2024 (10) TMI 1251 - AT - Central Excise

Process amounting to manufacture - inspection, rectification of defects, complete functional testing, quality control etc. - discharge of duty on the transaction value as per Rule 16(2) of the Central Excise Rules, 2002 - HELD THAT - This Tribunal in the appellant s own case M/S. MRO-TEK LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, BANGALORE I 2024 (4) TMI 30 - CESTAT BANGALORE analysing the processes undertaken by them on the imported Modems which are similar to that one now applied to the indigenous goods, held ' the activities carried by the appellant in the premises at 29B/3 on imported Modems would result into manufacture within the meaning of Section 2(f)(iii) of Central Excise Act, 1944. Consequently, the appellant are required to discharge duty on the imported Modems for the aforesaid activities in their trading premises, which amounts to manufacture.' Therefore, there is no doubt that the processes carried out by the appellant are resulting into manufacture; hence, the duty is required to be discharged on the transaction value of the Modems as per Rule 16(2) of the Central Excise Rules, 2002. The impugned order is set aside - the appeals are allowed

Summary

Issues:
Whether the processes carried out by the appellant amount to manufacture under Rule 16(2) of the Central Excise Rules, 2002.

Analysis:
The case involved three appeals against the Order-in-Appeal passed by the Commissioner of Central Excise (Appeals), Bangalore. The appellant, engaged in manufacturing Modems, cleared them for demo purposes and availed cenvat credit under Rule 16(1) of the Central Excise Rules, 2002. The Department disputed these activities as not constituting manufacture, demanding differential duty for various periods. The demands were confirmed after adjudication, leading to the filing of appeals before the Commissioner(Appeals), who rejected them, prompting the present appeals.

The appellant argued that the processes undertaken on the Modems, including visual inspection, rectification of defects, testing, and quality control, amounted to manufacture. They cited a previous Tribunal order analyzing similar processes on imported Modems, which concluded that these processes constituted manufacture and required duty payment on the manufactured goods. The Revenue reiterated the findings of the Commissioner(Appeals).

Upon hearing both sides and examining the records, the Tribunal focused on whether the appellant's processes resulted in manufacture, as per Rule 16(2) of the Central Excise Rules, 2002. Referring to the earlier Tribunal order on imported Modems, the Tribunal found that the activities undertaken by the appellant enhanced the marketability and usability of the Modems, aligning with the definition of manufacture under Section 2(f)(iii) of the Central Excise Act, 1944. Citing precedents related to similar circumstances with other products, the Tribunal concluded that the appellant's activities amounted to manufacture, necessitating duty payment on the transaction value of the Modems.

In light of the above analysis, the Tribunal set aside the impugned order, allowing the appeals with consequential relief as per law. The judgment emphasized that the processes carried out by the appellant indeed constituted manufacture, warranting duty payment as per Rule 16(2) of the Central Excise Rules, 2002.