TMI Blog2013 (8) TMI 844X X X X Extracts X X X X X X X X Extracts X X X X ..... but that will not amount to manufacture for excise purpose. Activities carried out by them was inspection of the same and fixing of some parts, if required and thereafter sending it to the job worker who undertakes the body building activities - The goods received form job workers were vehicles - Again inspection was carried out by the assesse and certain parts like kits etc. were fixed in order to comply with the Central Motor Vehicles Acts and Rules thereof. CENVAT credit - Interest and Penalty – Whether Cenvat Credit can be demanded when they have utilized the same for payment of duty on final products – Held that:-There was no dispute that the duty on the final product had been paid by the assesses by utilizing the Cenvat Credit being demanded and department had not disputed payment of duty on vehicles - ASHOK ENTERPRISES Versus COMMISSIONER OF CENTRAL EXCISE, CHENNAI [2007 (11) TMI 67 - CESTAT, CHENNAI] - The Cenvat Credit availed cannot be demanded in spite of the fact that the activity undertaken by the appellant does not amount to manufacture – appeal allowed. - E/1809/10 & E/387/11 - Final Order Nos. A/341-342/2013-WZB/C-II(EB) - Dated:- 26-4-2013 - S S Kang And ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... connection. Only activities that is being carried out in the said godown is receipt of the duty paid imported chassis, sending the same to job workers, receiving fully manufactured motor vehicle in all respect and fixing some minor accessories to meet the mandatory requirement as per the Central Motor Vehicle Rules, 1989. Appellant has no approvals from Maharashtra Pollution Control Board, MIDC, Factory Inspector, Forest department etc and other statutory bodies etc. which are normally needed in a factory/manufacturing unit. Since there is no factory, no manufacturing activity is carried out and appellants cannot be considered as manufacturer and are therefore not entitled to the CENVAT Credit. In the impugned order, it was held that the activity of making certain minor fitments on the body of the vehicle carried out by the appellant cannot be considered as manufacture, and so, the credit availed by them and utilized is incorrect. Adjudicating authority also took the view that the definition of manufacture in the Central Excise Act is inclusive and flexible to interpret in the facts and circumstances of each case. Since the activity carried out by the appellant does not result in e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e finished motor vehicle is dispatched. The learned advocate for the Appellant contended that they were granted Registration Certificate as a Manufacturer. Subsequently, the Range Officer visited the Appellant's premises for post Registration Verification where the entire process were clarified to him. Range Officer was also explained that the Appellant would dispatch the goods on the final assembly value and would avail Cenvat Credit on the inputs. In spite of the explanation, the Range Officer has given the Report that the Appellant factory is only a storage space for the chassis imported and the process undertaken in the appellant's factory does not amount to manufacture. Vide letter dated 27 th July, 2009 and 18 th August, 2009 appellant was asked to clarify the position which they had clarified, on 25 th August, 2009. Subsequently, they have received the demand notice. 4. The main contention of the appellant is that the activities undertaken by them amounts to manufacture under section 2 (f) of the Central Excise Act. According to the Ld. Advocate, the definition given in the Act states that the manufacture includes any process incidental or ancillary to the completion of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ported by them are Chassis. The goods sent to the Job workers are vehicles and the goods being cleared by them are vehicles. Thus, there is no change in name, character or use of the goods. In view of this position, the activities undertaken by them cannot, by any stretch of imagination, be considered as manufacturing. Since they are not manufacturer, CENVAT credit cannot be availed by them as per CENVAT Credit Rules. Credit can be taken only by a manufacturer or producer of final product or provider of taxable Services. Since, appellant is not a manufacturer or Provider of taxable Services, they cannot avail the CENVAT Credit. CENVAT Credit availed by them is totally incorrect and against the law and required to be paid back along with the interest and penalty. Ld. Commissioner (A.R.) further submitted that, even the Registration taken by them was incorrect and the department has been objecting to it immediately on post verification of the premises. In view of this position the Order is correct and required to be upheld. 