Customs, Excise and Gold Tribunal - Tamil Nadu
Karthigeya Moulds And Dies Private Ltd. vs Commissioner Of Central Excise on 22 October, 2007
Equivalent citations: 2008(125)ECC59, 2008(151)ECR59(TRI.-CHENNAI), 2008(222)ELT82(TRI-CHENNAI)
ORDER P.G. Chacko, Member (J)
1. The appellants are manufacturers of moulds and dies (SH 8480.10). They supply these products to companies like TVS Motor Co. Ltd., Whirlpool of India Ltd. etc. The period of dispute involved in this case is April, 2003 to January, 2006, part of which is covered by the first appeal and the rest covered by the second appeal. During the said period, they had undertaken rectification/correction/modification works on moulds supplied by their customers and had cleared the rectified/corrected/modified moulds to them against payment of labour charges. The lower authorities had demanded duty on the amounts so collected by the appellants from their customers. They have also imposed penalties on the assessee. The main challenge in these appeals is against the demands of duty and the connected penalties. After hearing both sides and considering their submissions, we note that the question immediately arising for consideration is whether the above work undertaken by the appellants amounted to 'manufacture' under Section 2(f) of the Central Excise Act. A plethora of decisions have been cited by learned consultant in support of the appellant's contention that the above activity does not amount to 'manufacture'. Some of these decisions are given below:
(i) Commissioner of Central Excise, Pune v. Dattanand Refrigeration Services Pvt. Ltd. , wherein repairs/reconditioning or remaking of compressors was held to be not amounting to manufacture under Section 2(f) of the Central Excise Act.
(ii) Bombay Cycle and Motor Agency Ltd. v. Commissioner of Central Excise, Pune , wherein repair of defective compressors was held to be not amounting to manufacture.
(iii) Timken India Ltd. v. Commissioner of Central Excise, Jamshedpur 2004 (175) E.L.T. 630 (Tri.-Kolkata), wherein repairs/reconditioning of old roller bearings was held not amounting to manufacture.
(iv) Accurate Transformers Ltd. v. Commissioner of Central Excise, Noida , wherein repair of transformers was held not amounting to manufacture.
(v) Commissioner of Central Excise, Mumbai v. Suresh Engg. Works 2003 (187) E.L.T. 288 (Tri.-Mumbai), repair/reconditioning of heat exchangers by replacement of new tubes was held not amounting to manufacture.
(vi) Metro Tyres Ltd. v. Collector of Central Excise, Chandigarh , wherein repairs/reconditioning of old/defective electrical fans by replacement of parts, rewinding of motor, refixing of number plates etc. was held to be not amounting to manufacture.
2. Learned consultant has also relied on Circular No. 14/87 dated 30.12.1987 of CBEC, wherein it was clarified that modifications on the body already built on chassis of motor vehicle would not be considered to bet as 'manufacture' and, therefore, conversion of old bus into lorries by such modifications would not amount to 'manufacture'. The line of decisions on the point is in favour of the appellants and, therefore, we hold that any duty of excise was not liable to be demanded from them in respect of the activity in question.
3. Another issue arising in one of these appeals is whether the appellants were entitled to avail CENVAT credit on an injection moulding machine (capital goods) which was received in their factory in January, 2005 and used for testing moulds as also for manufacturing components. The appellants used to manufacture and supply moulds to their customers according to the latter's specifications. They were liable to satisfy their customers as to the dimensional accuracy of the moulds and, for this purpose, they used the above machine. They used the machine also for manufacturing components for other customers on job work basis. In this case, they were paying duty on the components, also. This aspect, however, was not seriously taken note of by the lower authorities, before whom the appellants forcefully pleaded that they had used the above machine for the manufacture of excisable goods and hence they were eligible for capital goods credit thereon. It appears, the lower authorities chose to go by the aspect of the moulding machine having been used for testing purposes only. By any standards, they were not right in denying CENVAT credit on the capital goods to the appellants inasmuch as the machine was used only in the manufacture of excisable goods, whether it be moulds or moulded components.
4. In the result, the appeals succeed on merits and the same are allowed with consequential reliefs if any.
(Dictated and pronounced in open court)