2015 (2) TMI 182 - AT - Central Excise

Manufacture - Whether activity carried out by the appellant amounts to manufacture which gave rise to the finished goods which was liable to excise duty - Held that - By an apparent look, the raw material suggests that without undertaking processing thereof no finished goods can be produced since finished goods exhibits altogether a different look quite distinct from raw material which is visible to naked eye. It may be stated that there was structural change by touch when finished goods derived from the raw material is examined. It is also established that the appellant did not prefer to sell the raw material but sold finished goods undertaking process to make the raw material marketable in a different form to fetch better price and to make that useful for the purpose that is meant. - raw material shown to us today gave rise to finished goods with distinct identity and marketability. Finished goods having been covered by Chapter 84 it is difficult to agree with the appellant that there was no manufacture done - Decided against assessee.

Summary

Issues:
Whether the activity amounts to manufacture for excise duty liability.

Analysis:
The judgment revolves around the issue of whether the activity undertaken by the appellant amounts to manufacture, thereby attracting excise duty liability. The Tribunal directed the appellant to produce samples of raw material and finished goods for examination. Upon physical examination, it was observed that the finished goods exhibited a distinct identity and marketability compared to the raw material. The Tribunal noted that without processing the raw material, the production of finished goods would not be possible. The finished goods fell under Chapter 84, indicating a manufacturing process had taken place. The Tribunal concluded that the appellant's activity constituted manufacture, making the finished goods liable for excise duty.

Regarding the penalty, the Tribunal considered the difficulty in interpreting the law and the technical examination involved. Due to these complexities, the penalty imposed was waived. The judgment highlights the importance of physical examination and the distinct transformation of raw material into finished goods to determine the manufacturing process. Ultimately, the appeal was partly allowed based on the findings related to excise duty liability and the waiver of penalty due to the technical nature of the case.