2024 (8) TMI 849 - AT - Central Excise

Tribunal Reverses Duty Demand: Insufficient Evidence of Non-Compliance in Central Excise Procedures for SMPS Transactions.

The Tribunal set aside the order demanding duty payment from the appellant for 39 SMPS cleared without adhering to Central Excise procedures. The decision ... Failure to discharge duty on 39 numbers of SMPS alleged to have been cleared during the period December 2004 to February 2005 without following Central Excise procedure and discharging appropriate duty - HELD THAT:- It is found that the objection has been raised by the audit during the course of scrutiny of their records subsequent to obtaining their registration as a manufacturer. The period in question is relating to time when they were engaged in trading of rectifiers of SMPS. The relevant invoices against which the SMPS were purchased by the appellant from UTL are enclosed with the paper book. The Revenue could not produce any evidence that supply of additional items along with SMPS purchased from UTL resulted into emergence of a new manufactured product and the activity of assembly carried out by them amounts to manufacture. Neither investigation initiated nor statements have been recorded from the appellant about the activity of assembling, if any, of the additional items supplied with SMPS as observed in the impugned order. There are no merit in the impugned order - Consequently, the same is set aside and appeal is allowed. Issues:Whether the appellant failed to discharge duty on 39 numbers of SMPS cleared without following Central Excise procedure and paying appropriate duty.Analysis:In the case, the appellant appealed against the Order-in-Appeal passed by the Commissioner of Central Excise. The appellant was registered as a dealer and later as a manufacturer of 'Rectifier Power Supply Systems.' During an audit, it was found that 39 SMPS were sold without discharging duty, leading to a demand for duty recovery. The appellant contended that the SMPS were procured from another entity, UTL, which had already paid excise duty. The appellant argued that the mere addition of certain items along with the SMPS did not amount to manufacturing a new product, as they were engaged in trading at that time. The Revenue failed to provide evidence that the additional items resulted in a new manufactured product. The Tribunal found no merit in the demand and set aside the order, allowing the appeal in favor of the appellant.The key issue in the appeal was whether the appellant was liable to pay duty on the 39 SMPS cleared without following Central Excise procedures. The appellant argued that they procured the SMPS from UTL, which had already paid duty on the goods. The Tribunal noted that during the relevant period, the appellant was registered as a dealer and not a manufacturer. The invoices from UTL, showing duty payment, supported the appellant's claim. The Revenue failed to establish that the additional items supplied with the SMPS resulted in the manufacturing of a new product. No investigation or statements were recorded regarding the alleged assembly activity. Consequently, the Tribunal found no merit in the demand for duty and set aside the order.The Tribunal's decision was based on the lack of evidence supporting the Revenue's claim that the appellant failed to discharge duty on the cleared SMPS. The appellant demonstrated through invoices that the SMPS were procured from UTL, which had already paid duty. The Tribunal emphasized that during the period in question, the appellant was engaged in trading activities, not manufacturing. The Revenue's failure to prove that the assembly of additional items with the SMPS constituted manufacturing led to the dismissal of the duty demand. The Tribunal allowed the appeal, providing consequential relief to the appellant as per the law.In conclusion, the Tribunal set aside the order demanding duty payment from the appellant for the 39 SMPS cleared without following Central Excise procedures. The decision was based on the lack of evidence supporting the Revenue's claim and the appellant's documentation proving duty payment by the supplier. The Tribunal emphasized that during the relevant period, the appellant was a dealer, not a manufacturer, and the addition of items to the SMPS did not amount to manufacturing a new product. Consequently, the appeal was allowed in favor of the appellant.