TMI Blog2000 (10) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... minor defects, they were removed in line, whereas in cases of major defects coloured picture tubes received under warranty clause are sent through salvage section where the damaged colour picture tubes were debeaded losing their identity and few parts mainly panels and funnels, if found in order were recovered. These recovered parts alongwith fresh raw materials were used in the manufacture of fresh picture tubes which were cleared as a replacement under the cover of challans issued under the then Rule 57F(2). The Department alleged that the picture tubes were wrongly received under Rule 57F(2) as they were not fit for repair/reprocessing and that the respondents herein deliberately avoided their arrival under Rule 173H as the same provided for filing of D3 intimation and verification of the tubes after arrival. A SCN was issued to the respondents herein demanding Central Excise Duty of Rs. 4,23,04,300/- for the period October, 1989 to June, 1994 on the grounds that the respondents herein besides manufacturing Colour Picture Tubes are also undertaking the job work for their customers on defective Colour Picture Tubes received under warranty clause. It was also alleged that in cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Colour Picture Tubes were reprocessed either through finishing line or through salvage Section and sent back to their respective customers after carrying on the necessary operations; that the respondents herein did not maintain any record about the nature of defects found in the defective Colour Picture Tubes and also the performance in salvage Section as well as the nature of activity done on each Colour Picture Tube in the finishing line; that in the absence of any records the bifurcation of defective Colour Picture Tubes given in the case sheets maintained by the respondents cannot be accepted as correct; that in the salvage Section defective Colour Picture Tubes are cut open and panel and funnel or both and in some cases even metallic parts are recovered from the defective Colour Picture Tubes and these parts after cleaning etc. are subjected to the whole process of production which the respondents claimed to be reconditioning process on defective Colour Picture Tubes; that during chemical treatment for cleaning of salvaged parts, the identification mark of Colour Picture Tubes i.e. excise serial number affixed on Colour Picture Tubes is lost establishing a complete loss of id ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the warranty clause are received in the factory of the respondents and are manufactured afresh. He submits that in their case what they received in the factory are picture tubes and what they removed from the factory are picture tubes. He submits that the dispute between the Department and the assessee is whether work undertaken by the respondents herein is covered by Rule 57F(2) or by Rule 173H. He submits that under Rule 57F(2) in sub-clause (a) it has been provided that a manufacturer may remove the inputs to a place outside the factory for the purpose of test, repairs, refining, reconditioning or carrying out any other operation necessary for the manufacture of the final products and return the same to his factory for further use in the manufacture of final product. He submits that provisions of Rule 173H(2) stipulates that an assessee may bring into his factory, excisable goods which need to be remade, refined, reconditioned, repaired or subjected to any similar process in the factory. Ld. Counsel, therefore, submits that identical operations like repairs, reconditioning, refining are used in both the rules. He submits that in order to understand the meaning of the word ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court judgments on 'manufacture' as applied to the Central Excises Act. Reading the judgments and the clarification together, it amounted to saying that if the process of rectification of defects did not result in bringing into existence of commercially distinct goods and the goods were cleared in the same form in which they had been brought into the factory, the process would be one of repair and not of manufacture". In para 12 of this order this Tribunal held : "12. Taking the point of identity first, the Collector has relied on the following sentence occurring in the appellants' letter dated 29-12-76 : "The defective compressors received for repairs cannot be identified after they are dismantled. Before dismantled, section, however, records the particulars of the defective compressors received for repairs. This section also maintains records of the defective components sent to components shops for reconditioning". From this, the Collector concluded as under : "It has to be held in view of the foregoing that S.R.I. had in fact manufactured the aforesaid 29,494 compressors, and that they had not merely repaired the said compressors. It has also to be held that defective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir clarifications of Rule 173H(2) did not insist on any in-process identity but only stipulated that the article, after rectification of defects, should be cleared in the same form in which it had been received into the factory. In other words, the question of identity or that of the same form is relevant only at the time of re-issuing of the repaired article". He submits that the Tribunal in para 13 held : "We would go even further and say that even if it could be said that a repaired compressor has lost its identity because of addition of new part(s) or intermixing of old parts, as in this case, so long as the activity remains one of repair and no commercially different article comes into existence, Rule 173H would still be admissible". Ld. Counsel submits that since it is a function of repair and therefore, it is equally applicable to the removals under Rule 57F(2). 5.Summing up their arguments, the Tribunal in para 15 held as under : "We have asked ourselves the question whether it would be possible to conclude that there was manufacture involved where the bottom shell, which carried original serial number, had to be replaced and, consequently, the same serial numbe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, 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 undertak ..... X X X X Extracts X X X X X X X X Extracts X X X X
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