2001 (8) TMI 1327 - AT - Central Excise

Tribunal rules re-rubberisation not manufacturing for Excise Duty

The Tribunal ruled in favor of the appellants, determining that the re-rubberisation process on old rollers did not constitute manufacturing for the ... Manufacture - Departmental clarification Issues:Appeals against confirmation of demand of duty and imposition of penalty.Analysis:The case involved three appeals arising from the same order, where the appellants were manufacturing 'Rubberised Printing Rollers' and faced a demand for duty and penalty. The appellants engaged in re-rubberisation of old rollers in addition to manufacturing new ones. The Department issued a show cause notice (SCN) stating that the process of converting old rollers into re-rubberised rollers amounted to manufacture. The appellants argued that re-rubberisation did not change the identity of the rollers and cited various case laws to support their contention.The appellants contended that the process of re-rubberising old rollers did not amount to manufacture, citing Circular No. 3/86-CX and various court judgments. They argued that the rollers remained the same before and after re-rubberisation, and the process did not result in a new distinct article. The Department, however, confirmed a demand of duty and imposed penalties on the appellants.The appellants further argued that the demand calculation was incorrect, abatement under Section 4(4)(d)(ii) was not given, and the benefit of Notification No. 1/93 was disallowed. They claimed that the demand was time-barred, there was no intention to evade duty, and penalties were unwarranted. They also challenged the imposition of penalties on the Managing Director.The Department contended that the process of re-rubberisation amounted to manufacture as the rollers were not only repaired but also exchanged and sold with changes in specifications. They argued that the process undertaken by the appellants was a manufacturing process, justifying the demand for duty.After hearing detailed arguments, the Tribunal held that the activity of re-rubberisation on used rollers did not amount to manufacture under Section 2(f) of the Central Excise Act. The Tribunal noted the binding nature of the circulars issued by the Department and the precedents cited by the appellants. Consequently, the appeals were allowed, providing the appellants with consequential relief.In conclusion, the Tribunal ruled in favor of the appellants, determining that the re-rubberisation process on old rollers did not constitute manufacturing for the purpose of Central Excise Duty levy and collection. The decision was based on the specific case law, circulars, and arguments presented during the proceedings.