1997 (5) TMI 188 - AT - Central Excise

Summary

Issues:
1. Whether the replacement and renovation of old parts in a machine amount to manufacturing a new machine.
2. Whether the demand is barred by time under Section 11A of the Central Excises and Salt Act, 1944.

Analysis:
1. The appeal involved a dispute regarding the renovation of a cigarette-making machine. The Collector (Appeals) had upheld the contention that overhauling and reconditioning the machine did not amount to manufacturing a new machine. The Collector concluded that replacing old parts with new ones did not change the machine's identity and function as a plain cigarette machine. The appellant argued that such renovation resulted in a new machine capable of improved functions, suppressing facts and invoking an extended period.

2. The Revenue contended that replacing parts constituted manufacturing a new machine, capable of producing filter cigarettes, unlike the old machine. The Revenue pointed out a previous Order-in-Original where the appeal was dismissed. The appellant argued that replacing 500 to 600 worn-out parts out of 3000 components did not amount to manufacturing a new commodity, citing various authorities supporting the position that renovation does not equal manufacturing.

3. The Tribunal considered both sides' arguments and examined the facts. The Collector's detailed examination revealed that only a small percentage of parts were replaced due to wear and tear after 40 years of use. The Tribunal found no evidence supporting the Revenue's claim that replacement created a new commodity. The machine continued to produce the same type of cigarettes, maintaining its original function. Citing Supreme Court judgments, the Tribunal agreed that repair, reconditioning, or renovation did not constitute manufacturing.

4. Regarding the plea of limitation, the Tribunal referred to a previous order favoring the assessee on the same issue. Upholding the previous findings, the Tribunal dismissed the appeal, finding no fault in the Collector's decision on replacement and renovation not amounting to manufacturing a new machine. The Tribunal also upheld the limitation issue in favor of the assessee based on previous rulings.