2001 (6) TMI 352 - AT - Central Excise

Summary

Issues:
1. Whether the activity of manufacturing steel tubular poles amounts to a process of manufacture.
2. Whether a new product emerged from the process of lengthening tubular poles.
3. Whether the imposition of penalty under Rule 173Q is justified.
4. Whether the matter should be remanded for de novo consideration.

Analysis:

Issue 1:
The appeal involved a dispute regarding whether the activity of manufacturing steel tubular poles by the appellants constituted a process of manufacture. The Commissioner held that the appellants were engaged in the manufacture of a new product, classifiable under a specific chapter sub-heading of the CET Act. The Department alleged that the appellants had suppressed facts related to the production of "street light steel tubular poles" and cleared them clandestinely without paying duty. The appellants denied the allegations, arguing that the activity did not result in the creation of a new product as the poles remained "as poles" even after the process of lengthening and modification. However, the Commissioner disagreed and held that the process did amount to manufacture, leading to the emergence of a new product.

Issue 2:
The second issue revolved around whether a new product emerged from the process of lengthening tubular poles. The Revenue contended that the activity resulted in the creation of a new product with different characteristics and a different name, making it dutiable. The Commissioner supported this view, emphasizing that the process led to the formation of a new product through swaging. The appellants, on the other hand, argued that the new goods were not marketable as they were not marketing the poles as a new product. The Tribunal referred to previous judgments but ultimately remanded the matter for de novo consideration to determine whether a new marketable product had indeed emerged from the process.

Issue 3:
Regarding the imposition of penalty under Rule 173Q, the appellants challenged the equal amount of penalty imposed by the Commissioner. The appellants argued that there was no justification for such a penalty, citing precedents where similar impositions had been set aside. This issue highlighted the disagreement between the parties regarding the penalty amount and its applicability in the present case.

Issue 4:
The final issue centered on whether the matter should be remanded for de novo consideration. The Tribunal, after considering the arguments presented by both sides, concluded that the Revenue needed to establish the emergence of a new marketable product before imposing duty. As the original records and evidence regarding the process of manufacture and marketability were not fully presented, the Tribunal decided to remand the case to the original authority for a fresh examination. The Tribunal instructed the original authority to consider all pleas raised by the appellants, permit the production of evidence, and grant a personal hearing before making a decision in the de novo proceedings.

In conclusion, the Tribunal allowed the appeal by remanding the case to the original authority for a thorough reconsideration in light of the observations made during the proceedings.