Tribunal Rules Remaking Rejected Batteries as Manufacturing, Denies Duty-Free Clearance Under Central Excise Rules.

COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD Versus TUDOR (I) LTD.

COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD Versus TUDOR (I) LTD. - 2006 (197) E.L.T. 53 (Tri. - Mumbai) Issues:
Interpretation of Rule 173H of the Central Excise Rules, 1944 regarding the remaking of rejected batteries and whether it amounts to manufacture.

Analysis:
The case involved a dispute regarding the classification of the process of remaking rejected batteries under Rule 173H of the Central Excise Rules, 1944. The appellants were engaged in manufacturing Electric Accumulator (Automobile Batteries) and were availing of Modvat/Cenvat facility. The defective batteries were brought back to the factory during the guarantee/warranty period for remaking. The process involved cutting open the batteries, separating lead and plastic, and reprocessing the defective parts. The refined lead was then used in manufacturing new batteries with distinct serial numbers.

The key provision in question was Rule 173H of the Central Excise Rules, 1944, which allows the retention or bringing into a factory of duty paid goods for various purposes, including re-making, subject to certain conditions. The rule specifies that goods brought in for re-making should not be subjected to any process amounting to manufacture to qualify for duty-free removal.

The tribunal analyzed the process of remaking the batteries and held that it amounted to manufacturing based on precedents and decisions from other cases. The tribunal cited cases such as Tecumseh Products India Ltd. v. C.C.E., Hyderabad, DSM Anti-infective India (P.) Ltd. v. C.C.E., Chandigarh, and Maruti Udyog v. C.C.E., New Delhi-III to support their conclusion. These cases established that processes undertaken to make defective products fit for consumption and marketable would be considered as manufacturing.

Therefore, the tribunal concluded that the appellants were not eligible for duty-free clearance of remade batteries under Rule 173H. The impugned order was set aside, and the original order was restored, allowing the appeal in favor of the revenue authorities.

In summary, the judgment clarified the interpretation of Rule 173H regarding the remaking of rejected batteries, emphasizing that processes amounting to manufacturing would not qualify for duty-free clearance under the rule. The decision was based on established legal precedents and upheld the revenue authorities' position in the case.