TaxTMI 
TaxTMI 
2013 (8) TMI 844
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....ories as per the requirements of Central Motor Vehicle Act 1989 (CMV) and the rules made thereunder. Thereafter, the Chassis is dispatched to the job worker premises where the body building activities on the chassis are carried out. For the period from May 2009 to August 2009, the appellant followed the procedure under notification 214/86 CE dated 25thy March, 1986. From Sept 2009 to Nov. 2009 appellant has been following the provisions of Rule 4(5) (a) of the CENVAT Credit Rules, 2004. After the job worker completes the body building, vehicle is received back in appellant's premises. Here again, appellant inspect, modify as per customer's requirement, test, paint and polish. They are clearing the same on payment of excise duty. They availed the CENVAT credit of CVD/SAD paid at the time import as also excise duty deposited by Job Worker (Sept 2009 to Nov 2009). A Show Cause Notice was issued to the appellant for denial of the Cenvat Credit availed and utilized by them amounting to Rs.4,80,79,916/- (Rupees Four Crores Eighty Lakhs Seventy Nine Thousand Nine Hundred Sixteen only) during the period June 2009 to November 2009. The same has been confirmed in the impugned order alongwith....
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....el and radiator, front left hand suspension, shock absorber and they fix parts and accessories as per the requirement of Central Motor Vehicle Act, 1989. As per the said act, every vehicle must be fitted with a CMVR Kit before it is released on the road. The kit includes various parts such as Rear Under Run Protection Device (RUPD), Side Under Run Protection Device, Front Under Run Protection Device, bulbs, raw flap, mirrors, Warning triangles read/white with stand etc. The Ld. Advocate further stated that these parts are also mandatory under Automotive Indian Standard. (AIS). After these process are completed, they send chassis to the Job worker for mounting the body. The job worker undertakes body building operations under the Supervisory Control of the Appellant. Appellant only provide the drawing and specifications. The body building materials are procured by each job worker. Thereafter, the vehicles are received back from the job worker. After receipt of the vehicle, they again undertake inspection of the body built vehicle. Modification are also carried out as per the requirement of the customer. The modification process may include, (i) Leaf spring for suspension, (ii) Engin....
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.... Motor Vehicles Act. It is only after the completion of above process that the goods become marketable and can be taken on road. Ld. Advocate also argued that even for some reason if it is not accepted that the activities undertaken by them does not amount to manufacture, the very fact that the final product has been cleared on payment of duty, department cannot deny the benefit of Cenvat Credit on the ground that the process undertaken by them does not amount to manufacturer. In support of this contention Judgement passed by the High Court, Bombay in the case of Commissioner of Central Excise Pune III V/s. Ajinkya Enterprises reported in was cited. Ld Advocate stated similar view has been taken by the High Court of Gujarat in the case of Commissioner of Central Excise and Customs Versus Creative Enterprises reported in). He further contended that in view of these two judgments of the Hon. High Court of Gujarat and Bombay, the department cannot deny the appellant CENVAT Credit taken by them. Since everything was done in a open and totally transparent manner, department was aware from the day one, there is no case for imposition of any penalty. 5. The Ld. Commissioner AR argued t....
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....p; (f) "manufacture" includes any process,- (i) incidental or ancillary to the completion of a manufactured product; (ii) which is specified in relation to any goods in, the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture; or (iii) which, in relation to any goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer; and the word "manufacturer" shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account; The appellant's main contention is that the term manufacture includes any process installed or ancillary to the completion of a manufacture product and therefore his activity amounts to manufacture. Thus according to app....
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.... or a series of changes take the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognised as a new and distinct article that a manufacture can be said to take place. 12. Manufacture thus involves series of processes. Process in manufacture or in relation to manufacture implies not only the production but the various stages through which the raw material is subjected to change by different operations. It is the cumulative effect of the various processes to which the raw material is subjected to, manufactured product emerges. Therefore, each step towards such production would be a process in relation to the manufacture. Where any particular process is so integrally connected with the ultimate production of goods that but for that process manufacture or processing of goods would be impossible or commercially inexpedient, that process is one in relation to the manufacture. 13. The natural meaning of the word `process' is a mode of treatment of certain materials in order to produce a good result, a species of activity performed on the subject-matter in order to transform or reduce it to a c....
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....ot manufacture exigible to duty. To be manufacture exigible to duty there has to be such transformation that a new and different article which can ordinarily come to the market to be bought and sold and known to the market having a distinctive name, character and usage must emerge. In other words, it should be a different commercial commodity. The Supreme Court has also emphasised the importance of an article being known as such in the commercial community for consideration whether an article in question becomes an article as mentioned in the Schedule to the Act. The concept of being known to the market is important not from the point of view whether the goods are manufactured. By the process of forging as detailed above, a forged product of iron and steel comes into existence. It acquires distinguishable identity as forged product. Now once an article comes into existence with the detinue identity, the process of manufacture is complete and it is exigible to duty. Merely because a manufactured goods is used subsequently for manufacturing of another article, it cannot be concluded that the earlier process of manufacture was not complete or finished goods had not come into existence....
