1999 (12) TMI 405 - AT - Central Excise

Summary

Issues:
1. Appeal against decision of Collector of Central Excise (Appeals).
2. Allegations of violations of Rule 173Q and penalty under Rule 209A.
3. Contravention of provisions of Rule 173Q(4) read with Rules 53 & 226.
4. Manufacturing process completion and testing requirements.
5. Interpretation of specific orders for manufacturing goods.

Analysis:
1. The appeal was filed against the decision of the Collector of Central Excise (Appeals) confirming the order-in-original passed by the Additional Collector of Central Excise, Vadodara. The Collector (Appeals) upheld the demand based on alleged violations of Rule 173Q and penalty under Rule 209A, along with contravention of provisions of Rule 173Q(4) read with Rules 53 & 226. The appellants contended that the goods were not yet finished as testing was pending, but the Collector (Appeals) rejected this argument citing the judgment in the case of D.S. Screen Pvt. Ltd v. CCE. The appeal was made to the Appellate Tribunal CEGAT, Mumbai challenging this decision.

2. The central issue revolved around the completion of the manufacturing process and the necessity of testing. The appellants argued that testing was crucial for completion, relying on the Tribunal's observation in the D.S. Screen Pvt. Ltd case. However, the Tribunal noted that the appellants did not mention in their reply that the goods were produced based on specific orders requiring testing. The Tribunal emphasized that in cases where goods are manufactured based on specific orders and designs necessitating testing, completion occurs after quality tests. In contrast, when goods are manufactured according to the manufacturer's design and offered for sale, completion happens after the manufacturing process without mandatory testing. Since the appellants failed to establish that the goods were manufactured based on specific orders requiring testing, the Tribunal agreed with the appellate authorities' decision and rejected the appeal.

3. The judgment highlighted the distinction between goods manufactured based on specific orders with testing requirements and those manufactured by the manufacturer's design for general sale. The Tribunal emphasized that in cases like the present one, where goods were manufactured without specific order requirements for testing, completion of manufacturing occurred after the production process, not after testing. The absence of evidence indicating specific order requirements for testing led the Tribunal to uphold the decision of the appellate authorities and reject the appeal filed by the appellants.

4. The Tribunal's decision underscored the importance of establishing whether goods were manufactured based on specific orders necessitating testing or produced for general sale without such requirements. In the absence of evidence showing that the goods in question were manufactured based on specific orders with testing conditions, the completion of the manufacturing process was deemed to occur after production, not after testing. This distinction was crucial in determining the applicability of testing requirements for considering goods as fully manufactured items, as highlighted in the judgment cited during the proceedings.

5. Ultimately, the Tribunal rejected the appeal, emphasizing that the case did not involve goods manufactured based on specific orders with testing conditions but rather goods produced by the manufacturer's design for general sale. Since the appellants failed to demonstrate that the goods were manufactured on specific orders requiring testing, the completion of the manufacturing process was deemed to occur after production, aligning with the appellate authorities' decision and the principles outlined in the relevant legal judgment.