Appellant wins appeal due to procedural errors, manufacturing definition, and limitation period exclusion.

The Tribunal ruled in favor of the appellant on all issues. It found a violation of principles of natural justice in the order passed without considering submissions. The activities undertaken by the appellant were not considered as manufacturing based on legal interpretations. The Tribunal also held that the extended period of limitation was inapplicable due to the appellant's registration and filing history. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief, if any, on 04.07.2023.

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Issues Involved:

1. Violation of principles of natural justice.
2. Whether the activity undertaken by the appellant amounts to manufacture.
3. Applicability of the extended period of limitation.

Summary:

Issue 1: Violation of Principles of Natural Justice

The appellant contended that the order was passed in gross violation of the principles of natural justice as the matter was heard by one Commissioner, Dr. Sanjay Agarwal, but the order was passed by another Commissioner, Mr. Prashant Kumar, without considering the submissions made by the appellant. The Tribunal found that the matter was indeed heard by Dr. Sanjay Agarwal, and the order was passed by Mr. Prashant Kumar, which is a violation of principles of natural justice. The non-consideration of judicial pronouncements submitted by the appellant further supported this conclusion. Therefore, this issue was answered in favor of the appellant.

Issue 2: Whether the Activity Undertaken by the Appellant Amounts to Manufacture

The appellant was engaged in importing and acquiring products, performing calibration tests, and selling these products while passing on the CENVAT credit by issuing dealer's invoices. The appellant argued that these activities did not amount to manufacture as no new product emerged, and there was no change in the nomenclature, character, and use of the appliances. The Tribunal referred to CBEC Circular No.454/20/99-CX, which clarified that upgradation does not amount to manufacture. The Tribunal also cited various judgments, including Union of India vs. Delhi Cloth & General Mills Company Limited, which defined manufacture as bringing into existence a new substance known to the market. Based on these references, the Tribunal held that the appellant's activities did not amount to manufacture. This issue was also answered in favor of the appellant.

Issue 3: Applicability of the Extended Period of Limitation

The appellant had taken registration as a trader from 03.12.2001 and was filing Dealer's returns regularly. On 13.03.2009, the appellant took registration as a manufacturer for the same activities. The process undertaken by the appellant was well-known to the Department as of 13.03.2009, and the Department had examined the appellant's activities on 11.12.2009. The appellant was also submitting ER Returns. Given these circumstances, the Tribunal found that the show-cause notice issued on 27.12.2010 by invoking the extended period of limitation was not sustainable. Thus, this issue was answered in favor of the appellant.

Conclusion:

The Tribunal set aside the impugned order, finding no merit in it, and allowed the appeal with consequential relief, if any. The judgment was pronounced in open court on 04.07.2023.

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