Custom, Excise & Service Tax Tribunal
Value Industries Ltd.(Earlier ... vs Commissioner Of Central Excise, ... on 18 February, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. E/799/05-MUM [Arising out of Order-in- Appeal No. BPS(421) 138/2004 dated 30/12/2004 passed by the Commissioner of Central Excise & Customs (Appeals). Aurangabad] For approval and signature: Honble Mr. P.K. Jain, Member(Technical) Honble Mr Ramesh Nair, Member(Judicial) =======================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : seen
of the Order?
4. Whether Order is to be circulated to the Departmental: Yes
authorities?
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Value Industries Ltd.(Earlier Videocon Appliances Ltd)
:
Appellants
VS
Commissioner of Central Excise, Aurangabad
:
Respondent
Appearance
Shri. Yogesh Patki, Advocate for the Appellants
Shri. Sanjay Hasija, Superintendent (A.R.) for the Respondent
CORAM:
Honble Mr. P.K. Jain, Member (Technical)
Honble Mr. Ramesh Nair, Member (Judicial)
Date of hearing: 18/2/2015
Date of decision: 18/2/2015
ORDER NO.
Per : Ramesh Nair
The Appeal is directed against the Order-in- Appeal No. BPS(421) 138/2004 dated 30/12/2004 passed by the Commissioner of Central Excise & Customs (Appeals), Aurangabad wherein the Appeal of the Appellant was rejected.
1.1 The facts of the case is that the Appellant are engaged in the manufacture of excisable goods viz. Refrigerators, Air Conditioners, Washing Machines and Microwave Ovens falling under chapter 84 and 85 of the first schedule of the Central Excise Tariff Act, 1985. During the period Jan,2000 to Mar,2000 the Appellants were availing Modvat credit of duty paid on inputs including Compressors. The Appellant received the defective compressors from their customers for repairs or reconditioning etc. as the same were claimed to be not servicable, damaged and failed to function subsequent to their clearance. The Appellants carried out repairs on such compressors for gas leakage, copper tube damage, base clamp alignment, incorrect painting, leak test etc in their factory. For major repairs, the Appellants sent out the damaged and unserviceable compressors to M/s. Indian Refrigeration Co. Ltd. under Rule 57F(4) procedure and got them repaired. In M/s. IRC, the unserviceable and defective compressors were cut open, dismantled and mixed together in the batch process, parts segregated and repairable parts were repaired. Then the compressors were re-assembled from such repaired parts and some new parts/components were also utilized. Thereafter, the compressors so re-assembled were re-sealed, tested, painted, dehydrated, filled with desired quantity of refrigeration oil and then finally tested for various parameters and packed in new carton boxes. The revenue contended that this activity of the Appellant is amount to manufacture and the so called repaired compressors are liable to excise duty as if the same is the newly manfactured goods. Two show cause notices dated 18.05.2000 for the period Jan,2000 & Feb,2000 and dated 19.02.2001for March, 2000 were issued proposing demand of excise duty of Rs.8,51,329/- and Rs.37,233/- respectively and also proposing penalty and interest. In the adjudication the Joint Commissioner of Central Excise & Customs, Aurangabad confirmed the demands raised in the show cause notices vide his Order-in-Original No. 36 & 37/C.Ex./Jt.Commr./2004 dated 07.04.2004. Aggrieved by the said Original order, the Appellant filed appeal before the Ld. Commissioner (Appeals), who by his Order No.BPS (421)/138/2004/224 dated 30.12.2004 rejected the appeal. Aggrieved by the said impugned order, the Appellant filed this appeal.
2. Shri Yogesh S. Patki, Ld. Counsel for the Appellant submits that the Appellant received the defective Compressors from the market for the purpose of repairs and the repaired compressors were returned without payment of excise duty as permissible under Rule 173H of erstwhile Central Excise Rules, 1944. He submits that they followed the procedure laid down under the Rule such as filing of D-3 intimation wherein purpose of return of defective compressors and activity to be carried out thereupon was declared to the department. He submits that the facts regarding the nature of process is not under dispute. The revenues contention is that the process of repairs carried out by the Appellant is not repair but it amounts to manufacture, hence the excise duty was demanded. He submits that they are not clearing newly manufactured compressors, however they carry out repairs of defective compressors by whatever process for repairs is required. It his submission that except replacement of a few parts, the whole compressor is same and only repairs of the existing defective compressors was carried out. This is not a case where after return of defective compressors, the same was completely salvaged and in liew of the same a new compressor was cleared. He submits that the process of repairs involved such as cut open, dismantling, segregation and repair of parts, re-assembling from such repaired parts and some new parts/components, re-sealing of re-assembled compressor, testing, painting, dehydrating, filling of refrigeration oil and then final packing in new carton boxes. The revenue contended that this activity of the Appellant is manufacture. It his submission that for carrying out repairing of any compressor or like goods, there can not be any processes other than the process which was carried out by the Appellant. Shri Patki placed reliance on following judgments in support of his submission:
(a) Shriram Refrigeration Industries Ltd. Vs. CCE[1986 (26) ELT 353 (Tri.)]
