1987 (9) TMI 293 - AT - Central Excise

Summary

Issues:
1. Whether reconditioning of dies amounts to fresh manufacture and attracts duty payment.
2. Interpretation of Rule 173H of the Central Excise Rules regarding retention or re-entry of duty paid goods in the factory or warehouse.

Analysis:

Issue 1: Reconditioning of dies and duty payment
The case involved a show cause notice to a company regarding the reconditioning of dies brought back to the factory, questioning whether duty should be paid on the reconditioned dies. The Assistant Collector confirmed the duty demand, which was appealed by the company. The appellate order dealt with two appeals, one regarding the classification of dies and the other against the duty demand on reconditioned dies. The issue in this appeal was whether the company, by reconditioning already manufactured dies, was liable to pay duty on the reconditioned dies. The classification of the dies under Item 68 CET was not in dispute. The Tribunal referred to a previous order where duty was not payable on reconditioned dies. The company argued that reconditioning did not result in a new product and, therefore, no duty was payable. The Tribunal analyzed previous cases and held that reconditioning, even with new parts, did not constitute manufacture if the identity of the article remained intact. Consequently, the Tribunal upheld the order of the Collector (Appeals) and dismissed the appeal.

Issue 2: Interpretation of Rule 173H of the Central Excise Rules
Rule 173H of the Central Excise Rules deals with the retention or re-entry of duty paid goods in the factory or warehouse. Sub-rule (2) states that goods brought into a factory without undergoing a process amounting to manufacture can be removed without duty payment. The question in this case was whether reconditioning of dies amounted to manufacture. The Assistant Collector did not provide a clear explanation of how reconditioning constituted manufacture. The Tribunal referred to previous judgments where reconditioning, even with new parts, did not amount to manufacture as long as the identity of the article remained unchanged. The Tribunal emphasized that unless a new commercially distinct article emerged, there was no manufacture. Applying this principle, the Tribunal concluded that reconditioning of dies did not amount to manufacture, thereby upholding the order of the Collector (Appeals) and dismissing the appeal.

This detailed analysis of the judgment provides insights into the interpretation of the law regarding duty payment on reconditioned goods and the application of Rule 173H in the context of manufacturing processes.