2000 (12) TMI 181 - AT - Central Excise

Tribunal rules repair work not manufacturing under Central Excise Act

The Tribunal held that re-shelling rollers and fitting new parts did not amount to manufacture under the Central Excise Act. Consequently, the demand for ... Manufacture - Demand - Limitation Issues:- Whether re-shelling of Roller and Shaft of Sugar Mills and fitting of fresh Juice Guard Rings amounts to manufacture under Section 2(f) of the Central Excise Act, 1944.- Whether the demand for duty on parts used for repairing purposes is justified.- Whether the demand for duty is barred by limitation.Analysis:*Issue 1: Manufacture of Roller and Shaft of Sugar Mills*The main issue in this case was to determine whether the process of re-shelling rollers and fitting fresh Juice Guard Rings amounts to manufacture under Section 2(f) of the Central Excise Act, 1944. The appellant contended that based on previous court decisions and tribunal rulings, the process of re-shelling old worn-out Sugar Mill Rollers does not constitute manufacture. The appellant also argued that the demand of duty against them should be set aside following the precedent set by earlier cases. The Additional Commissioner found that the process of re-shelling rollers and fitting new parts transformed the roller shaft into a commercially different commodity, thus constituting manufacture. However, the Tribunal disagreed with this finding, citing previous judgments where similar activities were not considered as manufacturing processes. Therefore, the Tribunal held that the findings of the authorities below regarding the manufacture were not sustainable.*Issue 2: Duty on Parts Used for Repairing Purposes*The Revenue argued that the appellants are liable to pay duty on the parts manufactured by them and used for repairing purposes. The Additional Commissioner observed that the process of re-shelling roller shafts and fitting new parts required payment of Central Excise duty. However, the Tribunal's decision on the main issue rendered this argument moot, as it held that the activities in question did not amount to manufacture. Therefore, the demand for duty on parts used for repairing purposes was not justified based on the Tribunal's ruling.*Issue 3: Limitation on Demand for Duty*The appellant also raised the issue of limitation, arguing that the demand for duty was barred by limitation as the show cause notice was issued after a period of six months from the relevant date. The Tribunal noted that the Revenue was aware of the activities undertaken by the appellants and had issued show cause notices on the same grounds previously. The Revenue had also accepted the findings of the Commissioner (Appeals) and refunded the duty paid by the appellants. In light of these circumstances, the Tribunal held that the demand for duty was indeed barred by limitation. Therefore, the appeal was allowed on both merits and the point of limitation, and the impugned order was set aside.