2016 (8) TMI 1063 - AT - Central Excise

Duty liability - parts of dumpers and others imported, further repacked and labelled by the appellant and sold - whether the items/parts which are repacked are parts of automobiles to fall under Third Schedule and/or Section 4A Notification or not - Held that - the appellant has no case on merits as the Tribunal in the case of Larsen and Toubro Ltd. vs. CCE 2015 (12) TMI 224 - CESTAT MUMBAI has held that these items are liable for central excise duty as per Section 2(f)(iii) of the Central Excise Act, 1944. - Therefore, by applying the same appellant is liable to pay excise duty. Cum duty benefit - goods considered as manufactured - duty demanded under old Section 4 as well as Section 4A of the Central Excise Act, 1944 - Held that - there is no abatement given to the appellant in respect of the demands raised under Section 4A and no deductions have been given for the demands raised under Section 4 as the annexures indicate that the demands have been raised on the transaction value only. On this point, we agree with the appellant that the value which has been considered, if it is, the transaction value as per the invoice, then the benefit of cum duty has to be extended to the appellant, is the law settled by various High Courts and even in the case of Larsen and Toubro Ltd., the Bench had extended such a benefit. Having held so, we find that the quantification of the duty after extending cum duty benefit needs to be redone by the lower authorities. Cenvat credit - CVD paid by the appellant on goods imported - Held that - if the appellant is saddled with the central excise duty on the ground of deemed manufacture , the pars which have been imported by the appellant in bulk, if they have suffered CVD, the benefit of cenvat cannot be denied as the same parts are considered as manufactured on repacking and central excise duty is paid. Therefore, the appellant is eligible for cenvat credit of the CVD paid, subject to production of duty paying documents/bills of entry on the parts which were imported, repacked and sold. Requantification of demands - Held that - the adjudicating authority will also work out the interest liability on the main appellant. Since the penalty imposable is on the main appellant is dependent upon the quantum of duty liability, we also direct the adjudicating authority to consider the quantum of penalty to be imposed on the appellant after requantification of the duty liability. Imposition of penalty - suppression of correct and germane facts concerning the manufacture of excisable goods - Held that - we do not agree with the bland findings recorded by the adjudicating authority. As regards the appellant, T. Laxmi Narayana, General Manager (Finance) and Company Secretary of the main appellant, no role seems to have been attributed to him in any form in the impugned order for visiting him with personal penalty. In any case, we find that the issue involved in this case being in the nature of interpretation of the provisions of the Central Excise Act, personal penalty under Rule 26 is not imposable on the individual. Accordingly, we set aside the penalty imposed on the individual. - Appeal disposed of

Issues Involved:
1. Liability to duty on repacked and labeled imported parts.
2. Invocation of the extended period for demand.
3. Eligibility for cum duty benefit.
4. Eligibility for CENVAT credit on CVD paid.
5. Imposition of penalty on the individual.

Detailed Analysis:

1. Liability to Duty on Repacked and Labeled Imported Parts:
The core issue pertains to whether the activities of repacking and labeling imported parts amount to "manufacture" under Section 2(f)(iii) of the Central Excise Act, 1944. The Tribunal referenced the case of Larsen and Toubro Ltd. vs. CCE, where similar activities were deemed to constitute manufacture, making the goods liable for central excise duty. The Tribunal found that the appellant's arguments were akin to those in the Larsen and Toubro case, thus confirming the duty liability on the repacked parts.

2. Invocation of the Extended Period for Demand:
The appellant contested the invocation of the extended period, arguing that their activities commenced in 2009 and were supported by CBEC circulars indicating that dumpers and other machinery were not considered automobiles. However, the Tribunal held that the appellant, being in the organized sector, should have been aware of the legal implications. Consequently, the invocation of the extended period was deemed correct.

3. Eligibility for Cum Duty Benefit:
The appellant argued for the cum duty benefit on the transaction value. The Tribunal agreed, noting that if the transaction value as per the invoice was considered, the cum duty benefit should be extended. This aligns with the law settled by various High Courts and previous Tribunal decisions. The Tribunal directed the lower authorities to re-quantify the duty after extending this benefit.

4. Eligibility for CENVAT Credit on CVD Paid:
The Tribunal found merit in the appellant's claim for CENVAT credit on the CVD paid for imported parts, provided they produced the necessary duty-paying documents. The Tribunal remanded the matter back to the adjudicating authority to re-quantify the demands after verifying the eligibility for CENVAT credit.

5. Imposition of Penalty on the Individual:
The Tribunal found that the penalty imposed on the individual, T. Laxmi Narayana, was not justified. The adjudicating authority had not attributed any specific role to him in the suppression of facts. The Tribunal noted that the issue involved was interpretative, thus personal penalty under Rule 26 was not imposable. The penalty on the individual was set aside.

Conclusion:
The Tribunal upheld the duty liability on the main appellant but remanded the case for re-quantification of the duty, interest, and penalty after considering the cum duty benefit and CENVAT credit eligibility. The penalty on the individual was set aside. The appeal of the individual was allowed, and the appeal of the main appellant was disposed of as indicated.

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