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2012 (12) TMI 503 - AT - Central ExciseWaiver of pre-deposit manufacture or not - appellant is engaged in the marketing of hydrogen gas cylinders - appellant receives 99.9% pure hydrogen gas from SIEL through pipeline at a pressure of 1000 to 1200 mmwc. This gas is filled in returnable gas cylinders with identification marking of the appellant and sold to various consumers - Department was of the view that filling and marketing of hydrogen gas cylinders with label amounted to manufacture in view of Chapter Note 9 of Chapter 28 of the Central Excises and Salt Act as applicable at that time Held that - It cannot be said that filling of liquid ammonia from tanker into smaller cylinders does not amount to repacking of gas from bulk packing - appellant directed to deposit
Issues Involved:
1. Waiver of pre-deposit of duty demand. 2. Invocation of extended period of limitation. 3. Determination of whether the process of compressing and filling hydrogen gas into cylinders constitutes "manufacture" under Chapter Note 9 of Chapter 28 of the Central Excise Tariff Act. Detailed Analysis: Waiver of Pre-Deposit of Duty Demand: The appellant sought a waiver of the pre-deposit of a duty demand amounting to Rs. 3,17,82,267/- with interest and an equal amount of penalty. The application was made under Section 35F of the Central Excise Act, 1944. The appellant argued that the extended period of limitation should not have been invoked and that the process of compressing and filling hydrogen gas into cylinders does not amount to manufacture. Invocation of Extended Period of Limitation: The appellant contended that the Department was not justified in invoking the extended period of limitation under the proviso to Section 11A of the Central Excise Act, 1944. They argued that all relevant facts were within the knowledge of the Excise Department, as evidenced by the correspondence exchanged in 2006. The appellant had surrendered their manufacturer's registration and taken a trading license based on the Department's guidance. The Department, however, argued that the appellant had concealed the fact that they were filling gas cylinders with the aid of a compressor and filter and marketing these cylinders with their mark. The Tribunal found merit in the appellant's contention, noting that the Department was aware of all facts and circumstances and that there was no justification for invoking the extended period of limitation. Determination of Whether the Process Constitutes "Manufacture": The appellant argued that their process of compressing and filling hydrogen gas into cylinders did not amount to manufacture under Chapter Note 9 of Chapter 28, which states that "labelling or relabelling of containers or repacking from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the customers, shall amount to manufacture." The appellant claimed that they were not labelling or repacking the gas from bulk to retail packs but simply filling returnable cylinders for identification purposes without appending any brand name or label. The Department, however, argued that the process amounted to repacking from bulk supply to small packs (cylinders) and thus constituted manufacture. The Tribunal referred to the Supreme Court judgments in the cases of C.C.E., Mumbai v. Johnson & Johnson Ltd. and C.C.E., Mumbai v. BOC (I) Ltd., which held that repacking from bulk packs to retail packs to render the product marketable directly to the consumer amounts to manufacture. The Tribunal concluded that the appellant's process of filling gas in small cylinders from bulk supply through pipelines amounted to repacking of bulk gas in small packs, thus constituting manufacture under Chapter Note 9 of Chapter 28. Conclusion and Order: The Tribunal found that the appellant had made a prima facie case regarding the issue of limitation but not on the merits of the case. The Tribunal directed the appellant to deposit a sum of Rs. 95 lakhs with interest within four weeks. Upon compliance, the condition of pre-deposit of the balance amount of duty demand, interest, and penalty would be waived, and recovery stayed during the pendency of the appeal. The case was listed for compliance on 29-6-2012.
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