6. We have considered the submission of both the sides. The issue to be decided in this case is whether the activity being carried out by the appellant will a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Central Excise Vs. Rajasthan State Chemical Works reported in 1991 (55) E.L.T. 444 (S.C.) Apex Court observed as under:- 9. We have to consider what activity amounts to process in or in relation to manufacture of goods for the application of the notification. The word `manufacture' has been defined in Section 2(f) of the Central Excises and Salt Act, 1944, thus :- 2(f). `Manufacture' includes any process - (i) incidental or ancillary to the completion of a manufactured product; and (ii)which is specified in relation to any goods in the Section or Chapter Notes of the Schedule to the Central Excise Tariff Act, 1985 as amounting to manufacture." 10. Clause (f) gives an inclusive definition of the term `manufacture'. According to the dictionary, the term `manufacture' means a process which results in an alteration or change in the goods which are subjected to the process of manufacturing leading to the production of a commercially new article. In determining what constitutes `manufacture' no hard and fast rule can be applied and each case must be decided on its own facts having regard to the context in which the term is used in the provision under consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r stage. There is nothing in the natural meaning of the word `process' to exclude its application to handling. There may be a process which consists only in handling and there may be a process which involves no handling or not merely handling but use or also use. It may be a process involving the handling of the material and it need not be a process involving the use of material. The activity may be subordinate but one in relation to the further process of manufacture. From the above judgement of the Supreme Court it is very clear that what constitutes manufacture will have to be seen in the context of facts of each case. In the said judgment the issue before the Hon'ble Supreme Court was whether the power used to handle the raw materials prior to commencement of actual processing would be considered as a part of the manufacturing process or not. Revenue's contention was that the use of power even during the handling of the raw materials prior to commencement of actual processing amounts to use of power during the manufacture. The Hon'ble Supreme Court agreed with the contention. In the case of Metal Forgings Pvt. Ltd. and another Vs. Union of India and others reported in 1985 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... process of manufacture as parts of machinery which are liable to additional duty of Central Excise under Tariff Item 68 i.e. in addition to the duty at the stage of forging . The said judgement of the Hon'ble High Court was upheld by the Supreme Court. Thus forged products were again chargeable to excise duty once they become identifiable part of machinery. In the case of Brakes India Ltd. Vs. Commissioner of C.Ex., Chennai-III reported in 2007 (214) ELT 380 (Tri.-Chennai) the facts of the case in brief were that Brakes India Ltd. received various inputs such as steel scrap, pig iron and chemicals and manufactured castings. These castings were sent to another job worker for machining them into automotive parts. After machining, these goods were sent to another job worker who painted them. Brakes India Ltd. paid duty for clearances of these goods by the job workers. On receipt of the goods from the job worker, the appellants took credit of the duty paid on them and conducted ultrasonic test for shrinkage/porosity verification of dimensions, metallurgical tests and packed them before exporting them under bond. Revenue's objection was that the automotive parts received by the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .C.) the duty on the forged goods was on the weight basis Revenue was taking a view that weight should be immediately after the forged product comes into existence. It is in this context the Supreme Court held that the machining and polishing to remove the excess surface skin and such machining and polishing is incidental and ancillary to the manufacture of forged products and is essential that the goods are complete and accordingly held that the duty required to be paid on the weight after machining. In this case Hon'ble Supreme Court observed as under:- 4. A perusal of these items makes it clear that forged steel products are liable to duty in terms of Tariff Item No. 26AA. It is also beyond dispute that forged steel goods with which we are concerned would be covered by Tariff Item No. 26AA(ia) which includes forged or extruded shapes and sections, not otherwise specified. It is common ground that the appellant is liable to pay excise duty on the said goods under Tariff Item No. 26AA(ia). The dispute in this connection is what is the stage at which the said goods could be said to be forged iron and steel products as contemplated in the said item; whether they could be rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forging