2014 (7) TMI 275 - AT - Central Excise

Manufacture - assembly of CNG Kit - whether the very act of collecting various components and fitting them into a box for installation in the CNG would amount to manufacture - Held that - The appellant prepare the kit consisting of the items required for converting a motor vehicle into CNG run vehicle. For this purpose, some items like Electric Central Units (ECUS), Regulators, injectors, filters, etc. are imported on payment of appropriate customs duty and the other items - CNG cylinder, high pressure pipes, gauge and hoses are procured from the domestic manufacturers on which central excise duty has been paid and all these items are packed as CNG kits along with a diagram and instruction manual explaining how the kit is to be installed in a particular vehicle. It is the various components and installation manual which are sold as CNG kit. The appellant do not manufacture any of the above items. There is also no dispute that on the sale of the CNG kit, sales tax is paid on the value of the CNG kit and wherever the appellant installed the kit in a customer s vehicle, service tax is paid on the installation charges - impugned order is not sustainable - Decided in favour of assessee.

Summary

Issues:
Central excise duty on manufacturing of CNG kits, applicability of service tax, imposition of penalties.

Analysis:
The case involved the appellant engaged in assembling and manufacturing CNG kits, importing various components and procuring domestic items for the kits. The department alleged that this activity amounted to manufacturing attracting central excise duty. The appellant argued that they paid service tax for installation charges and VAT or CST on the kits, citing precedents where similar activities were not considered manufacturing. The department defended the order, claiming the act of collecting and packing items for CNG conversion constituted manufacturing.

The Tribunal found that the appellant did not manufacture any items but assembled components into CNG kits, paying sales tax on kit sales and service tax on installations. Citing judgments on similar cases, the Tribunal held that merely collecting and packing components did not amount to manufacturing. It distinguished a previous case where the issue was not specifically addressed. Therefore, the impugned order demanding central excise duty and imposing penalties was set aside, and the appeal along with the stay application was allowed.