(b) CCE Vs. Samtel Color Ltd[2001(135) ELT 288(Tri.)]
(c) Glass Equipment India Ltd. Vs. CCE [2003 (157) ELT 411]
(d) CCE Vs. Lipi Data Systems Ltd. [2001(156) ELT 968]
(e) CCE Vs. Dattanand Refrigeration Services Pvt. Ltd. [2001 (132) ELT 748]
(f) Tecumseh Products India Ltd. Vs. CCE [2004(167) ELT 498 (SC)]
(g) Sudhir Engineering Co. Vs. CCE(Tri) [2006(206) ELT 481]
3. On the other hand, Shri Sanjay Hasija, Learned Superintendent (AR) appearing on behalf of the revenue reiterates the findings of the impugned order. He further submits that the Appellant have cleared newly manufactured compressors in the guise of repaired compressors. He submits that once the compressor was completely knocked down and thereafter reassembled, the activity amounts to manufacture and it can not be called the compressor after such process, as repaired one. He submits that both the lower authorities have, after careful consideration of entire facts, held that the activity of the Appellant is not of repair but of manufacture, hence the demand was correctly confirmed. Therefore the present Appeal does not survive and liable to be dismissed.
4. We have carefully considered the submissions made by both the sides and perused the record.
5. The issue to be decided by us is that the activity of repair carried out by the Appellant on the returned defective compressors falls under repair as provided under Rule 173H of erstwhile Central Excise Rules, 1944 or manufacture in terms of Section 2(f) of the Central Excise Act, 1944. It is observed that the defective compressor returned to the Appellant factory and the return of the repaired compressor is one and the same. In our view there is clear distinction between repaired compressor and manufactured compressor. When a new compressor is manufactured, before manufacture its identity is not of compressor but it is in the form of various raw material and components which in unassembled form can not constitute a compressor. When all the components are assembled in proper form, it will constitute a newly manufactured compressor. However in the present case compressor was once completely manufactured before its first clearance from the manufacturer, the same manufactured compressor returned after use as defective. What the Appellant have done, they only carried out repairs on the existing compressor, though by various processes such as cut open, dismantling of parts, reassembling the same alongwith some new parts, testing, painting etc. But the activity carried out is conversion of old/defective compressor into repaired compressor unlike newly assembled compressor with all new raw material and new components. Therefore in our view there is clear distinction between the newly manufactured compressor and repaired one. It is also observed that if it is assumed that the repair claimed by the Appellant is not repair and it is a manufacture in terms of Section 2(f), then as per the nature of the product, there will be no concept of repair in respect of compressor and the like goods, for the reason that there can not be any process other than the process carried out by the Appellant in the present case for repair of the compressor. Obviously, if any defective compressor needs to be repaired, these very activities are required to repair the compressor. We therefore have no doubt in our mind that the activity carried out by the Appellant on the defective compressor is clearly an activity of repair and by no stretch of imagination, it can be called as manufacture. On going through findings of the Ld. Commissioner (Appeals) in the impugned order, we find that Ld. Commissioner (Appeals) rejected the appeal merely on the ground that judgment in the case of Shriram Refrigeration Industries Ltd. Vs. CCE(supra) which in favour of the appellant has been distinguished by the Honble Supreme Court in the case of Tecumseh Products India Ltd.(S.C.) Vs. CCE(supra). To understand the judgment in both the cases we have gone through the same and relevant portion of both the judgments are reproduced below:-
Shriram Refreigeration Industries Ltd
9.? Let us now see what the evidence on record shows the appellants were doing to the defective compressors received in their factory. According to the show cause notice in the case and further particulars given to us during the hearing, the process employed by them was as follows :-
(i) The outer shell of the compressors was cut open.
(ii) The inner components of the compressors were then dismantled piece by piece.
