2023 (9) TMI 285 - AT - Central Excise

Appellant entitled to CENVAT credit for spare parts manufacturing activity under Central Excise Act

The Tribunal held that the appellant's activity of packing and re-labelling spare parts of Heavy Earth Moving Machinery constitutes manufacture under ... Manufacture or not - activity of packing, re-labelling of the spare parts of HEMM undertaken by the appellant amounts to manufacture or not - CENVAT Credit - Extended period of limitation - HELD THAT:- The parts in question are covered by Serial No.100A of the Third Schedule of the Central Excise Act, 1944. The said issue has been dealt by this Tribunal in the case of Mercedes Benz India Pvt. Ltd. [2017 (10) TMI 1183 - CESTAT MUMBAI], wherein this Tribunal has observed In the facts of the present case, the goods as discussed above are falling under various chapter heading as proposed in the show cause notice are covered under Third Schedule and the activity which is undisputedly carried out by the appellants are packing in unit container, labelling with declaration of the MRP on the unit container are clearly covered under Section 2(f)(iii) therefore amounting to manufacture. It is seen that the goods are marketable as the same has been sold to M/s TSL on against the payment. Therefore, the said parts are marketable - the activity undertaken by the appellant amounts to manufacture. Consequently, the cenvat credit availed by the appellant, cannot be denied to the appellant. CENVAT Credit - HELD THAT:- As the appellant is paying duty on the manufactured goods by availing CVD paid on the imported goods, in that circumstances, the appellant is correctly taken the cenvat credit. Extended period of limitation - HELD THAT:- The appellant has registered with the Department and their activity is known to the Department, the appellant is also filing ER-I Returns regularly showing payment of duty and availing cenvat credit therein, in that circumstances, the extended period of limitation is not invokable in the facts and circumstances of the case. Therefore, on limitation also, the show-cause notice is not sustainable. Appeal allowed. Issues involved:The judgment involves the issue of whether the activity of packing and re-labelling of spare parts of Heavy Earth Moving Machinery (HEMM) undertaken by the appellant amounts to manufacture under Section 2(f)(iii) of the Central Excise Act, 1944.Comprehensive Details:Facts of the case: The appellant is engaged in maintenance and repair services of HEMM under long term comprehensive maintenance and repair contracts with Tata Iron and Steel Company Ltd. The appellant imports spare parts from the principal manufacturer, which are subject to labelling and re-packing. A show-cause notice was issued alleging that the appellant falsely obtained registration as a deemed manufacturer, leading to surplus credit in CENVAT account.Appellant's Contentions: The appellant argues that the activity of packing and re-labelling qualifies as manufacture under the Central Excise Act. They rely on a Tribunal decision stating that such activities amount to manufacture. They contend that the spare parts are marketable and that even one purchaser is sufficient to meet the criteria of marketability.Appellant's Alternate Argument: The appellant asserts that the denied CENVAT credit has been utilized for duty payment, which amounts to reversal of credit as held in a previous Tribunal decision affirmed by the High Court.Revenue's Position: The Revenue supports the impugned order denying CENVAT credit to the appellant.Decision: The Tribunal finds that the activity of packing and re-labelling spare parts of HEMM undertaken by the appellant amounts to manufacture under Section 2(f)(iii) of the Central Excise Act. The goods are marketable as they have been sold to a buyer, and hence, the appellant is entitled to the CENVAT credit. The Tribunal also rules that the extended period of limitation is not applicable in this case. Therefore, the impugned order is set aside, and the appeal is allowed with consequential relief.This summary provides a detailed overview of the issues, facts, contentions, and the final decision of the judgment.