TMI Blog2015 (9) TMI 297X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Appellant : Shri Yogesh Patki, Adv. For the Respondent : Shri Sanjay Hasija, Superintendent (A R) ORDER 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 serviceable, 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 dam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sors, 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sses 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. Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her 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 Hon'ble 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 specificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 backing 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 receip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts 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. Hon'ble 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 therefore the judgemnt 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 Hon'ble 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facture 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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