TaxTMI 
TaxTMI 
2015 (9) TMI 297
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....be not serviceable, damaged and failed to function subsequent to their clearance. The Appellants carried out repairs on such compressors for gas leakage, copper tube damage, base clamp alignment, incorrect painting, leak test etc in their factory. For major repairs, the Appellants sent out the damaged and unserviceable compressors to M/s. Indian Refrigeration Co. Ltd. under Rule 57F(4) procedure and got them repaired. In M/s. IRC, the unserviceable and defective compressors were cut open, dismantled and mixed, together in the batch process, parts segregated and repairable parts were repaired. Then the compressors were re-assembled from such repaired parts and some new parts/components were also utilized. Thereafter, the compressors so re-assembled were re-sealed, tested, painted, dehydrated, filled with desired quantity of refrigeration oil and then finally tested for various parameters and packed in new carton boxes. The revenue contended that this activity of the Appellant is amount to manufacture and the so called repaired compressors are liable to excise duty as if the same is the newly manufactured goods. Two show cause notices dated 18.05.2000 for the period Jan, 2000 & Feb 2....
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....n not be any processes other than the process which was carried out by the Appellant. Shri Patki placed reliance on following judgments in support of his submission: (a) Shriram Refrigeration Industries Ltd. Vs. CCE [1986 (26) ELT 353 (Tri.)] (b) CCE Vs. Samtel Color Ltd [2001 (135) ELT 288 (Tri.)] (c) Glass Equipment India Ltd. Vs. CCE [2003 (157) ELT 411] (d) CCE Vs. Lipi Data Systems Ltd. [2001 (156) ELT 968] (e) CCE Vs. Dattanand Refrigeration Services Pvt. Ltd. [2001 (132) ELT 748] (f) Tecumseh Products India Ltd. Vs. CCE [2004 (167) ELT 498 (SC)] (g) Sudhir Engineering Co. Vs. CCE (Tri) [2006 (206) ELT 481] 3. On the other hand, Shri Sanjay Hasija, Learned Superintendent (AR) appearing on behalf of the revenue reiterates the findings of the impugned order. He further submits that the Appellant have cleared newly manufactured compressors in the guise of repaired compressors. He submits that once the compressor was completely knocked down and thereafter reassembled, the activity amounts to manufacture and it can not be called the compressor after such process, as repaired one. He submits that both the lower authorities have, after careful consideration of entire ....
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....sor. We therefore have no doubt in our mind that the activity carried out by the Appellant on the defective compressor is clearly an activity of repair and by no stretch of imagination, it can be called as 'manufacture'. On going through findings of the Ld. Commissioner (Appeals) in the impugned order, we find that Ld. Commissioner (Appeals) rejected the appeal merely on the ground that judgment in the case of Shriram Refrigeration Industries Ltd. vs. CCE (supra) which in favour of the appellant has been distinguished by the Hon'ble Supreme Court in the case of Tecumseh Products India Ltd. (S.C.) vs. CCE (supra). To understand the judgment in both the cases we have gone through the same and relevant portion of both the judgments are reproduced below: Shriram Refrigeration Industries Ltd "9. Let us now see what the evidence on record shows the appellants were doing to the defective compressors received in their factory. According to the show cause notice in the case and further particulars given to us during the hearing, the process employed by them was as follows :- (i) The outer shell of the compressors was cut open. (ii) The inner components of the compressors wer....
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....not sustain in view of the test laid down by the Hon'ble Bombay High Court in the spinnerets' case; and (4) just by inter-mixing of identical parts as between defective compressors of the same model and specification, it could not be said that the reassembled or repaired compressors were not in the same form as those brought into the factory; nor going by the test laid down by the Constitution Bench of the Hon'ble Supreme Court in the Allenbury Engineers' case and reiterated by a Full Bench of the Hon'ble Supreme Court in the Barfi Devi's case, could it be said that reassembled or repaired compressors were commercially distinct article as compared to the goods that were brought into the factory for repairs. Apart from the above specific grounds, the Collector has also stated in paragraph 9 of the impugned order that the contents of the letters dated 29-12-1976; 18-6-1969 and 30-4-1977 of the appellants' disclosed that the so-called repairing of the compressors was nothing short of the manufacturing of compressors by assembling salvaged parts from the defective compressors, received from places outside the factory of the assessees, with certain other ....
