1987 (10) TMI 264 - AT - Central Excise

Reconditioning of Dies Not Deemed Manufacture: Duty Liability Clarified

COLLECTOR OF C. EX. Versus FORDHAM PRESSINGS (INDIA) PVT. LTD.

The Tribunal held that the reconditioning of dies did not amount to fresh manufacture attracting duty payment. The appeal focused on the interpretation of ... Manufacture Issues:1. Whether reconditioning of dies amounts to fresh manufacture and attracts duty payment.2. Interpretation of Rule 173-H of the Central Excise Rules regarding retention or re-entry of duty paid goods in the factory.3. Comparison with relevant case laws regarding the definition of manufacture in excise law.Analysis:1. The appeal involved a show cause notice issued to a company regarding the reconditioning of dies and the duty implications on the same. The Assistant Collector initially confirmed the duty demand, which was later set aside by the Collector (Appeals). The main issue was whether the reconditioned dies should be considered as fresh manufacture attracting duty payment. The classification of the dies under item 68 CET was not in dispute, and the appeal focused solely on the duty liability for reconditioned dies.2. Rule 173-H of the Central Excise Rules was crucial in determining the duty liability in this case. The rule allows for the retention or re-entry of duty paid goods in the factory without payment of duty if not subjected to any process amounting to manufacture. The question arose whether the reconditioning process amounted to manufacture. The respondent argued that the dies remained the same even after reconditioning, and no new product emerged, hence no duty was payable. The Assistant Collector's order lacked clarity on how reconditioning constituted manufacture, and the prescribed procedure under Rule 173-H was not followed, which might be a ground for penalty but not for demanding duty.3. The Tribunal referred to relevant case laws to determine the definition of manufacture in excise law. In the case of Collector of Central Excise v. M/s. Saran Engineering Company Ltd., it was held that certain processes may not amount to manufacture for the purpose of duty liability. Similarly, the case of Collector of Central Excise v. Lathia Industrial Supply Company (Pvt.) Ltd. was discussed, where the Supreme Court later ruled that certain processes did not amount to manufacture. The Tribunal also cited the case of Shriram Refrigeration Industries Ltd., emphasizing that as long as the identity of the article remains intact, reconditioning may not constitute manufacture. Applying these precedents, the Tribunal held that the reconditioning of dies in the present case did not amount to manufacture, thereby upholding the Collector (Appeals) order and dismissing the appeal.