2024 (5) TMI 1193 - HC - Central Excise

Interpretation of statute - section 2(f) of the Central Excise Act, 1944 - activities incidental and ancillary to completion of manufacture of products - levy of penalty - HELD THAT - The assessee was able to explain before the learned Tribunal by placing voluminous records which have been taken note of by the learned Tribunal and carefully appreciated. The learned Tribunal, has referred to in detail the documents and records which were placed before the learned Tribunal by the respondents to establish their cases. The learned Tribunal proceeded to deal with the crucial issues of the matter, namely co-relatable purchases and sales; duty paid on purchases; job work; testing at third party premises; demand on sale of materials to private parties and sale of wires, channels, angles etc. and non-existence of alleged four suppliers; physical movement of goods. The learned Tribunal has allowed the respondents appeals on appreciation and re-appreciation of all the documents placed before it which admittedly were voluminous. Appeal dismissed.

Summary

Issues involved:
The appeal raised substantial questions of law regarding the interpretation of section 2(f) of the Central Excise Act, 1944, and the imposition of central excise duty. The respondents challenged the order of adjudication by the Commissioner of Central Excise, Kolkata, which confirmed the proposal in the show cause notice and levied central excise duty along with penalties.

Judgment Details:

Issue 1:
The main legal issue was whether the respondent, who declared themselves as a manufacturer but engaged in trading activities, could be considered a trader under section 2(f) of the Central Excise Act. The Tribunal noted that the respondent's representations to power supply corporations were for business purposes, and there was a lack of manufacturing infrastructure at their premises.

Issue 2:
The Tribunal observed that there was no additional evidence presented by the revenue to counter the respondent's contentions during the investigation period. The lack of proof of clandestine manufacture or undisclosed manufacturing facility weakened the case for confirming demands of central excise duty.

Issue 3:
The Tribunal found discrepancies in the adjudicating authority's claim that the excisability of the goods was never disputed by the respondent. The respondent clarified that goods were manufactured by job workers on a principal-to-principal basis, challenging the manufacturing status attributed to them.

Issue 4:
The Tribunal emphasized that suspicion, without concrete proof, cannot justify the imposition of demands. The partners of the respondent firm provided consistent explanations, supported by voluminous records, which the Tribunal carefully considered in its analysis.

Issue 5:
The Tribunal thoroughly examined various aspects such as co-relatable purchases and sales, duty payments, job work arrangements, testing procedures, and the movement of goods. After evaluating the documents presented by the respondents, the Tribunal concluded that the activities did not amount to manufacturing, leading to the dismissal of the appeals.

Conclusion:
The High Court of Calcutta upheld the Tribunal's decision, stating that the matter was primarily factual, and no substantial question of law arose for consideration. The appeals were dismissed, and all connected applications were closed.