(iii) The individual parts so obtained were sent to the respective sections in which similar new parts were manufactured. In these sections the received parts were tested and repaired. Irreparable parts were rejected and were replaced by new parts.
(iv) After such testing/repairs/replacements, the parts were brought back to a separate repair assembly line set up in 1971. Here, the parts were re-assembled to make a compressor.
(v) In about 60% cases, bottom shells of the returned compressors required replacement. Serial number of the compressor is engraved on the bottom shell. So, when the bottom shell itself was replaced, serial number of the returned compressor was re-engraved on the new bottom shell of the re-assembled compressor with a prefix R (to denote repair). In the remaining 40% or so cases, where bottom shells were not replaced, the serial number was nevertheless re-engraved with the prefix R since the original engraving became distinct because of wear and tear, acid bath etc. The appellants used to receive about 600 to 800 defective compressors per month. Because of the large scale operations, they could not dismantle and reassemble each compressor individually and separately. They were doing this work in batches. It was quite common, because of the batch operation, that original components of one defective compressor would go into the re-assembly of another defective compressor, of course, of the same model and specification.
On the accounting side, the appellants used to send an intimation to the authorities when defective compressors were received in their factory. They maintained a register of repairs in Form V prescribed by the department. At the time of re-issuing, separate series of gate passes were made out for clearance of the reassembled compressors. In the monthly RT 12 returns sent to the authorities, a separate note was made about the repaired compressors cleared in the factory.
20.?To sum up, of the various grounds taken up by department against the appellants -
(1) The incident of 15 compressors detected with duplicate marks and numbers was ultimately decided in favour of the appellants;
(2) the two grounds of high quantity of rejected parts and high cost of repairs were dropped by the Collector himself during adjudication;
(3) the argument of loss of identity cannot sustain in view of the test laid down by the Honble Bombay High Court in the spinnerets case; and (4) just by inter-mixing of identical parts as between defective compressors of the same model and specification, it could not be said that the reassembled or repaired compressors were not in the same form as those brought into the factory; nor going by the test laid down by the Constitution Bench of the Honble Supreme Court in the Allenbury Engineers case and reiterated by a Full Bench of the Honble Supreme Court in the Barfi Devis case, could it be said that reassembled or repaired compressors were commercially distinct article as compared to the goods that were brought into the factory for repairs.
Apart from the above specific grounds, the Collector has also stated in paragraph 9 of the impugned order that the contents of the letters dated 29-12-1976; 18-6-1969 and 30-4-1977 of the appellants disclosed that the so-called repairing of the compressors was nothing short of the manufacturing of compressors by assembling salvaged parts from the defective compressors, received from places outside the factory of the assessees, with certain other parts, which (other parts) could be new or the salvaged ones. This is a vague statement. The Collector does not say specifically as to which parts of these letters of the appellants lead to his conclusion. The appellants say that there is nothing at all in these letters to warrant the conclusion arrived at by the Collector. The only specific portion quoted by the Collector is from the appellants letter dated 29-12-76 where they have stated that the defective compressors received for repairs cannot be identified after they are dismantled. This particular portion has already been discussed by us in detail in paragraph 12 above and we have held that there was nothing objectionable in it for the simple reason that after dismantling what is visible are various parts of the compressor only and not the compressor itself and that the material thing is that after repairs the parts can be put back in the form of the original compressor.
On the available evidence, we have, therefore, to agree with the appellants, so far as the substantive issue is concerned, that their activity was one of repair/reconditioning/remaking which did not amount to manufacture of any new article and hence they were entitled to the benefit of Rule 173H. If the authorities have a feeling that what is really happening is not what is made out to be, they would have to investigate the matter thoroughly and substantiate their case with proper evidence. On the present showing, however, no violation of rules by the appellants is proved and hence the demand for duty and the imposition of penalty in the impugned order cannot sustain.
Tecumseh Products India Ltd.(S.C.) The question raised for our consideration in these appeals is whether while repairing the defective compressors any part such as stators replaced by the appellant involves manufacturing activity attracting duty under the Central Excise Act. The appellant in the process of repairing scraps some components which cannot be repaired and one such component is stators. The stators were earlier manufactured in the factory of the appellants for repairing of the compressors. Later, the materials required for replacing the scrapped components are received on payment of duty from the factory of the appellant. The Service Centre sends these materials to outside job workers for making the stators. Thereafter the appellant undertook the shaping, varnishing and baking of such stator to fit such stators into the compressor housing. The Collector having felt that the activity of shaping, varnishing and baking done by the appellant on receipt of the stator from the job workers results in manufacture and initiated proceedings for adjudication of tax.
