2025 (7) TMI 1551 - AT - Customs

Benefit of concessional rate of duty - exemption under Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules 1996 - activity of filling Toner Powder into used waste empty cartridge amounts to manufacture or not - HELD THAT - This Tribunal in the appellant s own case for the earlier period from February 2010 to September 2012 in the case WEP PERIPHERALS LIMITED VERSUS THE COMMISSIONER OF CENTRAL EXCISE CUSTOMS SERVICE TAX MYSORE. 2024 (9) TMI 1779 - CESTAT BANGALORE analysing the facts as well as the principle of law on the subject observed the activity carried out by the appellant amounts to manufacture. Since the other issues regarding demand of Custom duty denial of Cenvat credit and penalty imposed are only based on the finding that the activity carried out by the appellants does not amount to manufacture they are also unsustainable. There are no reason not to follow the aforesaid order of the Tribunal in the appellant s own case. Thus following the said decision of the Tribunal it is held that the present impugned order is devoid of merit and accordingly set aside - appeal allowed.

Summary

ISSUES:

• Whether the process of conversion of 'used waste empty toner cartridge' into 'Compatible Cartridge' constitutes "manufacture" under the Central Excise Act, 1944.
• Whether the appellant was entitled to claim exemption under the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996, based on the activity being manufacture.
• Whether the demand of customs duty, denial of Cenvat credit, and penalty imposed are sustainable if the activity is held to be manufacture.

RULINGS / HOLDINGS:

• The process of converting used waste empty toner cartridges into compatible cartridges "amounts to manufacture" as it changes the basic character of the used cartridges and results in a new marketable product with warranty and labeling.
• The appellant was entitled to claim exemption under the IGCRDMEG Rules, 1996, since the activity qualifies as manufacture, and the exemption notification was rightly applied.
• The demand of customs duty, denial of Cenvat credit, and penalty imposed, which were premised on the finding that the activity did not amount to manufacture, are "unsustainable" and therefore set aside.

RATIONALE:

• The Tribunal relied on the detailed factual analysis of the manufacturing process, including dismantling, cleaning, refilling toner, replacing old parts, assembling components, labeling, testing, and packaging, which collectively change the basic character of the used cartridge.
• The legal framework applied includes Section 2(f) of the Central Excise Act, 1944, defining "manufacture," and the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996.
• Precedents considered include the Tribunal's earlier decision in the appellant's own case for a prior period and the Supreme Court's ruling in Tecumseh Products India Ltd. v. Commissioner, which held that extensive processing and replacement of parts constitute manufacture.
• The Tribunal distinguished cases involving mere relabeling or minor processing, emphasizing the substantial transformation and creation of a new product in the present case.
• No dissenting or differing opinion was recorded; the decision follows established principles without doctrinal shift.