2011 (8) TMI 93 - SC - Central Excise

Manufacture - whether the treatment given or the process undertaken by the appellant to Helium gas purchased by it from the open market would amount to manufacture, rendering the goods liable to duty under Chapter Note 10 of Chapter 28 of the Central Excise Tariff Act, 1985 - when the appellant was asked about the process which was being carried out on Helium gas before selling it to its customers, the representative of the appellant had refused to give any detail with regard to the process because, according to him, that process was a trade secret and he would not like to reveal the same - it is clear that the appellant was purchasing Helium at the rate of ₹ 520/- per Cum. and was selling the same after adding 40% to 60% profit - It can be very well said that the Helium purchased by the appellant was in a marketable state but it is equally true that by giving different treatment and purifying the gas, the appellant was manufacturing a commercially different type of gas or a new type of commodity which would suit a particular purpose - No duty was ever paid by the appellant on the Helium sold by it after giving some treatment so as to make it a different commercial product - Decided against the assessee

Summary

Issues:
1. Whether the treatment given to Helium gas by the appellant amounts to manufacture under Chapter Note 10 of Chapter 28 of the Central Excise Tariff Act, 1985.
2. Whether the process undertaken by the appellant renders the goods liable to duty.

Analysis:

Issue 1:
The appeal challenges the Tribunal's decision that the treatment given by the appellant to Helium gas constitutes "manufacture" under Chapter Note 10 of Chapter 28 of the Act. The appellant argued that no new product emerged from the treatment, and the gas remained unchanged. However, the Tribunal found that the testing and treatment rendered the gas marketable in distinct grades, justifying duty imposition. The appellant's reliance on previous cases was countered by the respondent, supporting the Tribunal's conclusion.

Issue 2:
The appellant contended that the gas was already marketable upon purchase, and testing did not enhance its marketability. However, the Tribunal highlighted that the gas was sold in different grades post-testing, indicating a change in marketability. The appellant's refusal to disclose the treatment process raised suspicions of willful suppression. The Tribunal's decision on limitation and duty imposition was upheld, emphasizing the appellant's manufacturing activity under Chapter Note 10.

The judgment concludes that the Tribunal's decision aligns with Chapter Note 10, as the treatment given by the appellant transformed the Helium gas into distinct commercial products. The relabelling argument was dismissed, emphasizing the creation of new commercial commodities through treatment. The lack of disclosure and non-payment of duty further supported the Tribunal's findings. Ultimately, the appeal was dismissed, affirming the duty liability on the appellant for engaging in manufacturing activities as per Chapter Note 10.