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....num Conductors. For the period prior to June 98, the said respondent was manufacturing the conductors himself and was supplying the same to the Gujarat Electricity Board. However, during the period June'98 to Nov.'98, the appellant's manufacturing operations were closed down. Accordingly, he sent the raw material to M/s. Prem Conductors for manufacture of aluminum conductors by following the due procedure under Rule 57F. On receipt of the godos by M/s. Abhay Conductors, same were being entered into RG-1 Register and cleared to Gujarat Electricity Board. Inasmuch as the M/s. Abhay Conductors was availing the benefit of small scale exemption notification, no duty was being paid by them on the said goods. It is in the above circumstances that the Tribunal has taken a view that in situation where the goods are manufactured on specific order and specific design and are made receivable by the ordering party after undergoing a certain specific test, manufacturing process would be completed only after such test. It is in these circumstances that the Tribunal has taken a view that M/s. Abhay Conductors can be considered as manufacture. In the case of D.S.Screen Pvt. Ltd. Vs. Collector of....
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..... A perusal of Item 26AA would show the excise duty on forged goods covered under the said entry, is according to the weight of the goods. It was contended by the appellant that the weight should be measured only after the polishing and machining at the appellant's workshop was completed. It is obvious that as a result of such machining and polishing there would be some loss weight on account of excess skin removal. It was on the other hand contended on behalf of the Revenue, the respondent herein, that the forging of the goods was complete before the machining and polishing was done to remove the excess surface or excess skin. It appears to us that the aforesaid contention of the appellant deserves to be accepted. Even to prepare forged goods for supplying to the Railways, it was essential that the goods should comply with the Railways' specifications and the excess steel on the surface or the excess skin as it is called, would have to be removed for that purpose. Moreover, as pointed out by learned single Judge of the Delhi High Court, in Metal Forgings Pvt. Ltd. & Another v . Union of India and Others [1985 (20) E.L.T., p. 280 at paragraph 12]: - "the process of ....
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....reme Court stated without a nameplate, fan does not become marketable and hence set-off is to be allowed. In the case of Collector of Central Excise Vs. Eastend Paper Industries Ltd. reported in 1989 (43) E.L.T. 201 (S.C.), the issue before the Supreme Court was whether the wrapping paper used in the wrapping of the wrapped paper can be considered as raw material. In the case of Commissioner of C.Ex., New Delhi Vs. Panchsheel Soap Factory reported in 2002 (145) E.L.T. 527 (Tri.Del.), Tribunal held that activity of putting the stickers on the product in order to comply with the legal requirement of other laws in India does not satisfy the criterion laid down in Chapter Note 6 to Chapter 34 and, therefore, does not amount to manufacture. In the case of German Remedies Ltd. Vs. Commissioner of Central Excise, Mumbai-IV reported in 2003 (162) E.L.T. 429 (Tri.Del.) issue was whether pasting of sticker on imported product to indicate importer's name, M.R.P. etc. to comply with the requirements under Standard of Weight and Measures Act, 1976 and Drugs and Cosmetics Act, 1940 amount to manufacture Tribunal answer was no. In the case of Commissioner of Central Excise, Mumbai Vs. Johns....
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....ed brassieres are ironed in the petitioner's factory using electric irons before they are packed in boxes. The contention of the petitioner is that the process of manufacture' of the brassieres was complete before the stage of ironing and therefore it cannot be said that electric power has been used by the petitioner in relation to the process of manufacture of the brassieres. Various decisions dealing with the connotation of the expression 'manufacture' were cited before us by the petitioner's counsel as lending support to the above contention. It was argued that 'manufacture' involves a transformation in the commercial identity of an article and any process that does not bring about such a change of identity cannot be regarded as a process of manufacture. In our opinion, it is unnecessary for the purpose of this case to consider the broad question as to whether it is essential that every item of work carried out of process applied to an article should by itself bring about a change in the commercial sense at that very stage in order that such work may be regarded as a process carried on in relation to the manufacture of such article. We say so because for the purposes of the Act ....
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....sion. It was because that process of manufacture had been completed prior to the stage of the purchase of the tubes by the petitioner in that the learned Judges held that the work of printing and lacquering carried out by the petitioner in relation to those tubes could not be said to be incidental or ancillary to the completion of the process of manufacture referred to in Item 27(e). 5. In the present case, Item 22D of the First Schedule with which alone we are concerned, authorizes the levy of 10% ad valorem duty on articles of ready-to-wear apparel including undergarments and body supporting garments in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power. Since the definition contained in Section 2(f) of the Act includes all processes that are incidental or ancillary to the completion of a manufactured product the only question to be considered by us, in the present case, is whether the process of ironing applied to the stitched brassieres can be regarded as incidental or ancillary to their completion. In our opinion, the process of ironing that was applied to the stitched brassieres prior to their packing was a pr....
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....urpose. We therefore hold that activities undertaken by the appellant will not amount to manufacture. 12. We observe that since the activity undertaken by the appellant does not amount to manufacture, appellant cannot be considered as a manufacturer and therefore not eligible to take the Cenvat Credit under Rule 3 of Cenvat Credit Rules 2004. 13. We now come to the next question viz. whether Cenvat Credit can be demanded when they have utilized the same for payment of duty on final products. We note that appellant has paid the duty at the time of clearance of the vehicles. Keeping in view the judgment of the Bombay High Court in the case of Commissioner of Central Excise, Pune III Vs. Ajinkya Enterprises reported in has observed as under:- "10. Apart from the above, in the present case, the assessment on decoiled HR / CR coils cleared from the factory of the assessee on payment of duty has neither been reversed nor it is held that the assessee is entitled to refund of duty paid at the time of clearing the decoiled HR / CR coils. In these circumstances, the CESTAT following its decision in the case of Ashok Enterprises 2008( 221) ELT 586 (T), Super Forgings 200....