2018 (7) TMI 846 - AT - Central Excise

Manufacture - appellant contended that what they are selling are stampings only and the process of cleatting or riveting does not result in coming into existence of a part of stator or rotor - Held that - The first stage of the process of manufacture is a cleatting/riveting of the requisite number of stampings. Thus, the cleatting/riveting of the stake of stamping is a first stage necessary for the manufacture of stator. The show-cause notice alleges that the appellants have manufactured stators of different sizes. When the matter was remanded by the Tribunal, there was a specific issue referred to the adjudicating authority which required the adjudicating authority to determine if the process amounts to manufacture. The impugned order deals with the classification of the product but it does not deal with the issue of manufacture. It needs to be appreciated that a different classification per se is not sufficient to prove the fact of manufacture. To establish that the activity of manufacture is happened, it needs to be established that a new product known in the market has come into existence due to activity conducted by the appellants. We find that the Commissioner has not dealt with this issue at all despite specific remand on this issue. Since the impugned order fails to deal with the core issue regarding manufacture, the impugned order needs to be set aside and matter remanded once again to decide the issue afresh strictly in terms of the order of remand dated 22.1.2007.

Summary

Issues involved:
Classification of cleatted or riveted stator stampings as part of stator under Heading 8503.00 of Central Excise Tariff Act, 1985 and duty liability.

Analysis:

Issue 1: Classification of cleatted or riveted stator stampings
The appellant argued that cleatting or riveting stampings do not result in the emergence of a new stator part. They emphasized the detailed process of manufacturing a stator, including insulation, winding coils, and varnishing, which occurs after cleatting or riveting. The appellant provided expert opinions and certificates to support their claim that cleated or riveted stampings do not constitute a stator. They contended that cleatting or riveting alone does not amount to manufacture, citing the Delhi Cloth Mills case. Additionally, they highlighted discrepancies in the Revenue's interpretation of the goods described in the invoices, asserting that cleatting charges were only applicable in specific cases. The appellant also argued that the demand was time-barred due to their genuine belief in non-manufacture activities.

Issue 2: Interpretation of previous orders and remand
The Tribunal noted that the impugned order failed to address the core issue of whether the process amounted to manufacture, despite specific remand instructions. The Tribunal emphasized that the impugned order focused on product classification rather than the manufacturing aspect. It was highlighted that a different classification alone does not establish manufacturing activity. The Tribunal found that the Commissioner did not adequately address the emergence of a new product due to the appellant's activities. Consequently, the Tribunal set aside the impugned order and remanded the matter for a fresh decision strictly in accordance with the remand order.

In conclusion, the Tribunal's judgment focused on the key issue of whether cleated or riveted stampings constitute a stator part and the failure of the impugned order to address the manufacturing aspect. The Tribunal emphasized the need to establish the emergence of a new product to prove manufacturing activity and remanded the matter for a fresh decision on this critical issue.