6.?The situation that is considered and examined either in the Shriram Refregeration or Karna Industries was entirely different. In the present case, what was looked into examined and found was the several steps taken in respect of the stator and so far as the stators were concerned, it has been rightly held by the Tribunal that separate activities were carried on by the appellants which were identical to the ones that was carried out in respect of new stator and, therefore, to the extent of the stator being made ready for the purpose of using in the repairing of compressor must be held to be an activity of manufacture and the Tribunal has confirmed the demand only in respect of Stators.
7.?But, insofar as the application of extended period of limitation provided under Section 11A is concerned, we do not think that the Tribunal is justified because it was not clear as to whether if any part is used for the purpose of repairing a machinery would amount to manufacture. In fact, the Tribunal on a detailed analysis and after going into several processes carried out by the appellant, came to the conclusion that the stators which were used in the repairing of the compressors involved manufacturing activity. This circumstance itself shows that there was bona fide dispute between the parties in regard to the question whether stators made ready for the purpose of use of compressors involved any manufacturing activity or not. Therefore, to the extent the authorities invoked Section 11A of the Act and imposed penal interests and other penalties shall stand set aside and the order made by the Tribunal stands modified to that extent.
From facts of the both above judgments Shriram Refrigeration Industries Ltd(supra) and Tecumseh Products India Ltd.(S.C.) (supra), it is clear that in a case of Shriram Refrigeration Industries Ltd the entity was same as of present appellant i.e. repair of compressor whereas in the case of Tecumseh Products India Ltd, the fact was that of the dutiability of a part i.e. stator used in the repair of compressor. In the case of Shriram Refrigeration Industries Ltd it was a case of repairing of compressor by the similar process as existing in the present case, whereas in the case of Tecumseh Products India Ltd the duty was demanded on parts which newly manufactured and used in the repairing of compressor. There is no dispute that if any part newly manufactured whether the same is used for repairing of new equipment or used for manufacture of new equipment or cleared as such, it is liable for duty because part as such is independently manufactured goods therefore facts of Shriram Refrigeration Industries Ltd and Tecumseh Products India Ltd were entirely different. Honble Supreme Court in the case of Tecumseh Products India Ltd even approved the findings given by the Tribunal in the case of Shriram Refrigeration Industries Ltd therefore the judgment of Shriram Refrigeration Industries Ltd attained finality and it has not been overruled. In view of this position it appears that the Ld. Commissioner has misunderstood the findings of the Honble Supreme Court judgment in Tecumseh Products India Ltd case, therefore findings of the Ld. Commissioner(Appeals) in this regard is misplaced, consequently his order mainly based on this points only cannot sustain. We further gone through the judgments in case of Sudhir Engineering Co. Vs. CCE, Daman (Supra) wherein it was held as under:
2.?The appellants are engaged in the manufacture of Diesel Generating Sets classifiable under Chapter No. 85 of the Central Excise Tariff Act, 1985. The appellants factory was visited by the Preventive Officers of Central Excise, on 28-1-1991, who conducted various checks and verifications and recorded the statements of the authorized representatives of the appellant. During the course of checks, it transpired that the appellant had received certain DG Sets for repairs, reconditioning and/or for remaking, etc., which were originally cleared by them on payment of duty from their factory. The officers found that in some of the DG Sets either the engine or alternator or both were replaced with new engines or alternators. As such, they entertained a view that such replacement of the old engine/alternator with a new engine amounts to manufacture and the applicants were required to pay duty on the same.
In the above facts with the majority order it was held that
37.?In view of the majority order, it is held that repairing activity undertaken by the appellants in respect of DG sets does not amount to manufacture. However, the Modvat credit availed in respect of the inputs used in such repairing activity is required to be reversed. Accordingly, the appeal is remanded to the original adjudicating authority for quantifying the demand of duty and adjudging the penalty in terms of the majority order.
