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TMI Blog2024 (4) TMI 371X X X X Extracts X X X X X X X X Extracts X X X X ..... ary for connecting tubes with one another. The appellant was paying duty of Excise on the value of couplings. The appellant is also undertaking the said activity on job work basis for M/s ISMT, which sends the bare pipes to the appellant for carrying out the aforementioned processing, after which the pipes are returned to the principal, duly fitted with the couplings. The appellant claims labour charges for this job work activity. The contention of Revenue is that this processing of tubes by undertaking the aforementioned processes amounts to 'manufacture' and therefore, the appellant should have discharged Excise duty on these goods. Consequently, upon initiation of proceedings, SCN dt.01.05.2012 was issued for demanding duty of Rs.6,77,46,033/- including cess, allegedly not paid on casing pipes and production tubings for the period April 2007 to March 2012, detailed in the annexure to SCN, by invoking extended period of limitation, with further proposal to impose penalty under Sec 11AC as well as under Rule 25 of CER, 2002. 2. The relied upon documents in the SCN are as follows: a) ER1 Returns submitted by the assessees for the period from April 2007 to March 2012. b) Commer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s conceded that the above said processes undertaken by the appellant on job work basis, do not amount to manufacture and hence, was pursuing the demand of service tax. After 16.06.2005, the appellant has been paying service tax for the said activities undertaken by them on job work basis under BAS, wherever applicable, which is not being disputed by the department. The very same activities are also undertaken by the appellant on their own account, on the duty paid pipes purchased/ imported by them and cleared after such operations. For the couplings manufactured by the appellant and fitted to the pipes, the appellant had duly paid Excise duty. 5. He further urges that in this connection, the SCN dt.01.05.2012 has been issued on the appellant, demanding Excise duty of Rs.6,77,46,033/- for the period April 2007 to March 2012 by alleging that consequent to introduction of 8 digit tariff from 28.02.2005, the pipes purchased by the appellant fall under CETH 7304 1910 and after such processing, the pipes become usable in oil drilling purposes and classifiable under CETH 7304 2390. In as much as the character, use and tariff heading of the pipes have changed, leading to a different class ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion tubings are exempted from payment of Excise duty, if supplied to ONGC and OIL and if the processes do not amount to manufacture, there is no need for such exemption. In this connection, he urges that if these goods are manufactured from the stage of their basic raw materials, they become liable to Excise duty and hence, exemption has been granted. There is nothing in the notification to suggest that the subject processes would amount to manufacture. 10. The appellant relies on HSN Sub-Heading notes for Chapter 7303, from where it can be observed that the only difference between the pipes falling under 7304 11 and 7304 23 is only in the different standards being prescribed. The processes, which involve such changes in the parameters, cannot be considered as manufacturing processes, in the absence of any specific Chapter note to that effect, in as much as no new product has emerged after these processes. Accordingly, he submits that the demand of Excise duty confirmed on the appellant is not sustainable both on merits and on time bar and hence, it is prayed that the impugned orders may kindly be set aside and the appeals may be allowed. 11. Opposing the appeals, learned AR for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctured product. He further urges that in HSN Explanatory notes, fifth edition (2012), Chapter heading 72 provides that - the finished products may be subjected to further finishing treatments or converted into other articles by a series of operations such as (i) Mechanical Working (turning, milling, grinding, perforation or punching, folding, sizing, peeling etc.), (ii) Surface treatments (including cladding to improve the properties or appearance of the metal, protect it against rusting and corrosion, etc.), (iii) Chemical surface treatments (such as phosphating, which consists of immersing the product in a solution of metallic acid phosphates). It is further urged that under HSN Explanatory Notes in Chapter 73, after general note (2), it provides that the General Explanatory Note to Chapter 72 applies, mutatis mutandis, to this Chapter (Chapter 73). Accordingly, prays for dismissing the appeals and upholding the impugned orders. 14. Having considered the rival contentions, after going through the records, we find that the present SCN has been issued by the Revenue due to change of opinion and/or interpretation after introduction of the 8 digit tariff. The only case of Revenue is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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