Tribunal Overturns Excise Duty Demand, Rules Hydrogen Gas Processing Not Manufacturing Under Central Excise Tariff Act

The Appellate Tribunal CESTAT Chandigarh set aside the Order-in-Original by the Commissioner of Central Excise Chandigarh, which had confirmed a demand for excise duty, interest, and a penalty on M/s Surya Air Products (P) Ltd. The Tribunal ruled that the appellant's process of filtering and drying hydrogen gas for sale did not constitute manufacturing under the Central Excise Tariff Act. This decision was based on a previous Tribunal decision and an Apex Court judgment, both of which held that such processes were not manufacturing. The appeal was allowed, and consequential relief was granted to the appellant.

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The present appeal before the Appellate Tribunal CESTAT Chandigarh was directed against an Order-in-Original passed by the Commissioner of Central Excise Chandigarh, confirming a demand for Central Excise Duty, interest, and imposing a penalty on the appellant, M/s Surya Air Products (P) Ltd. The appellant, engaged in the marketing of Hydrogen Gas Cylinders, received pure hydrogen gas from another manufacturing unit, filled it in gas cylinders, and sold it to consumers. The issue revolved around whether the process undertaken by the appellant on the received gas amounted to manufacture under the Central Excise Tariff Act.The appellant had surrendered its manufacturer's registration and obtained registration as a dealer after realizing that other gas cylinder fillers were not paying excise duty. The Revenue alleged that the appellant's process constituted manufacture, leading to the issuance of a show cause notice and subsequent confirmation of the demand by the Commissioner, prompting the present appeal.In the hearing, the appellant's counsel argued that the impugned order was unsustainable, citing a previous Tribunal decision and a subsequent Apex Court judgment that held the appellant's process did not amount to manufacture. The Revenue, represented by the Authorized Representative, reiterated the findings of the impugned order.After considering the submissions and reviewing the previous Tribunal decision and the Apex Court judgment, the Tribunal found that the issue in the present case mirrored that of the earlier appeal, which had been upheld by the Apex Court. The Tribunal referenced the Apex Court's findings that the appellant's process of filtering and drying the received gas did not constitute a manufacturing process. Consequently, the Tribunal held that the impugned order was not sustainable and set it aside, allowing the appeal of the appellant.In conclusion, the Tribunal's decision was based on the precedent set by the Apex Court in the appellant's earlier case, affirming that the appellant's process of preparing the gas cylinders for sale did not amount to manufacturing under the Central Excise Tariff Act. The appeal was allowed, and the impugned order was set aside, providing consequential relief to the appellant as per the law.

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