Customs, Excise and Gold Tribunal - Ahmedabad
Kaveri Metallising And Coating ... vs Cce on 2 May, 2008
ORDER Archana Wadhwa, Member (J)
1. The appellants are engaged in the process of metallising and lacquering and laminating on duty paid Polyester, BOPP/PUC films etc. as well as selling of duty paid films. The dispute in the present appeal is as to whether the said activity amounts to manufacture or not. Asst. Commissioner vide his order confirmed demand of duty of Rs. 3,99,325/- along with confirmation of interest by holding that the said process resulted in emergence of a new and distinct product and as such the activity has to be held as manufacture activity. However, he did not impose any penalty upon the assessee by observing that there is not willful misstatement or suppression on their part.
2. The above order of Asst. Commissioner was appealed against by the appellant before Commissioner (Appeals), who again rejected their contention that the process does not amount to manufacture. Apart from that, he also observed that the dropping of penalty by the Asst. Commissioner was not proper and accordingly, he imposed penalty of identical amount on the assessee, though there was no appeal by the Revenue. First of all, we would like to observe that such action on the part of the Commissioner (Appeals) was against the settled principles of jurisprudence. In the absence of any challenge by the Revenue to the said part of the Asst. Commissioner's order vide which he dropped the penalty, it was not open to Commissioner (Appeals) to decide the said issue and impose penalty upon the assessee, who had approached him for relief against the duty confirmation.
3. In any case we find that the issue as to whether such activity amounts to manufacture or not stands decided by the Hon'ble Supreme Court in the case of Metlex (I) Put. Ltd. . It was held that product is a film to start with and remains a film after lamination or metallization and no new and distinct product comes into existence. The said order of the Hon'ble Supreme Court stands followed by the Tribunal in a number of cases. Reference in this regards is made to Tribunal's decision in the case of Ellora Mechanical Products Pvt. Ltd. 2005(186) ELT 234 (Tri. Del.) and Hon'ble Bombay High Court's decision in the case of Garware Plastics & Polyester Ltd. v. UOI . The said decisions do not stand followed by Commissioner (Appeals) on the ground that the same are not relevant after introduction of eight digit classification code in Central Excise Tariff Act, where, raw materials fall under chapter heading No. 3940 and finished product falls under heading No. 3921. We do not find any merits in the above distinction raised by Commissioner (Appeals) inasmuch as the act of manufacture is first required to be decided in terms of Section 2(f) of Central Excise Act and then classification is to be arrived at. If the provisions of Section 2(f) are not satisfied, the fact that raw material and finished product are separately listed in the tariff, by itself is of no consequence. The Hon'ble Supreme Court's decision laying down that no manufacture takes place inasmuch as no new and distinct product comes into existence is in relation to Section 2(f) and would be applicable even after the introduction of eight digit code. Admittedly there is no change in the definition of manufacture in terms of Section 2(f) of the Act. As such, we hold that the processes undertaken by the appellant do not amount to manufacture and no duty liability can be fastened against them. Appeal is accordingly allowed by setting aside the impugned orders.
(Pronounced in Court)