9) TMI 167 - CEGAT, KOLKATA , wherein it has been held that separation of mineral sand by physical and mechanical process does not amount to manufacture. Thus, no process amounting to manufacture as defined under Section 2(f) of the Central Excise Act, 1944 has been undertaken by the respondent - there are no infirmity in the impugned order and hence, the same is upheld. Appeal of Revenue dismissed.

Summary

Issues Involved:

1. Jurisdiction of the Show Cause Notice issuing authority.
2. Whether the process undertaken by the respondent amounts to "manufacture" u/s 2(f) of the Central Excise Act, 1944.
3. Liability of the respondent for the period prior to April 2005.

Summary:

Jurisdiction of the Show Cause Notice issuing authority:

The respondent challenged the jurisdiction of the Show Cause Notice issuing authority before the Hon'ble High Court at Calcutta, which ruled in favor of the respondent. The Department's appeal to the Hon'ble Supreme Court was allowed, directing that the proceedings be taken to their logical conclusion.

Whether the process undertaken by the respondent amounts to "manufacture" u/s 2(f) of the Central Excise Act, 1944:

The respondent argued that they are a trader and not engaged in manufacturing. They imported slack wax and residue wax, separating oil by tilting and pressing, which does not constitute manufacturing as defined in Section 2(f) of the Central Excise Act, 1944. The Ld. Commissioner (Appeals) and the Tribunal observed that the separation process did not involve any machinery or equipment that would qualify it as manufacturing. The hydraulic press used for squeezing oil was not considered a manufacturing process. The Tribunal upheld the Ld. Commissioner (Appeals)'s finding that no new product emerged from the separation process, and thus, it did not amount to manufacture.

Liability of the respondent for the period prior to April 2005:

The respondent contended that they did not assume the liabilities of the proprietorship firm M/s. Krishna Wax Industries when they purchased its assets. Therefore, the demand for the period prior to April 2005 was not sustainable against them.

Conclusion:

The Tribunal, relying on various judicial precedents, including the Hon'ble Supreme Court's decision in Shyam Oil Cake Ltd. v. Collector of Central Excise, Jaipur, held that no process amounting to "manufacture" u/s 2(f) of the Central Excise Act, 1944 was undertaken by the respondent. Consequently, the impugned order was upheld, and the appeal filed by the Revenue was rejected.

(Order pronounced in the open court on 09.05.2024)