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TMI Blog2018 (4) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... cess of the imported Rectifiers. The processes carried out are in the nature of finishing process which can be considered as ancillary to the manufacture of a finished product - there is no justification for demand of such amount under Rule 3 (5). Appeal allowed - decided in favor of appellant. - E/MISC/20250/2017 in E/851/2008-DB - Final Order No. 23235 / 2017 - Dated:- 11-12-2017 - SHRI S.S GARG, JUDICIAL MEMBER AND SHRI V. PADMANABHAN, TECHNICAL MEMBER Shri B.N Gururaj, Advocate, For the Appellant Dr J, Harish, Deputy Commissioner(AR), For the Respondent Per: V. PADMANABHAN The present appeal is before the Tribunal for de novo decision as per the order passed by the Hon ble High Court of Karnataka dated 23.09.2011 in CEA No, 15/2011. The assessee is a manufacturer of power supply systems for telecom sector. They import Rectifiers and avail cenvat credit of CVD as well as SAD paid at the time of import, Such Rectifiers after receipt in the factory are sometimes cleared for further manufacture of power supply systems and in certain other cases they are cleared for use as spare parts. The dispute is with reference to the clearance made by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issions made by the appellant before us and before the adjudicating authority, there is no technical write up which would indicate as to how the processes (as recorded hereinabove), are incidental or ancillary to a manufactured product. Before us also, the learned Counsel has only submitted that programming and burning test would be a test, which is to be considered incidental or ancillary to the manufactured product. We find that in the absence of any technical write up as to how the rectifiers, which were imported by the assessee, and the rectifiers cleared by the assessee, after undergoing the processes as indicated herein above, had resulted in a better rectifiers cleared from the assessee's unit. We are unable to accept the assessee's contention that the processes indicated herein above, would amount to process which is incidental or ancillary for the completion o the manufactured product. Since the definition of manufacture in section 2(f) is not satisfied, it has to be concluded that there is no manufacture in the assessee s premises. We find that the ratio of the Hon 'ble Supreme Court's decision in the case of Metlex (I) Pvt Ltd. (supra) is correctly relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, we hold that the demand of the duty, as confirmed by the adjudicating authority in the impugned order, is correct and the appellant is liable to pay interest on the amount, which has been utilized by him for discharge of duty liability as held by the Hon'ble High Court of Punjab Haryana in the case of Ind-Swift Laboratories Ltd Vs. UOI - 2009-TIOL-440-HC-P H-CX. The imposition of penalties on appellant is unwarranted and hence are set aside. The appeal is disposed off in the above terms. 2. With the above background, we heard Shri B. N. Gururaj, learned advocate appearing for the appellant as well as Dr Harish, learned DR appearing for the Revenue, 3. The learned counsel appearing for the appellant drew our attention to the technical write-up submitted at the time of filing the appeal before the Tribunal and explained that after receipt of the Rectifier within the appellant's factory, the goods are subjected to various tests including the burning test for two hours, the purpose of carrying out these tests to test whether the imported goods satisfy the specifications prevailing in India and its suitability for use within the country. The Rectifiers are also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et. 5. After hearing both sides and perusal of record, we note that the Hon'ble High Court has remanded the matter with the specific directions to examine the technical write up which was submitted by the appellant at the time of the appeal before the Tribunal in the last round of litigation. We have accordingly carefully considered the technical write up which is on record. In addition to the technical specifications of the Rectifiers which has been imported by the appellant, there is a process flow chart indicating the various processes which are carried out by the appellant in their factory prior to clearance of the same. The write up further lists out the tests and also indicates sample test logs, Further copies of the test logs have also been furnished. These test logs indicate that whereas most of the imported goods passed the various tests, a few failed the same and hence are not considered fit for clearance to the spare part market. 6. After understating the various tests carried out, we note that these tests as well as programming carried out within the factory are in the nature of acceptance testing i.e. to mean that the tests are required to ensure that the g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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