Tribunal: M/s. GM qualifies as manufacturer under Central Excise Act

Commissioner of Central Excise & ST, Jammu & Kashmir Versus M/s. Gravita Metals, M.S. Gravita Metals Inc. And Vice-Versa

Commissioner of Central Excise & ST, Jammu & Kashmir Versus M/s. Gravita Metals, M.S. Gravita Metals Inc. And Vice-Versa - 2020 (372) E.L.T. 172 (Tri. - ... Issues Involved:
1. Whether the activity undertaken by M/s. GM amounts to manufacture or not.
2. Whether the different treatment of similar activities by other manufacturers violates Article 14 of the Constitution of India.
3. Whether M/s. GM has been treated as a manufacturer under Customs Notification No. 96/2009-Cus.
4. Whether the adjudicating authority was correct in dropping the demand on account of Cenvat credit utilized for payment of duty.
5. Whether M/s. GMI is entitled to the benefit of exemption Notification No. 214/86-CE.
6. Whether Notification No. 56/2002-CE can be granted to M/s. GMI if Notification No. 214/86-CE is not applicable.

Detailed Analysis:

1. Whether the activity undertaken by M/s. GM amounts to manufacture or not:
The Tribunal examined the definition of "manufacture" under Section 2(f) of the Central Excise Act, 1944, which includes processes incidental or ancillary to the completion of a manufactured product. The Tribunal noted that M/s. GM's process involves converting unrefined lead ingots into refined lead ingots by removing impurities and then making lead alloys. This process results in a new and distinct product with a different name, character, and use, which is commercially recognized. The Tribunal referenced various case laws, including *Brakes India Ltd.* and *Mamta Surgical Cotton Industries*, to support the view that such a transformation amounts to manufacture. It was concluded that M/s. GM's activities meet the criteria for manufacture.

2. Whether the different treatment of similar activities by other manufacturers violates Article 14 of the Constitution of India:
The Tribunal observed that similar activities by other manufacturers across India, including M/s. GM's own unit in Gandhidham, Gujarat, have been treated as manufacturing. Reports from various Commissionerates confirmed that identical processes were recognized as manufacturing. The Tribunal cited the Supreme Court's decisions in *Damodar J. Malapani* and *Unipatch Rubber Limited*, emphasizing that there should be uniformity in the application of the law. The Tribunal held that treating M/s. GM's activities differently would violate Article 14 of the Constitution, which ensures equality before the law.

3. Whether M/s. GM has been treated as a manufacturer under Customs Notification No. 96/2009-Cus:
The Tribunal found that M/s. GM imported unrefined lead, processed it into refined lead and alloy ingots, and exported the finished products while availing benefits under Customs Notification No. 96/2009-Cus. This recognition by Customs authorities, along with the Import Export Policy, indicated that the process of making refined lead from unrefined lead amounts to manufacture. Thus, M/s. GM was treated as a manufacturer under the said notification.

4. Whether the adjudicating authority was correct in dropping the demand on account of Cenvat credit utilized for payment of duty:
The Tribunal upheld the adjudicating authority's decision to drop the demand related to Cenvat credit. It referenced the Bombay High Court's decision in *Ajinkya Enterprises*, which held that payment of duty, even if the process does not amount to manufacture, amounts to the reversal of Cenvat credit. Therefore, the Tribunal found no fault in allowing M/s. GM to utilize Cenvat credit for duty payment.

5. Whether M/s. GMI is entitled to the benefit of exemption Notification No. 214/86-CE:
The Tribunal noted that M/s. GM, the principal manufacturer, had filed the required undertaking under Notification No. 214/86-CE, committing to pay duty on the manufactured goods. This compliance entitled M/s. GMI to the benefits of the notification. The Tribunal referenced similar cases, such as *Moon Chemicals*, to support this conclusion. Consequently, M/s. GMI was found eligible for the exemption.

6. Whether Notification No. 56/2002-CE can be granted to M/s. GMI if Notification No. 214/86-CE is not applicable:
Since the Tribunal concluded that M/s. GMI is entitled to the benefits of Notification No. 214/86-CE, it did not need to address the applicability of Notification No. 56/2002-CE to M/s. GMI.

Conclusion:
(i) The activity undertaken by M/s. GM amounts to manufacture. Hence, the demand of duty against M/s. GM is not sustainable, and the appeals filed by M/s. GM and M/s. GMI are allowed.
(ii) The appeal filed by Revenue is dismissed.