clearances specified in the standards by I.S.I./or International. It is conceded by the Government that forging would not cease to be forging by processes like removal of superfluous extra skin of cast Iron." The learned Judge has further pointed out in the next paragraph of the said judgment that the removal of extra/unwanted surface steel by either trimming or by gas cutting or by skin cutting of the forged products must be regarded as incidental or ancillary to the process of manufacture. This view is also consistent with the definition given to the term "manufacture" contained in Sub-section (f) of Section 2 of the Central Excises and Salt Act, 1944. This definition shows that the manufacture includes any process incidental or ancillary to the completion of a manufactured product. We are, therefore, of the view that in respect of the said goods the weight for the purpose of levy of excise duty under Item 26AA(ia) should be taken after the machining and polishing is done to remove the excess surface skin and the contention of the appellant in this regard must be accepted . In the case of Addisons Co. Ltd. Vs. Collector of Central Excise reported in 1990 (48) E.L.T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cibatul Ltd. P.O. Atul Vs. Union of India and others reported in 1978 (2) E.L.T. (J 68) (Guj.) is relating to brand name and not relevant to present case at all. 10. The Ld. Advocate for the appellant has given a lot of emphasis during arguments as also in appeal memo on the case law of Metro Readywear Company Vs. Collector of Customs reported in 1975 (2) E.L.T. (J 520) (Kar.). In the said case fact are that 10% advalorem duty was made leviable in respect of articles of ready-to-wear apparel, known commercially as readymade garments, including undergarments and body supporting garments but excluding articles of hosiery in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power. In this context Hon'ble High Court of Kerala at Ernakulam observed as under:- 4. The process employed in the petitioner's factory for the manufacture of brassieres has been explained as follows in Ext. P1; We manufacture brassieres. We started manufacturing this ready-to-wear apparel in, 1964. We have a factory in Pattikkara Street, Palghat with 9 sewing machines where these brassieres are stitched. Cutting is done in our premises in Market Road, pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by others and which were already subjected to excise duty, applies to those tubes a process of printing and lacquering. It was held by the Division Bench of the Gujarat High Court that under Item 27(e) of the First Schedule, the levy of duty is on the manufacture of tubes of aluminium by applying the process of extrusion. After pointing out that the work extrusion' in relation to tubes means the process of forming the tube from a metal slug or dump the learned Judges held that the said process had already been applied fully when the plain extruded aluminum tubes purchased by the petitioner were originally manufactured. Dealing with the scope of the definition contained in Section 2(f) the learned Judges held that any process that is incidental or ancillary to the completion of a manufactured product, however unessential it may be, will fall within the compass of the expression manufacture'. But, in order that any process can be regarded as incidental or ancillary to the completion of a manufactured product it must have same relation to the manufacture of a finished product. On the facts of that case the learned Judges came to the conclusion that the printing or lacquering could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, stitching etc. were being getting done by or on behalf of the Metro Readywear Company. Their contention was that power used in the iron will not amount to power used in the manufacture of goods. The Hon'ble High Court took a view that even ironing is a process incidental to the completion of the product and therefore amounts to manufacture. The case of Siddhartha Tubes Ltd. Vs. Commr. Of Cus. C.Ex., Indore (M.P.) reported in 2006 (193) E.L.T. 6 (S.C.) is relating to valuation and is not relevant to the present case. We have also seen other cases quoted by Ld. Advocate and we do not consider it necessary to discuss. 11. From the analysis of above case laws' we are of the view that whether a particular activity carried out by a person amount to manufacture or not or is only a process in a series of activities will have to be viewed in the facts and circumstances of each case. In the present case as mentioned earlier, appellant receives the chassis. Activities carried out by him is inspection of the same and fixing of some parts, if required and thereafter sending it to the job worker who undertakes the body building activities. The goods received form job workers are vehic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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