2013 (11) TMI 776 - AT - Central Excise

Packing activity manufacture or not - Whether packing of re-generated Mercury into 30 Kg Cans would amount to manufacture in term of Chapter Note 10 to Chapter 28 Held that - There is nothing to show that the 30 Kg Cans in which Mercury was sold, are pre-packed commodity for sale satisfying the criteria prescribed in this regard in the Board s Circular dt. 08.10.97 thus, the packing of used Mercury in 30 Kg Cans in which the same was sold would not amount to manufacture in terms of Chapter Note 10 to Chapter 28. Period of limitation Held that - The Show Cause Notice has been issued after expiry of normal limitation period of one year from the relevant date and same would not survive unless the Department proves that the respondents had deliberately suppressed the relevant facts from the Department with intent to evade the duty - the assessee is a Public Sector Undertaking wholly owned by the Government of India - it would be absurd to accuse a wholly Government owned company of non-payment of excise duty with intent to evade the tax - it would not be correct to allege that the assessee have suppressed the relevant facts from the Department with intent to evade the payment of duty and as such longer limitation period under proviso of Section 11A(1) and the penalty under section 11AC would not be applicable - the duty demand is not sustainable on limitation also Decided against Revenue.

Summary

Issues Involved:
- Whether the packing of re-generated Mercury into 30 Kg Cans amounts to manufacture under Chapter Note 10 to Chapter 28 of the Central Excise Tariff Act, 1985.
- Whether the duty demand is sustainable based on the limitation period.

Analysis:

Issue 1: Packing of re-generated Mercury into 30 Kg Cans

The case involved a dispute regarding whether the packing of re-generated Mercury into 30 Kg Cans would amount to manufacture under Chapter Note 10 to Chapter 28 of the Central Excise Tariff Act, 1985. The Department argued that such packing constituted repacking from bulk pack to retail pack, attracting Central Excise duty. However, the Tribunal referred to previous judgments to support the argument that transferring material from one container to another may not qualify as packing under Chapter Note 10. The Tribunal also highlighted that the 30 Kg Cans did not meet the criteria of a pre-packed commodity as defined in relevant circulars. The Tribunal distinguished a previous judgment cited by the Department, emphasizing that the circular explaining the scope of Chapter Note 10 had not been considered in that case. Ultimately, the Tribunal concluded that the packing of re-generated Mercury into 30 Kg Cans did not amount to manufacture under Chapter Note 10 to Chapter 28.

Issue 2: Duty Demand Based on Limitation Period

The Tribunal also addressed the issue of the duty demand being sustainable based on the limitation period. It noted that the Show Cause Notice was issued after the normal limitation period of one year had expired. The Tribunal emphasized that for the duty demand to survive beyond the limitation period, the Department needed to prove that the respondents had deliberately suppressed relevant facts with the intent to evade duty. Considering that the respondent was a wholly Government-owned company, the Tribunal found it unreasonable to accuse them of such suppression. Therefore, the Tribunal concluded that the duty demand was not sustainable based on the limitation period as the Department had not proven deliberate suppression of facts by the respondents.

In conclusion, the Tribunal dismissed the Revenue's appeal both on merits regarding the packing issue and based on the limitation period, highlighting that the duty demand was not sustainable under the circumstances presented in the case.