2019 (5) TMI 1530 - AT - Central Excise

Tribunal upholds Central Excise duty demand for Roorkee units, directors spared penalties.

M/s Padma Flashlights Pvt. Ltd., M/s Mahalaxmi Industries, Shri T.V. Pradeep, Director, Shri Prakash S. Kahadane, Director Versus Commissioner of Central Excise, Meerut-I

M/s Padma Flashlights Pvt. Ltd., M/s Mahalaxmi Industries, Shri T.V. Pradeep, Director, Shri Prakash S. Kahadane, Director Versus Commissioner of Central ... Issues:- Confirmation of demand of Central Excise duty against two manufacturing units- Imposition of penalty on the directors of the company- Confiscation of seized goods with an option for redemption- Interpretation of Notification No.50/2003-CE and subsequent amendmentsConfirmation of Demand of Central Excise Duty:The judgment involves the confirmation of Central Excise duty against two manufacturing units located in Roorkee, following an investigation by the Revenue. The Commissioner confirmed a demand of Rs.1,63,26,036 against one unit and Rs.9,22,520 against another, along with penalties imposed on the directors of the company. The units were accused of availing area-based exemption wrongly by assembling torches from parts received from another unit in Bombay. The Revenue contended that the torches were fully manufactured in Bombay and only assembled in Roorkee to avail the exemption.Interpretation of Notification No.50/2003-CE:The judgment delves into the interpretation of Notification No.50/2003-CE and subsequent amendments, particularly Para 4 inserted by Notification No. 1/2008-CE. The amendment specified that goods subjected to certain processes without undergoing manufacturing would not be eligible for exemption. The Revenue argued that the processes undertaken by the Roorkee units did not amount to manufacture, thus disqualifying them from the exemption. However, the appellant contended that the processes in Roorkee, including assembling various components and manufacturing switches, constituted manufacturing under the Central Excise Act.Analysis of Arguments:The appellant argued that the activities in Roorkee qualified as manufacturing under Section 2(f) of the Central Excise Act, citing precedents and legal provisions. They highlighted the deeming fiction of manufacture under Note 6 of Section XVI, emphasizing that their activities satisfied the definition of manufacture by assembling parts into a marketable product. The appellant stressed that the amendment to the notification only excluded non-manufacturing activities from the exemption. In contrast, the Revenue maintained that torches were fully manufactured in Bombay and transported to Roorkee for availing the exemption.Judgment and Conclusion:After considering the submissions, the Tribunal found that the activities in Roorkee constituted manufacturing, as the units were assembling various parts into complete torches. The Tribunal noted discrepancies in the Revenue's argument regarding duty payments and assessments at the Bombay unit, indicating that the parts received in Roorkee should be assessed as parts. The judgment concluded that the Roorkee units rightfully availed the exemption, setting aside the impugned orders and allowing all four appeals with consequential relief to the appellant.This detailed analysis of the judgment highlights the issues of central excise duty confirmation, penalty imposition, confiscation of goods, and the interpretation of relevant notifications, providing a comprehensive overview of the legal proceedings and arguments presented before the Tribunal.