2006 (1) TMI 376 - AT - Central Excise

Tribunal rules in favor of rubber roll manufacturer, setting aside duty demand and penalty.

The Tribunal set aside the duty demand of Rs. 7,85,773/- and the penalty of Rs. 50,000/- imposed on the appellant, a manufacturer of Rubber Rolls, for job ... Manufacture - job work - incidental processes - input retains identity after processing - classification as hollow profiles - cleaning (sand-blasting) not manufacturingManufacture - job work - incidental processes - input retains identity after processing - cleaning (sand-blasting) not manufacturing - classification as hollow profiles - Whether the processes carried out by the appellant on received perforated steel sheets amounted to manufacture making them liable to duty and penalty. - HELD THAT: - The Appellate Tribunal examined the nature of the operations performed on the perforated steel sheets received by the appellant for job work. The sheets were cut to dimensions, bent into a rounded shape and welded at four points, and subjected to sand-blasting. On inspection, the processed items remained hollow profiles (albeit changed in shape) and the core identity of the input was retained. Sand-blasting was held to be a cleaning operation and not a manufacturing process. The processes did not produce a new product with a distinct name or use; they were incidental to the use of the hollow profiles in the manufacture of rubber rolls by the principal manufacturer. Accordingly, the activities did not amount to manufacture for excise purposes and could not sustain a demand of duty or penalty. [Paras 4]No manufacture was established; duty demand and penalty set aside and the appeal allowed to that extent.Final Conclusion: The Tribunal held that the appellant's work on perforated sheets-bending, limited welding and sand-blasting-did not amount to manufacture as the input retained its identity and sand-blasting was merely cleaning; the duty demand and penalty were quashed. Issues:Contesting duty demand and penalty for job work carried out by the appellant.Analysis:The appellant, a manufacturer of Rubber Rolls, contested a duty demand of Rs. 7,85,773/- and a penalty of Rs. 50,000/- for job work carried out for another manufacturer of Rubber Rolls. The main contention was whether the processes undertaken by the appellant amounted to manufacturing, thereby making them liable to pay duty. The processes involved receiving perforated steel sheets, cutting them to dimension, bending, welding, and sand-blasting. The duty demand was under Heading 73.06 of the Central Excise Tariff, relating to other tubes, pipes, and hollow profiles.The appellant argued that the processed sheets remained hollow profiles even after bending, welding, and sand-blasting, and that these processes did not result in the creation of a new article. It was contended that the processed profiles were used in the manufacture of rubber rolls and did not constitute manufacturing in themselves. Upon examination of the samples at various stages, the Tribunal found merit in the appellant's submissions. The perforated sheets received could be classified as hollow profiles, and even after bending and welding, they retained their hollow profile nature. Sand-blasting was considered a cleaning process and not manufacturing. As no new product emerged from the processes carried out by the appellant, the Tribunal concluded that there was no manufacturing involved, and therefore, no duty demand should be imposed.Consequently, the duty demand of Rs. 7,85,773/- and the penalty of Rs. 50,000/- were set aside, and the appeal was allowed in favor of the appellant.