2023 (4) TMI 311 - AT - Central Excise

Tribunal: Grinding, Sizing, Packaging = 'Manufacture' for CENVAT Credit

The Tribunal held that the processes of grinding, sizing, and packaging on the Ferro Silicon cakes constituted 'manufacture' as they were essential for ... CENVAT Credit - Process amounting to manufacture or not - receipt of unprocessed Ferro Silicon cake on payment of central Excise duty and carrying out the activities of grinding, sizing and packing, in the factory - It is the allegation of the Revenue that since these processes of grinding, sizing and packing of Ferro Silicon cakes does not amount to manufacture - HELD THAT:- Section 2(f) of the Central Excise Act,1944 (CEA) defines 'manufacture' as: 'manufacture' includes any process: (i) incidental or ancillary to the completion of a manufactured product; (ii) which is specified in relation to any goods in the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act . Thus any process undertaken on an input to make it marketable amounts to ‘manufacture’ as per section 2 (f) of the CETA1944 - In the present case, the ferro silicon cake received in the factory were bigger size . Without undertaking the processes of sizing, grinding and packaging they cannot be marketed as such. The customers may require it in different sizes. Hence sizing of the Ferro Silicon cake according to the requirement of each customer is an activity amounting to ‘manufacture’ as per section 2 (f) of CETA, 1944. The processes of grinding, sizing and packaging undertaken by the Appellant on the inputs namely ferro silicon cake, in their factory amounts to ‘manufacture’ as they are all essential processes for making the goods marketable, as per Section 2(f) of the CETA 1944 - there is no infirmity in the availment of CENVAT credit on the inputs received by the Appellant - Appeal allowed. Issues involved: The issue involves the denial of CENVAT credit to the appellant for undertaking processes of grinding, sizing, and packaging on unprocessed Ferro Silicon cakes, with the Revenue alleging that these processes do not amount to 'manufacture' as per the Central Excise Tariff Act.Summary:Issue 1: Allegation of incorrect CENVAT credit availed on unprocessed Ferro Silicon cakes:The Appellants, engaged in the manufacture of Silico Manganese, received unprocessed Ferro Silicon cakes and carried out grinding, sizing, and packaging activities in their factory. The Revenue contended that these processes do not constitute 'manufacture,' leading to the denial of CENVAT credit. The Appellant argued that the processes were essential for making the goods marketable, citing legal precedents supporting their contention.Issue 2: Interpretation of 'manufacture' under Section 2(f) of the Central Excise Act, 1944:The Appellant claimed that the processes of grinding, sizing, and packaging on the Ferro Silicon cakes amount to 'manufacture' as per Section 2(f) of the Central Excise Act, 1944, as they are essential for making the goods marketable. They highlighted that the Department did not question the payment of duty on the finished goods cleared after these processes were undertaken.Judgment:The Tribunal found that the processes of grinding, sizing, and packaging undertaken by the Appellant on the Ferro Silicon cakes constituted 'manufacture' as they were essential for making the goods marketable. Citing Section 2(f) of the Central Excise Act, 1944, the Tribunal held that any process making an input marketable amounts to 'manufacture.' Legal precedents were referenced to support the Appellant's contention that CENVAT credit cannot be denied on minor technical formalities if the duty-paid nature of the goods is established. Consequently, the Tribunal set aside the Commissioner's order and allowed the appeal filed by the Appellant.(Order pronounced in the open court on 31 March 2023.)