Tribunal overturns Order-in-Appeal on ACP manufacturing, emphasizing marketability proof.

The Tribunal allowed the appeal, setting aside the Order-in-Appeal confirming demands under Section 11A, interest, and penalty for manufacturing Aluminium composite panels, ruling that the cutting and routing activities did not create new goods distinct from imported ACP sheets. The burden of proving marketability was emphasized, with the Tribunal finding no evidence of trade parlance supporting the creation of a new product. Citing various judgments, the Tribunal concluded that the cutting and routing process did not amount to manufacturing under the relevant tariff heading, leading to the decision that the impugned order was not legal and proper.

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Issues:
Challenging Order-in-Appeal confirming demands under Section 11A, interest, and penalty under Section 11AC for manufacturing Aluminium composite panels distinct from imported ACP sheets. Rejection of plea regarding cutting and routing activity not creating new goods. Setting aside demands on time bar plea rejected. Burden of proving marketability on the department. Reference to Apex Court judgments. Lack of evidence of trade parlance for cutting and routing activity creating new product. Interpretation of "manufacture" as bringing new substance known in the market.

Analysis:
The appellants contested the Order-in-Appeal confirming demands under Section 11A, interest, and penalty under Section 11AC, arguing that the Aluminium composite panel they manufactured was not distinct from the imported ACP sheets. Authorities rejected the plea, stating that cutting and routing ACP material produced a new product under Tariff Heading 76.10 of CET. The plea to set aside demands on time bar grounds was also dismissed, leading to duty and penalty imposition.

In response, the appellants referred to Apex Court judgments like Hindustan Zinc Ltd. v. CCE, Jaipur, emphasizing the burden of proving marketability on the department. They cited cases such as M/s. Hubli Electricity Supply Company Ltd. v. CCE, Belgaum, and KEB v. CCE, Bangalore, where similar activities were held not dutiable as they did not result in a process of manufacture. Several other case laws were also relied upon to support their argument.

Upon careful consideration, the Tribunal noted the absence of evidence establishing trade parlance indicating that cutting and routing ACP material created a new product recognized in the market. Referring to the definition of "manufacture" as bringing into existence a new substance known to the market, the Tribunal cited relevant judgments, including UOI v. Delhi Cloth and General Mills Co. Ltd. and Hindustan Zinc Ltd., to support its decision. Rulings in cases like M/s. Hubli Electricity Supply Company Ltd. and AGV Alfab Limited were also considered, leading to the conclusion that the mere process of cutting and routing did not result in new products. Consequently, the impugned order was deemed not legal and proper, and the appeal was allowed with consequential relief, if any.

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