2010 (3) TMI 429 - AT - Central Excise

Cenvat- Input- The present dispute relates to Steel Tubes and Pipes which have been procured as inputs and which were cut into desired length and electroplated and exported. Show cause notice was issued holding that mere cutting of Tubes and Pipes to desired length and electroplating would not amount to manufacture and the final product electroplated pipes and tubes were not arising out of manufacture and therefore no new excisable goods were manufactured and therefore credit availed on such steel tubes/pipes was irregular. Held that- contention of appellant that relief in respect of duty paid on inputs and final products available as products exported acceptable impugned order set aside. Original order dropping proceeding restored.

Summary

Issues:
- Dispute regarding the classification of steel tubes and pipes as inputs
- Whether the process of cutting and electroplating constitutes manufacturing
- Eligibility of availing credit on duty paid on steel tubes and pipes
- Interpretation of Tribunal's previous decision in a similar case

Analysis:
The appeal in this case revolves around the classification of steel tubes and pipes used in the manufacturing process. The dispute arises from the contention that cutting and electroplating these tubes and pipes do not amount to manufacturing, leading to a question of whether the final product, electroplated steel tubes and pipes, should be considered as new excisable goods. The Department argued that the process does not result in the emergence of a new product beyond the raw materials used, which warrants consideration. The absence of a specific definition of manufacturing in this context supports the Department's stance, suggesting that the final product cleared for export should be treated as the same input procured by the appellants.

The appellant's representative argued that denying credit on duty paid for steel tubes and pipes would essentially tax the inputs used in the exported product. They highlighted a previous Tribunal decision related to the export of inputs under bond without duty payment, asserting that the Commissioner erred in disregarding this precedent. The Tribunal considered the arguments from both sides and acknowledged the similarity between the present case and the earlier ruling, even though the previous decision was made in a different context. The Tribunal ultimately concluded that the cutting and electroplating processes did not result in the creation of a new excisable product, aligning with the Department's position.

Regarding the actions taken by the authorities, the Original Authority had initially dismissed the proceedings proposed in the show cause notice, which included duty recovery, interest, and penalty imposition. However, the Commissioner (Appeals) overturned this decision without quantifying any dues from the appellants. The Tribunal set aside the Commissioner's order and reinstated the Original Authority's decision, allowing the appeal with appropriate legal consequences. This comprehensive analysis clarifies the classification and treatment of steel tubes and pipes in the manufacturing process, emphasizing the importance of legal precedent and proper application of excise duty regulations.