2019 (5) TMI 1530 - AT - Central Excise

Area based exemption - benefit of N/N. 50/2003-CE dated 10.06.2003 - Revenue s contention is that the said amendment carried out in Notification No.50/2003 made the Roorkee units unavailable to the exemption Notification inasmuch as the process undertaken by them, do not amount to manufacture - HELD THAT - The Revenue s entire case is based upon the fact that Mumbai unit of the appellant had manufactured head units and body unit of the torch which was assembled in Mumbai and it is only thereafter the same were again disassembled and transported to Roorkee. Roorkee units have only assembled the fully manufactured parts and have cleared the torches after claiming the benefit of the notification. The two units located at Roorkee were only manufacturing switches in question and were not in a position to manufacture the full torch. The assembling of various parts amounts to manufacture in terms of the provisions of Section 2(f) of Central Excise Act inasmuch as the same encompasses any incidental or ancillary activity. Even as per Note 6 of Section XVI the conversion of an incomplete article into a complete article would amounts to deemed manufacture. The Amending Notification No.01/2008-CE is applicable only in those cases where the processes undertaken does not amount to manufacture. Inasmuch as we have held that the activity at Roorkee was of manufacturing nature, the benefit of the Notification stands correctly availed by them. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Confirmation of demand of Central Excise duty against two manufacturing units
- Imposition of penalty on the directors of the company
- Confiscation of seized goods with an option for redemption
- Interpretation of Notification No.50/2003-CE and subsequent amendments

Confirmation of Demand of Central Excise Duty:
The judgment involves the confirmation of Central Excise duty against two manufacturing units located in Roorkee, following an investigation by the Revenue. The Commissioner confirmed a demand of Rs.1,63,26,036 against one unit and Rs.9,22,520 against another, along with penalties imposed on the directors of the company. The units were accused of availing area-based exemption wrongly by assembling torches from parts received from another unit in Bombay. The Revenue contended that the torches were fully manufactured in Bombay and only assembled in Roorkee to avail the exemption.

Interpretation of Notification No.50/2003-CE:
The judgment delves into the interpretation of Notification No.50/2003-CE and subsequent amendments, particularly Para 4 inserted by Notification No. 1/2008-CE. The amendment specified that goods subjected to certain processes without undergoing manufacturing would not be eligible for exemption. The Revenue argued that the processes undertaken by the Roorkee units did not amount to manufacture, thus disqualifying them from the exemption. However, the appellant contended that the processes in Roorkee, including assembling various components and manufacturing switches, constituted manufacturing under the Central Excise Act.

Analysis of Arguments:
The appellant argued that the activities in Roorkee qualified as manufacturing under Section 2(f) of the Central Excise Act, citing precedents and legal provisions. They highlighted the deeming fiction of manufacture under Note 6 of Section XVI, emphasizing that their activities satisfied the definition of manufacture by assembling parts into a marketable product. The appellant stressed that the amendment to the notification only excluded non-manufacturing activities from the exemption. In contrast, the Revenue maintained that torches were fully manufactured in Bombay and transported to Roorkee for availing the exemption.

Judgment and Conclusion:
After considering the submissions, the Tribunal found that the activities in Roorkee constituted manufacturing, as the units were assembling various parts into complete torches. The Tribunal noted discrepancies in the Revenue's argument regarding duty payments and assessments at the Bombay unit, indicating that the parts received in Roorkee should be assessed as parts. The judgment concluded that the Roorkee units rightfully availed the exemption, setting aside the impugned orders and allowing all four appeals with consequential relief to the appellant.

This detailed analysis of the judgment highlights the issues of central excise duty confirmation, penalty imposition, confiscation of goods, and the interpretation of relevant notifications, providing a comprehensive overview of the legal proceedings and arguments presented before the Tribunal.