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....ok the shaping, varnishing and backing of such stator to fit such stators into the compressor housing. The Collector having felt that the activity of shaping, varnishing and baking done by the appellant on receipt of the stator from the job workers results in manufacture and initiated proceedings for adjudication of tax. 6. The situation that is considered and examined either in the 'Shriram Refrigeration' or 'Karna Industries' was entirely different. In the present case, what was looked into examined and found was the several steps taken in respect of the stator and so far as the stators were concerned, it has been rightly held by the Tribunal that separate activities were carried on by the appellants which were identical to the ones that was carried out in respect of new stator and, therefore, to the extent of the stator being made ready for the purpose of using in the repairing of compressor must be held to be an activity of manufacture and the Tribunal has confirmed the demand only in respect of "Stators". 7. But, insofar as the application of extended period of limitation provided under Section 11A is concerned, we do not think that the Tribunal is justifie....
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....is misplaced, consequently his order mainly based on this points only cannot sustain. We further gone through the judgments in case of Sudhir Engineering Co. vs. CCE, Daman (supra) wherein it was held as under: 2. The appellants are engaged in the manufacture of Diesel Generating Sets classifiable under Chapter no. 85 of the Central Excise Tariff Act, 1985. The appellant's factory was visited by the Preventive Officers of Central Excise, on 28-1-1991, who conducted various checks and verifications and recorded the statements of the authorized representatives of the appellant. During the course of checks, it transpired that the appellant had received certain DG Sets for repairs, reconditioning and or for remaking, etc., which were originally cleared by them on payment of duty form their factory. The officers found that in some of the DG Sets either the engine or alternator or both were replaced with new engines or alternators. As such, they entertained a view that such replacement of the old engine/alternator with a new engine amounts to 'manufacture' and the applicants were required to pay duty on the same. In the above facts with the majority order it was held that 37....
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.... appeals were filed by revenue against these two judgments. 9. We have been given a photocopy of the judgment of the Supreme Court in Civil Appeal No. 1029 of 1987, dated 25-8-1999 where the Revenue appeal against the Tribunal's judgment in the case of M/s. Shriram Refrigeration Industries Ltd. [1999 (113) E.L.T. A121 (S.C.)]was dismissed by the Supreme Court on merits. The same order in Sr. No. 2534/92 pertained to the Tribunal judgment in the case of M/s. Karna Industries. 10. What we find is that the process of repairs adopted by the two service centers viz. M/s. Dattanand Refrigeration Pvt. Ltd. and M/s. S.C. Industries before the Commissioner was similar to those before the Tribunal in the cited judgments. In the cited judgments, it has been held that the activity did not amount to manufacture. In view of the judgment of the Supreme Court, it must be held in the present case also that the process undertaken by the two respondents did not amount to manufacture and that they are not liable to pay duty. The fact that in the cited case Rule 173H was under discussion is not relevant, nor does it operate as a bar for application of the ratio thereof. 11. The Revenue appeal....
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....ains a module and no new commodity comes into existence. As no new commercial commodity comes into existence as a result of process employed by the Appellants, it cannot be said that the processes undertaken by them amount to manufacture and consequently no duty of excise will be leviable. The mere fact, that the old and used modules are dismantled by the Appellants for the purpose of repaid, would not convert the process into manufacture. This was the view expressed by the Tribunal in the case of Shriram Refrigeration Industries Ltd. v. CCE, 1986 (26) E.L.T. 353 (T) wherein the Tribunal observed that the compressors can be repaired only after cutting open the outer shell and "This situation is not peculiar to compressors but occurs in the matter of repairs of practically all items of machinery and appliances." The Tribunal has, further observed that "Even in the case of non-machinery items, the identity of the article is liable to change in the course of repairs/refining/reconditioning/remaking..... In the course of retreading, the shaved-off tyre hardly looks like a tyre; it is only carcass or base of a tyre. But after retreading the article again emerges into original form as a ....