2005 (9) TMI 409 - AT - Central Excise

Manufacturing processes impact duty credit: Tribunal upholds Commissioner's decision on dutiable goods.

The Tribunal held that the processes undertaken by the respondent constituted manufacturing, resulting in the production of dutiable goods. It was ... Cenvat/Modvat - Manufacture Issues:1. Whether the imported compressors, after undergoing certain processes, constitute excisable goods on which duty is paid.2. Whether the processes undertaken by the respondent amount to manufacture.3. Whether the goods were removed as such, affecting the duty credit taken initially.Analysis:Issue 1:The appeal concerns the classification of imported compressors that underwent specific processes before clearance. The main question is whether these processes result in the production of excisable goods on which duty is paid. The respondent claimed Modvat credit for CVD paid during clearance, arguing that the processes were necessary for the compressors to be usable. The Revenue contended that no manufacturing process occurred, and thus, the final goods are not dutiable.Issue 2:The Tribunal analyzed the processes undertaken by the respondent to determine if they amounted to manufacturing. It was observed that, except for testing voltage and magnetic coils, the processes did constitute manufacturing. The respondent consistently classified compressors as the final product, paying duty accordingly. The Tribunal emphasized that the department collected duty on the final products, indicating that the compressors resulted from manufacturing activities.Issue 3:Regarding the contention that the goods were removed as such, potentially impacting the initial duty credit, the Tribunal clarified that the inputs were not removed as such. Instead, they were cleared only after undergoing manufacturing processes. This distinction was crucial in upholding the Commissioner (Appeals) order and rejecting the Revenue's appeal.In conclusion, the Tribunal determined that the processes undertaken by the respondent constituted manufacturing, leading to the production of dutiable goods. The decision emphasized the consistency in classification and duty payment on the final products. The judgment highlighted the importance of understanding the manufacturing processes and their impact on the dutiability of goods, ultimately upholding the Commissioner (Appeals) decision and dismissing the Revenue's appeal.