TaxTMI 
TaxTMI 
2015 (9) TMI 297
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....nditioning etc. as the same were claimed to 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....
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....ring of any compressor or like goods, there can 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 repa....
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....y defective compressor needs to be repaired, these very activities are required to repair the compressor. 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 f....
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.... (2) the two grounds of high quantity of rejected parts and high cost of repairs were dropped by the Collector himself during adjudication; (3) the argument of loss of identity cannot 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....
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....d for replacing the scrapped components are received on payment of duty from the factory of the appellant. The Service Centre sends these materials to outside job workers for making the stators. Thereafter the appellant undertook 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 manufa....
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..... In view of this position it appears that the Ld. Commissioner has misunderstood the findings of the Hon'ble Supreme Court judgment in Tecumseh Products India Ltd. case, therefore findings of the Ld. Commissioner (Appeals) in this regard 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 s....
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....s the ratio of the judgment. 8. These two judgments of the Tribunal were appealed against in the Supreme Court. In fact in the 3 appeals from the Revenue there is a specific claim made of the denial of the ratio of the judgment to the service centers on the ground that the 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 als....
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....e on whether the identity of the original commodity ceases to exist." This test, in our opinion, is not satisfied in the present matter as a different commercial commodity does not come into existence as a result of the process undertaken by the Respondents. After the processes undertaken by the Appellants, module remains 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 ....
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....992 (42) ECR 522. 8. We note that the question of inter-mixing of identical parts of defective compressors of the same model and specification has been held as not tentamount to manufacture. Similarly, the Tribunal in the case of Sri Ram Refrigeration Ind. Ltd. also examined the Dictionary meaning of identity not lost if serviceable parts of one defective compressor utilised in reassembly or another identical defective compressor and vice versa . On this question, the Tribunal held that in the instant case so long as the activity remains one of repair and no commercially different article comes into existence Rule 173H would be admissible. We find that it is equally applicable to Rule 57F(2). We also note that the Tribunal held that if it is permissible to replace any unserviceable part during repair logically, no objection could be taken on replacement of the unserviceable bottom shell having the serial number of the compressor engraved on it. Therefore, it is not possible to conclude that there was manufacture involved when the bottom shell which carried original serial number has to be replaced and consequently the same serial number engraved with the prefix 'R'....