Following the judgment Shriram Refreigeration Industries Ltd(supra) this Tribunal in the case of CC, Pune Vs.. Dattanand Refrigeration Services Pvt. Ltd. held as under:-
6.?We find that the recountal of the process made in the cited judgments in the case of Shriram Refrigeration Industries Ltd. as well as M/s. Karna Industries was identical and similar to what was stated in the cases before us. In paragraph 9 of the Shriram Refrigeration Industries Ltd. judgment, the method adopted was narrated. In that case, the assessees were manufacturing the compressors as well as undertaking the repairs thereof. The replaced parts were not always new but were often reconditioned old parts. In the judgment in the case of Karna Industries, the procedure adopted was narrated in paragraph 2 of that order. The facts in Karna Industries case are more akin to the facts of the present case where the replacement work resulting in the customer receiving an entirely different product from what was surrendered by them. In the case of Shriram Refrigeration Industries Ltd. the Tribunal held that the activity of repair/reconditioning/remaking did not amount to manufacture of any new articles. The judgment was relied upon and followed in later judgment in the case of Karna Industries where the findings were the same.
7.?The Commissioner in the face of the similarity and on facts in the ratio of the judgment, he did not go to the factor distinguishing but in the case of M/s. S.C. Industries (Order No. 02/CEX/1998) he merely held the activity to be distinguishable. In the order in the case of M/s. Dattanand Refrigeration Services Pvt. Ltd. (No. 04/CEX/1998) he did not even discuss the ratio of the judgment.
8.?These two judgments of the Tribunal were appealed against in the Supreme Court. In fact in the 3 appeals from the Revenue there is a specific claim made of the denial of the ratio of the judgment to the service centers on the ground that the appeals were filed by revenue against these two judgments.
9.?We have been given a photocopy of the judgment of the Supreme Court in Civil Appeal No. 1029 of 1987, dated 25-8-1999 where the Revenue appeal against the Tribunals judgment in the case of M/s. Shriram Refrigeration Industries Ltd. [1999 (113) E.L.T. A121 (S.C.)] was dismissed by the Supreme Court on merits. The same order in Sr. No. 2534/92 pertained to the Tribunal judgment in the case of M/s. Karna Industries.
10.?What we find is that the process of repairs adopted by the two service centers viz. M/s. Dattanand Refrigeration Pvt. Ltd. and M/s. S.C. Industries before the Commissioner was similar to those before the Tribunal in the cited judgments. In the cited judgments, it has been held that the activity did not amount to manufacture. In view of the judgment of the Supreme Court, it must be held in the present case also that the process undertaken by the two respondents did not amount to manufacture and that they are not liable to pay duty. The fact that in the cited case Rule 173H was under discussion is not relevant, nor does it operate as a bar for application of the ratio thereof.
11.?The Revenue appeals, therefore, do not succeed and are dismissed.
12.?In the cross-objection filed by the respondents to the present appeals, agitation is made of the penalties imposed upon the two units. The penalties were imposed on the conviction of the Commissioner that the activity undertaken by the units were covered under the phrases used in Sec. 6 of the Central Excise Act, 1944. We find that where it was held that the respondents had not engaged in the manufacture of excisable goods, there is no requirement for them to be licensed and consequently there was no requirement for penalties to be imposed upon them. Cross-objections are allowed. The orders imposing penalties are set aside and consequential relief, if any, is ordered.
In the case of Glass Equipment India Ltd. (supra) it was held as under :
6.?We have considered the submissions of both the sides. The admitted facts are that the Appellants are getting old and used modules for repair/reconditioning; that the modules are completely dismantled and non-usable parts are replaced by new components and then the modules are assembled. According to the Revenue, this process amounts to manufacture as a new module, out of partially used and reusable parts retrieved from the worn out module comes into existence. We find ourselves unable to agree with the submissions made by the learned Senior Departmental Representative. For being exigible to excise duty, it is necessary that process should amount to manufacture. As per the judgment of the Apex Court in Union of India v. Delhi Cloth and General Mills Co. Ltd., 1977 (1) E.L.T. (J 199) manufacture implies a change, but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation; a new and different article must emerge, having a distinctive name, character and use. The Supreme Court again in J.G. Glass case, supra, laid down a two fold test for deciding whether the process is that of manufacture. The first test is whether by the said process a different commercial commodity comes into an existence on whether the identity of the original commodity ceases to exist. This test, in our opinion, is not satisfied in the present matter as a different commercial commodity does not come into existence as a result of the process undertaken by the Respondents. After the processes undertaken by the Appellants, module remains a module and no new commodity comes into existence. As no new commercial commodity comes into existence as a result of process employed by the Appellants, it cannot be said that the processes undertaken by them amount to