2019 (5) TMI 1287 - AT - Central Excise

Manufacture of disposable syringe as also syringe components - N/N. 6/2006-CE dated 01/03/2006 - Revenue entertained a view that parts of syringes were being cleared by the appellant to only two companies of the appellants group at Gorakhpur and Guwahati - HELD THAT - If the Jurisdictional Commissioner (Appeals) of the buyers unit of the appellants has held the processes undertaken at the buyer s premises as amounting to manufacture, it has to be held that the manufacture of the complete syringe takes place at the buyer s premises. In such a scenario, it cannot be held that what was being cleared by the appellant was a complete syringe - The findings of the Lower Authorities are only based upon the fact that the packaging material sent by the appellant alongwith various parts of the syringe bears the name of the buyer s unit. The matter has not been investigated thoroughly and the various submissions made by the appellant has not been adverted to by the Lower Authorities. Extended period of limitation - HELD THAT - The entire demand is barred by limitation having been raised beyond the normal period. The issue involved is bona fide issue of interpretation and inasmuch as the various parts cleared by the appellants were under going further processes of manufacturer at the buyer s premises, appellants cannot be held guilty of non-payment of duty by way of any suppression or misstatement - the demand is also time barred. Demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Duty of excise on parts and components of syringes
- Interpretation of Exemption Notification No.6/2006-CE
- Challenge to penalty imposition
- Barred by limitation

Analysis:
1. Duty of excise on parts and components of syringes: The appellants were engaged in manufacturing disposable syringes and components. The Revenue contended that by printing the names of two companies on the packaging material, the appellants were clearing complete syringes, attracting duty of excise. However, the Tribunal noted that the processes undertaken at the buyer's premises were crucial in determining whether the complete syringe was being cleared by the appellant.

2. Interpretation of Exemption Notification No.6/2006-CE: The Commissioner (Appeals) upheld the penalty imposed on the appellants, despite them contesting the demand and interest being deposited before the show cause notice. The appellants raised grounds challenging the demand on merits and limitation. The Tribunal observed that the activities undertaken at the buyer's premises were integral to determining whether the manufacture of the complete syringe occurred there.

3. Challenge to penalty imposition: The appellants contested the confirmation of demand and imposition of penalty, arguing that the demand was challenged by referring to the deposited duty and interest before the show cause notice. The Tribunal found that the demand was time-barred and a bona fide issue of interpretation, as the parts cleared by the appellants underwent further manufacturing processes at the buyer's premises.

4. Barred by limitation: The Tribunal held that the entire demand was time-barred, raised beyond the normal period. It concluded that the appellants could not be held liable for non-payment of duty due to any suppression or misstatement, as the parts cleared were undergoing additional manufacturing processes at the buyer's premises. Consequently, the impugned orders were deemed unsustainable, and the demand of duty, interest, and penalty imposed on the appellant were set aside.

This detailed analysis of the legal judgment highlights the key issues involved, the arguments presented by the parties, and the Tribunal's findings and conclusions regarding duty of excise on syringe parts, interpretation of exemption notifications, penalty imposition, and limitation constraints.