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of <h1>Tribunal remands duty liability issue for re-evaluation, emphasizes manufacturing definition & penalty limitations.</h1> <h3>Shiva Kashi Metals & Ferro Alloys, Shri Ajodhya Gupta Versus Commissioner of Central Excise, Customs & Service Tax, Bbsr</h3> Shiva Kashi Metals & Ferro Alloys, Shri Ajodhya Gupta Versus Commissioner of Central Excise, Customs & Service Tax, Bbsr - 2017 (358) E.L.T. 754 (Tri. - ... Issues Involved:Whether activities of separating High Carbon Ferro Chrome from Slag amount to manufacture under Section 2(f) of the Central Excise Act, 1944.Detailed Analysis:Issue 1: Activities of Separation Amounting to ManufactureThe main issue in the appeal was whether the activities undertaken by the appellant, involving the separation of High Carbon Ferro Chrome (HCFC) from Slag, constituted 'manufacture' as per Section 2(f) of the Central Excise Act, 1944. The appellant argued that they did not manufacture HCFC in their factory but simply separated metals from the Slag, which already contained the metal. They contended that no new or distinct commodity came into existence after processing the raw material. The Revenue, however, treated the entire process as manufacturing and levied duty, interest, and penalties on the appellant.Issue 2: Interpretation of Chapter Note 4A key contention was the addition of Note 4 to Chapter 26 of the Central Excise Tariff, stating that the process of converting ores into concentrates amounts to 'manufacture.' The appellant highlighted that this note was added after the period in question (12.6.2009 to 12.10.2010) and argued that their activities should not be considered manufacturing. However, the Revenue argued that the outcome product, HCFC, was distinct from the raw material Slag and thus qualified as a new identifiable and marketable product, satisfying the definition of manufacturing under Section 2(f).Issue 3: Liability of Central Excise DutyThe Tribunal analyzed whether the appellant's activities met the criteria for manufacturing under Section 2(f) and noted that there was doubt regarding the coverage of the process. As a result, the Revenue could only charge duty for a period of one year from the date of the show cause notice, not beyond. The Tribunal also emphasized that the non-payment of duty was a bona fide mistake, leading to the setting aside of all penalties imposed on the appellant.Conclusion:The Tribunal partially allowed the appeal by remanding the matter to the original authority for quantifying the duty liability for one year and directed the determination within four months. The decision highlighted the importance of the definition of manufacturing, the interpretation of tariff notes, and the limitations on the imposition of penalties in cases of doubt.
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