1997 (12) TMI 203 - AT - Central Excise

Summary

Issues:
1. Whether the job work of rubber lining on tanks constitutes a process of manufacture for excise duty liability.
2. Whether there was suppression by not declaring the activity to the department, leading to confiscation of tanks and imposition of fines.
3. Whether the order confiscating land, building, and machinery under Central Excise Rules is justified.

Detailed Analysis:
Issue 1:
The appeal questioned if rubber lining on tanks, as anti-corrosive treatment, amounts to manufacture for excise duty. The department alleged contravention of Central Excise Rules, stating failure to obtain a license, classify goods, maintain records, and pay duty. The appellants argued that rubber lining was a treatment process, not manufacturing, citing relevant judgments. The tribunal agreed, following Supreme Court and Tribunal precedents. It held that tanks remained unchanged after rubber lining, not creating a new product, thus not constituting manufacture. The Addl. Collector's failure to determine the tariff heading and lack of evidence for suppression led to the appeal's success.

Issue 2:
Regarding suppression and confiscation of tanks, the appellants contended that their process did not amount to manufacture, hence no duty was due. The tribunal found in favor of the appellants, emphasizing the lack of evidence for suppression and the process not constituting manufacture. The tribunal set aside the order for confiscation and penalty, as the appellants held a bona fide belief that their process did not qualify as manufacturing.

Issue 3:
The order confiscating land, building, and machinery was challenged. The tribunal found the confiscation unjustified, as the process was not manufacturing. The lack of a clear finding on the appellants' belief that their process was not manufacturing led to setting aside the order. The tribunal distinguished relevant judgments cited by the department, emphasizing that the process did not create a new product, aligning with established legal principles.

In conclusion, the tribunal ruled in favor of the appellants, determining that the rubber lining process on tanks did not amount to manufacture for excise duty purposes. The lack of evidence for suppression, coupled with the process not creating a new product, led to setting aside the confiscation order and penalties imposed by the Addl. Collector. The tribunal's decision was based on established legal precedents and interpretations of the term "manufacture" under the Central Excise Act.