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2023 (7) TMI 299 - AT - Central ExciseViolation of principles of natural justice - Process amounting to manufacture or not - activity undertaken by the appellant as calibration tests and upgradation/configuration of the appliances according to the requirements/specifications of the customers - Extended period of limitation. Violation of principles of natural justice - matter was heard by one Commissioner and the order was passed by another Commissioner without considering the submissions made by the appellant - HELD THAT:- It is fact on record that the matter was heard by Dr. Sanjay Agarwal, the erstwhile Commissioner of Central Excise, Kolkata and the order has been passed by Shri Prashant Kumar, Commissioner of Central Excise, Kolkata V, which is in gross violation of principles of natural justice. Before passing the impugned order, Shri Prasant Kumar, Commissioner of Central Excise, Kolkata V, was required to hear the appellant on merit. It is also noticed that the appellant during the course of personal hearing and in the written submissions and the reply to the show-cause notice had relied upon certain case laws relying to the issue involved in hand, but the same has not been considered by the adjudicating authority while passing impugned order - thus, non-consideration of the judicial pronouncement submitted by the appellant is in gross violation of principles of natural justice - answered in favor of appellant. Activity of calibration tests and upgradation/configuration of the appliances - Whether the activity undertaken by the appellant amounts to manufacture of not? - HELD THAT:- CBEC Circular No.454/20/99-CX dated 12.04.1999 clarified that the upgradation does not amounts to manufacture as it does not bring into existence new name, character and use - Further, in the case of UNION OF INDIA VERSUS DELHI CLOTH AND GENERAL MILLS CO. LTD. [1962 (10) TMI 1 - SUPREME COURT], the Hon’ble Apex Court dealt the issue and held that “manufacture’’ means bringing existences new substance known to the market and not mere on some changes in the substance. The Hon’ble Apex Court has held The definition of ‘manufacture’ as in S. 2 (f) puts is beyond any possibility of controversy that if power is used for any of the numerous processes that are required to turn the raw material into a finished article known to the market the clause will be applicable; and an argument that power is not used in the whole process of manufacture using the word in its ordinary sense, will not be available. It is only with this limited purpose that the legislature, in our opinion, inserted this definition of the word ‘manufacture’ in the definition section and not with a view to make the mere “processing” of goods as liable to excise duty. In the present case, the activity undertaken by the appellant as calibration tests and upgradation/configuration of the appliances according to the requirements/specifications of the customers, does not amount to manufacture as no new product came into existence and their character and use remain the same. Therefore, the activity undertaken by the appellant does not amount to manufacture. Accordingly, this issue is answered in favor of the appellant. Whether in the facts and circumstances of the case, the extended period of limitation is invokable or not? - HELD THAT:- The appellant has taken registration as trader from 03.12.2001 and filing their Dealer’s return regularly and thereafter, on 13.03.2009, the appellant took registration as manufacture of the same activity. Therefore, the process undertaken by the appellant was well-known to the Department on 13.03.2009 and also on the visit done on 11.12.2009 for examination of Books of Account and other activities undertaken by the appellant and the appellant was also submitting ER Returns to the Department. In that circumstances, the show-cause notice issued on 27.12.2010 by invoking extended period of limitation, is not sustainable - all the demand against the appellant is barred by limitation. Hence, this issue is also answered in favor of the appellant. Appeal allowed.
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