1999 (4) TMI 224 - AT - Central Excise

Summary

Issues:
1. Liability for payment of duty on pure MCB manufactured from impure MCB.
2. Whether the conversion process amounts to manufacture.
3. Time limitation for issuing the show cause notice.

Analysis:
1. The appellants were involved in manufacturing PCBS using impure CMCB, which required purification before use. A show cause notice alleged duty payment on pure MCB obtained from job workers. The appellants argued they didn't claim Modvat credit on impure MCB and believed the conversion wasn't manufacturing under Section 2(f) of the Central Excises Act, citing relevant case laws. They also claimed the notice was time-barred.

2. The Revenue contended that as per Rule 57F(2), duty payment responsibility couldn't be shifted to job workers. The Tribunal noted that the appellants didn't claim Modvat credit due to their final product not being excisable. The central dispute was whether the conversion from impure to pure MCB constituted manufacture, which needed further examination by the Collector.

3. The Tribunal observed that the Collector presumed the conversion as manufacture without proper assessment. They decided to remit the case back to the Collector for a detailed examination on the dutiability of pure MCB and to determine if the conversion process indeed amounted to manufacture. The issue of time limitation for the show cause notice was deferred pending resolution of the manufacturing aspect.

4. The Tribunal acknowledged the arguments presented by both sides but emphasized the need for expert opinion on whether the conversion process constituted manufacture. They allowed the appeal, set aside the previous order, and directed the Jurisdictional Commissioner to conduct fresh proceedings to determine the dutiability of the pure MCB and address the manufacturing aspect before deciding on the case's merits.

In conclusion, the judgment highlighted the complexities surrounding duty liability, the definition of manufacture, and the importance of expert opinions in such cases. The remittance of the proceedings back to the Commissioner signified the need for a thorough examination of the manufacturing process before making a final determination on duty payment and time limitation issues.