2001 (3) TMI 508 - AT - Central Excise

Summary

Issues:
- Classification of activity as manufacture under Section 2(f) of the Act.
- Whether silver coating on copper powder amounts to manufacture.
- Burden of proof on Revenue to establish substantial change in character or usage.
- Comparison with previous judgments on similar activities.

The judgment by the Appellate Tribunal CEGAT, New Delhi involved an appeal against an order confirming duty and imposing a penalty on the appellants for not reflecting the supply of silver coated copper tamping powder in their records. The appellants argued that their activity of coating copper powder with silver did not constitute manufacture under Section 2(f) of the Act. The Revenue contended that the process resulted in a new marketable product, thus falling under the definition of manufacture. The Tribunal examined the process adopted by the appellants, which involved manual coating without machinery, and noted that the silver coating enhanced efficiency but did not substantially change the character of the copper powder. The Tribunal emphasized the lack of evidence showing a change in the character or usage of the product due to silver coating. Citing previous judgments, including Tobu Enterprises and Jayesh Electricals, the Tribunal highlighted that mere coating may not amount to manufacture if no new distinct product emerges.

The Tribunal further referenced the Apex Court's decision in C.C.E., Meerut v. Goyal Gases (P) Ltd., where mixing gases did not constitute manufacture without evidence of a new distinct product. Based on the lack of material evidence demonstrating a substantial change in the product's character or usage, the Tribunal disagreed with the Collector's view that silver coating amounted to manufacture. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellants. The judgment emphasized the importance of establishing a significant transformation in the product to classify an activity as manufacture, aligning with previous legal interpretations on similar cases.