manufacture and consequently no duty of excise will be leviable. The mere fact, that the old and used modules are dismantled by the Appellants for the purpose of repaid, would not convert the process into manufacture. This was the view expressed by the Tribunal in the case of Shriram Refrigeration Industries Ltd. v. CCE, 1986 (26) E.L.T. 353 (T) wherein the Tribunal observed that the compressors can be repaired only after cutting open the outer shell and This situation is not peculiar to compressors but occurs in the matter of repairs of practically all items of machinery and appliances. The Tribunal has, further observed that Even in the case of non-machinery items, the identity of the article is liable to change in the course of repairs/refining/reconditioning/remaking.. In the course of retreading, the shaved-off tyre hardly looks like a tyre; it is only carcass or base of a tyre. But after retreading the article again emerges into original form as a tyre. This also answers the contention of the learned Senior Departmental Representative that after the processes employed by the appellants modules become usable which they were not before the processes were undertaken. But this is the purpose of carrying out repair/reconditioning to make to article reusable. The Tribunal has similarly held the activity of repairing defective picture tubes by dismantling the same and by adding new parts as not amounting to manufacture in the case of CCE, Meerut v. Samtel Color Ltd. [2001 (135) E.L.T. 288 (T) = 2000 (41) RLT 333 (CEGAT)]. Finally, the Larger Bench of the Tribunal in the case of J.S.S. Printing Industries P. Ltd., 2000 (122) E.L.T. 309 has held that the work carried out to re-engrave the rollers second, third or fourth time, as the case may be, will not amount to process of manufacture. Accordingly, we set aside the impugned Order and allow the Appeal without considering the aspect of time-limit and valuation.
In the case of CCE Vs. Samtel Color Ltd (supra) it was held as under
7.?We have heard the rival submissions. We have carefully considered the evidence on record and the case law cited and relied upon by both the sides. We note that the dispute centres round whether the activity undertaken by the respondents herein on the Colour Picture Tubes received under the warranty clause is manufacture or not. The Department's contention is that there is cutting open of the picture tubes which completely destroys the identity of the picture tubes; that parts are added and the process of manufacture is undertaken and therefore, the Department has argued that since the process undertaken is that of manufacture and since new Colour Picture Tubes were manufactured they were required to pay duty. We find that all these aspects are covered by the decision of this Tribunal in the case of Sri Ram Refrigeration Industries Ltd. which has been approved by the Hon'ble Supreme Court and which has been followed by the Tribunal in the case of CCE, New Delhi v. Karna Industries Ltd. reported in 1992 (42) ECR 522.
8.?We note that the question of inter-mixing of identical parts of defective compressors of the same model and specification has been held as not tentamount to manufacture. Similarly, the Tribunal in the case of Sri Ram Refrigeration Ind. Ltd. also examined the Dictionary meaning of identity not lost if serviceable parts of one defective compressor utilised in reassembly or another identical defective compressor and vice versa. On this question, the Tribunal held that in the instant case so long as the activity remains one of repair and no commercially different article comes into existence Rule 173H would be admissible. We find that it is equally applicable to Rule 57F(2). We also note that the Tribunal held that if it is permissible to replace any unserviceable part during repair logically, no objection could be taken on replacement of the unserviceable bottom shell having the serial number of the compressor engraved on it. Therefore, it is not possible to conclude that there was manufacture involved when the bottom shell which carried original serial number has to be replaced and consequently the same serial number engraved with the prefix 'R' on the new bottom shell, for by no stretch of imagination can it be said that a commercially new or distinct article has come into existence. In the light of the above discussions, we find that the activity undertaken by the respondents is not that of manufacture but is that of repair and since repair is covered by Rule 57F(2) as indicated above, we do not find any legal infirmity in the impugned order. Accordingly, the impugned order is upheld and the appeal is rejected.
In view of the consistent view in the above judgments of this Tribunal on the identical issue, it is settled that unless new commodity emerge after any process of repair it can not be treated as manufacture. As discussed above in the present case the defective goods brought in the factory of the appellant is a compressor and after repair carried out by whatsoever process, the repaired goods nothing but the compressor only. Therefore the repair of defective compressor carried out by appellant is classified as repaired and not as manufacture, therefore no duty is demandable on the repaired compressor. In view of our above discussion we are of the considered view that repairing activity carried out on the defective compressor by the appellant is process of repair and not of manufacture therefore impugned order is set aside and the appeal is allowed with consequential relief, if any, in accordance with law.
(Operative part pronounce in court) P.K. Jain Member (Technical) Ramesh Nair Member (Judicial) sk 2