Excise duty on alleged manufacture at a Delhi unit turns on proof of manufacture, with pre-July 2000 demand set aside.

Central excise duty on acoustic enclosures/canopies was examined on the factual question whether manufacture occurred at the Delhi unit before July 2000. The record of machinery purchases, electricity use, invoices and vendor/job-worker documents supported the view that the unit did not manufacture the goods before that date, and the Revenue failed to produce corroborative evidence; Note 6 of Section XVI was found inapplicable because the goods were not semi-finished or unfinished goods. The duty demand for the period before July 2000 was set aside, while duty with interest for July 2000 to September 2000 was sustained. The penalties on the main appellant and one officer were set aside, and the deceased officer's appeal abated.

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Issues: Whether the demand of central excise duty on acoustic enclosures/canopies alleged to have been manufactured at the Delhi unit prior to July 2000 was sustainable, and whether the penalties imposed on the main appellant and its officers could survive.

Analysis: The dispute turned on whether the appellant had any manufacturing facility at the Delhi unit before July 2000. The record showed purchase of machinery in June and July 2000 and evidence of electricity consumption around the relevant period. The Revenue did not produce corroborative material to establish manufacture at the Delhi unit before July 2000, and the statement relied upon was of a general nature. The invoices and other documents showed procurement of acoustic enclosures from vendors or job workers, and the refitting or painting activity at the Delhi unit related to DG sets, not to manufacture of canopies. Note 6 of Section XVI was held inapplicable because the goods received could not be treated as semi-finished or unfinished goods.

Conclusion: The duty demand for the period prior to July 2000 was set aside, while the duty with interest for July 2000 to September 2000 was upheld. The penalties on the main appellant and one officer were also set aside, and the appeal of the deceased officer abated.

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