2000 (9) TMI 548 - AT - Central Excise

Summary

Issues Involved:
1. Whether the assembly of motorcycle parts imported in SKD condition amounts to manufacture u/s 2(f) of the Central Excise Act.
2. Whether the demand for duty is time-barred u/s 11A of the Central Excise Act.
3. Competence of the Additional Commissioner to adjudicate the matter.
4. Imposition of penalty u/s 11AC of the Central Excise Act.

Summary:

1. Assembly as Manufacture:
The primary issue is whether the assembly of motorcycle parts imported in SKD (Semi-Knocked Down) condition constitutes "manufacture" u/s 2(f) of the Central Excise Act. The Tribunal held that the process of assembly undertaken by the appellants amounts to manufacture as it results in a new product with a distinct name, character, and use. The Tribunal relied on Note 6 to Section XVII of the Tariff, which states that converting an incomplete or unfinished article into a complete or finished article amounts to manufacture. The Tribunal rejected the appellants' reliance on previous decisions, noting that those cases did not involve a similar statutory provision.

2. Time-Barred Demand:
The appellants argued that part of the demand is time-barred u/s 11A of the Central Excise Act. The Tribunal found merit in this argument, noting that the department was aware of the appellants' activities through various correspondences. Consequently, the extended period of limitation was not applicable. The demand for the period from July 1996 to May 1997 was deemed time-barred, and the adjudicating authority was directed to re-determine the duty amount accordingly.

3. Competence of the Additional Commissioner:
The appellants contended that the Additional Commissioner was not competent to adjudicate the matter as the total demand exceeded Rs. 20 lakhs. The Tribunal clarified that the competence of the Additional Commissioner is determined on a case-by-case basis. Since the demand in the show cause notice adjudicated by the Additional Commissioner was less than Rs. 20 lakhs, he was competent to decide the case.

4. Imposition of Penalty:
The Tribunal found no suppression of facts by the appellants and held that the penalty u/s 11AC of the Central Excise Act was not imposable. The Tribunal also considered the penalty imposed to be excessive and reduced it from Rs. 5 lakhs to Rs. 50,000/-.

Conclusion:
The appeal was disposed of with the Tribunal upholding the process of assembly as manufacture, partially accepting the time-barred argument, confirming the competence of the Additional Commissioner, and reducing the penalty imposed.