TMI Blog2023 (7) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacture during the period from 2005-06 to 2009-10. 2. The facts of the case are that the appellant had taken Dealers Registration on 03-12-2001 for dealing with excisable goods. The appellant was mostly importing the electronic goods and also procuring some negligible quantity indigenously such as Power Meters, Control Panels, Infrared Thermometers, PID Controllers, Non-contract I.R. Sensors, SMPS, Span Power Supply Controllers SC Adopter, Duplex MM/SC Digital MM and selling the same to the manufacturer of excisable goods and the manufacturers. The appellant was maintaining records in RG 23D Accounts and issuing Central Excise Invoices to enable the customers to avail CENVAT Credit. The appellant was selling the goods to their customers after calibration tests and upgradation/configuration of the appliances according to the requirements/specifications of the customers. Such process was not required in all cases. Such process is not amounting to manufacture since the same would not change the nomenclature, character and use of such appliances. This process continued during the period from 2001 to February 2009. The appellant was also submitting the returns as a Dealer. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacturer w.e.f. March 2009. The activities of the appellant was known to the Department. Secondly, the process of calibration or upgradation in some cases as per specifications of the customers are not amounting to manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944 since no new product emerges and there was no change in the nomenclature, character and use such as Power Meters were purchased as Power Meters and sold also as a Power Meters. The same is also in respect of other goods. They relied on some decisions in support of their contentions. Some items were manufactured by them did not exceed 50(fifty) Lacs. They also relied upon Board Circular dated 12-04-1999 to contend that upgradation is not a process of manufacture. The appellant prayed for dropping the case. They enclosed the Quarterly Returns and ER-1 Returns. 2.3 The appellant was granted Personal Hearing on 05-08-2011 when the appellant appeared before the Commissioner of Central Excise, Kolkata V Commissionerate and made submission. The appellant was further issued with a notice for Personal Hearing on 30-08-2011 vide letter dated 24-08-2011 in view of the fact that the Ld. Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the present appeal. 3. The ld. Counsel appearing for the appellant submits that the Order passed by the Ld. Adjudicating Authority cannot be maintainable in law in view of the fact that the said Order has been passed in gross violation of the principles of natural justice since the matter was heard by one Commissioner, Dr. Sanjay Agarwal but the Order has been passed by the another Commissioner Mr. Prashant Kumar. This is bad in law and the same is well settled in this regard. 3.1 He further submits that Order is also non-speaking for non-considerations of submissions and decisions cited, which seriously affected the decision-making process, resulting violation of principles of natural justice again. 3.2 He further submits that the process of calibration and upgradation required in some cases as per specification of the customer is not amounting to manufacture since it does not emerge any new article and also did not change the nomenclature, character and use of such appliances. The manufacturing licence was taken for business convenience and the payment of duty by itself does not make the process amounting to manufacture. Further, such tests are not done in all cases. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 8. In that circumstances, we hold that non-consideration of the judicial pronouncement submitted by the appellant is in gross violation of principles of natural justice. Therefore, we answered the said issue in favour of the appellant. Issue (b) Whether the activity undertaken by the appellant amounts to manufacture of not ? 9. We find that it is a fact on record that the appellant was engaged in the import as well as acquiring product from the independent market and after going through the necessary calibration tests used to sell those products and passed on the cenvat credit by issuing dealer s invoices. In March, 2009, the appellant surrendered dealer s registration and got themselves registered as a manufacturer. It is also on record th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the several affidavits of several concerns who market refined groundnut oil under the brand names - Falika, Tripti, Kitchen, Kiran, Temple, Sovereign, Lotus, Nirmal, Dilkhus, Kamdhenu, Radio, Deer, Dog, Sepoy, Cocogem, Tushar and Binutol. They agree in asserting that the oil is always deodorised before it is marketed as refined oil under these brand names. As against this it has to be noticed that the appellant could not produce evidence of one single case of marketing of refined oil without deodorisation. Instead of that Mr. Pathak produced before us copies of extracts of a book by Alton Bailey of the name Cottonseed and Cottonseed Products and another book by the same author of the name, Industrial Oil and Fat, Products and a third book of the name, Vegetable Fats and Oil by G.S. Jamiesom. Mr. Jamiesom s statement does not at all make it clear that refined oil is put on the market without deodorisation. Mr. Bailey appears to have stated in his book on Industrial Oil and Fat Products that the term refining refers to any purifying treatment designed to remove free fatty acids phosphatides or mucilaginous material or other gross impurities in the oil; it excludes bleac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Pathak s argument is that even if it be held that the respondents do not manufacture refined oil , as is known to the market they must be held to manufacture some kind of non-essential vegetable oil by applying to the raw material purchased by them, the processes of neutralisation by alkali and bleaching by activated earth and/or carbon. According to the learned Counsel manufacture is complete as soon as by the application of one or more processes, the raw material undergoes some change. To say this is to equate processing to manufacture and for this we can find no warrant in law. The word manufacture used as a verb is generally understood to mean as bringing into existence a new substance and does not mean merely to produce some change in a substance, however minor in consequence the change may be. This distinction is well brought about in a passage thus quoted in Permanent Edition of Words and Phrases, Vol. 26, from an American judgment. The passage runs thus :- 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. But something more is necessary and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act the word 'manufacture has been used to mean a process incidental to the manufacture of the article. Thus in the very Item under which the excise duty is claimed in these cases, we find the words in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power . 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. 12. Further, in the case of Hindustan Polymers Vs. Collector of Central Excise reported in 1989 (43) ELT 165 (S.C.), again the Hon ble Apex Court has examined the issue. 13. In the case of South Bihar Mills Limited Vs. Union of India repo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation was necessary before the product could be called refined oil . It was not in dispute that that process was employed after hydrogenation and not at the stage when what was called refined oil came into existence at an intermediate stage. No evidence was produced by the union of refined oil being brought to the market without deodorization. It was held that raw oil purchased by the respondents for the purpose of manufacturing vanaspati did not become at any stage refined oil as known to the consumers and the commercial community. 14. Further, in the case of Collector of Central Excise, Chandigarh Vs. Steel Strips Limited reported in 1995 (77) ELT 248 (S.C.), the Hon ble Apex Court has observed as under : 6 . It cannot be sufficiently emphasised that when it is the case of the Excise Authorities that an article is the result of a process of manufacture and it is commercially distinct and known as such, it is for the Excise Authorities to lay evidence in this behalf before the first adjudicating authority regardless of the fact that he is an officer of the Excise Department. There should, ordinarily, be no difficulty in establishing that the article is the result ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant. Issue (c) Whether in the facts and circumstances of the case, the extended period of limitation is invokable or not ? 16. We find 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. 17. Accordingly, we hold that all the demand against the appellant is barred by limitation. Hence, this issue is also answered in favour of the appellant. 18. In view of the above observations, we do not find any merit in the impugned order and the same is set aside. 19. In the result, the appeal is allowed with consequential relief, if any. (Pronounced in the open court on 04.07.2023) - - TaxTM ..... X X X X Extracts X X X X X X X X Extracts X X X X
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