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2019 (11) TMI 1578 - CESTAT MUMBAIProcess amounting to manufacture or not - processes carried out by the appellant on the imported “Arcofon” branded plates resulted into ‘manufacture’ or not - extended period of limitation - Cenvat credit of the CVD component of the import duty paid on the wear plates - HELD THAT:- The Learned Commissioner after analyzing the purchase order and sale invoices raised by the appellant on their customers observed that the appellant was required to supply the goods to the customers as per their design and requirement and the product sold by the appellant, is having a distinct size and shape different from that of imported ‘wear plates’. The Customers placed orders on the appellant for the impugned goods of various shapes and sizes required, for different types of machine parts and appellant had supplied the same as per the drawing and design mentioned in the respective purchase order by individual customer for its use as parts of a particular machine. Therefore, the activity of the appellant is not just mere trading but involved converting the imported ‘wear plates’ into various shapes and sizes as per the requirement of the customers by subjecting into various processes, like cutting, welding, drilling etc. resulting into different commodity having distinct character, name and use - Applying the principles of twin test in determining excisibility of a product when subjected to various processes as laid down in a series of judgments of the Hon’ble Supreme Court namely, MOTI LAMINATES PVT. LTD. VERSUS COLLECTOR OF CENTRAL EX., AHMEDABAD [1995 (2) TMI 67 - SUPREME COURT], UNION OF INDIA VERSUS DELHI CLOTH & GENERAL MILLS CO. LTD. [1997 (5) TMI 49 - SUPREME COURT], CADILA LABORATORIES PVT. LTD. VERSUS COMMR. OF CENTRAL EXCISE, VADODARA [2003 (2) TMI 65 - SUPREME COURT], the Learned Commissioner concluded that in the present case, the processes i.e. cutting, drilling, welding etc. on the imported wear plates resulted into a new product which can no more be called as a mere wear plates, but having a distinct name, character and use as part of the machinery, which is marketable and is marketed by the appellant as parts of machines only. The Learned Commissioner has correctly arrived at the conclusion that the processes undertaken by the appellant on the imported wear plates results into ‘manufacture’ and the activity undertaken by the appellant on the imported wear plates cannot be considered as mere trading activity, hence rightly confirmed the duty demanded for clearance of the said goods after undertaking the process of drilling, cutting and welding etc. in their factory premises. Extended period of limitation - HELD THAT:- The Department visited the factory of the appellant way back in 2004 and undertook analysis of the process undertaken by the appellant on the imported wear plates. In response to Department’s query, the appellant submitted their reasons about the durability of imported plates after undertaking the process of cutting, drilling, welding etc., in contrast to their own branded manufactured wear plates, however the Department did not take any action after recording the statement of the concerned plant manager and a letter written by the appellant on 24-10-2004. The appellant was allowed to continue to clear the imported ‘Arcofon’ plates without payment of duty after carrying out the process of cutting, drilling, welding etc. in various shapes and sizes as per the customer’s requirement. It is in 2007, the Department issued the show cause notice alleging suppression and mis-statement of facts. We do not find any basis in invoking extended period of limitation when the appellant in its endeavor to justify, not to discharge duty on imported ‘Arcofon’ wear plates in the year 2004, explained his stand on the issue and the Department did not take any action as they were not clear about the issue of dutiability on such activity undertaken on the imported plates - the demand should be confined to the normal period of limitation. Also, as the issue relates to interpretation of law, imposition of penalty on the appellant is unwarranted and cannot be justified - penalties also do not sustain. Cenvat credit of the CVD component of the import duty paid on the wear plates - HELD THAT:- The appellant though claimed benefit of Cenvat credit on inputs before the adjudicating authority, but could not place requisite documents to satisfy the Commissioner about the quantum of credit admissible to them, accordingly the adjudicating authority has rejected their claim. The matter is remanded to the adjudicating authority to re-determine the duty liability for normal period and examine the admissibility of Cenvat credit of duty paid on the inputs on production of relevant documents - Appeal is allowed by way of remand.
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