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2014 (12) TMI 1034 - AT - Central ExciseManufacturing activity or not - Levy of duty on water resistant bonding agent - The appellants' claim is that since the manufacturing process undertaken by them is only of diluting the inputs and repacking the same, their activities do not amount to manufacture and hence, no excise duty is payable on their final product namely, Sika Latex and Sika Latex Power - Revenue, on the other hand, is claiming that the final product of the appellant is the ‘water resistant bonding agent', which is used as an additive to cement mortar/concrete to improve the adhesive and water resistant property of such cement mortar/concrete, while their inputs are “Styrofan D 623 AP” and “Apcotex TSN 100”, which are aqueous polymer dispersion used in the modification of hydraulic setting system - Held that:- The inputs are aqueous polymer and dispersion which are being processed to make it suitable as water resistant bonding agent. In our view, Revenue has discharged the burden from the literature of the final product as also that of inputs, the process being carried out leads to transformation of inputs into a final product having distinctive name, character or use. Inputs are not being sold by their manufacturer as water resistant bonding agent at all but as a product which manufacture after experiment can be used for diverse applications. In our view, Revenue has discharged the burden that final products are new products with distinctive name, character or use. - maintenance of elaborate records and conduct of quality test ipso facto dos not mean that the process amounts to manufacture, however, it is to be noted that if the process is very simple of dilution, then there is no need to keep elaborate records and there will be no need to conduct quality test for each batch (it can be concentration test only). - in the facts and circumstances of the case, the product having distinct name, character and use comes into existence from the inputs. The final product is a water resistant bonding agent while the inputs are understood as aqueous polymer dispersion used in the modification of hydraulic setting system. Name of inputs or process of transformation is a trade secret and is not known to trade or users. - Decided against the assessee. Computation of liability that the value to be taken as cum duty, we find force in the argument and we remand the matter back to the adjudicating authority to re-compute the duty liability considering the selling price as cum duty price. Keeping in view the nature of dispute, we set aside the penalty imposed. - Matter remanded back - Decided partly in favour of assessee.
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