TaxTMI 
TaxTMI 
2017 (10) TMI 1181
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....is granted by way of refund/ self-credit of excise duty paid through PLA in excess of the available CENVAT credit. The appellants were manufacturing from unrefined lead ingots to refined lead ingots and thereafter from the refined lead ingots to lead alloys to exacting specifications as required by battery manufacturers. Revenue is of the view that the appellant is not entitled for the benefit of notification, on the grounds that the process of making refined lead ingots and lead alloys, does not amount to manufacture. 3. In these set of facts, show cause notice was issued to M/s. GM to deny the benefit of Notification No. 56/2002-CE dated 14.11.2002 wherein the duty paid from PLA by M/s. GM has taken as refund which is recoverable from them and to deny the Cenvat credit on the said goods and to impose penalty on M/s. GM. The matter was adjudicated by the adjudicating authority. The amount of duty paid through PLA as self-credit was held to be recoverable from M/s. GM and the Cenvat credit availed on the inputs was allowed and penalty was also imposed. M/s. GM is in appeal against the confirmation of amount of self-credit taken by them and imposing penalty whereas, the Revenue is ....
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....e all over the country, the duty is being collected on identical process being carried out, including the factory of M/s. GM situated in Gujarat at Gandhidham. 7. He further submitted that the process of making refined lead from unrefined lead shows that when unrefined lead is obtained, it has impurity ranging from 79.34% to 95.64% and in other test report, it is ranging from 97.84% to 99.42%. It is pertinent that the refined lead ingots are made after going to ground zero, namely the metal is totally melted and thereafter to remove impurities, chemically the same is treated and the purity of the lead obtained to the highest degree. The refined lead ingots are defined as per the sub-heading note to Chapter 78, requiring composition of 99.9% of lead and also limiting the content by weight and percentagewise of various other elements like silver, arsenic etc. Therefore, the refined lead being made by the M/s. GM has the exact specifications, and is a commercially recognised as separate identifiable product. After getting the refined lead, thereafter the same is again melted to make it alloy lead ingots. That, each manufacturer of batteries has its own specifications of the refined l....
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....orities, read with the Import Export Policy. It is his submission that the contention of the AR is not acceptable in as much as even the definition in the FTP requires to bring into existence a new product having a distinctive name character and use, basis which the advance licences were granted to M/s. GM. Therefore, it is clear that even from this the evidence the process of making the refined lead and lead alloy ingots amounts to manufacture. He further submits that the process undertaken by M/s. GM amounts to manufacture and the reliance has been placed on the decision of the Tribunal in the case of Jindal Stainless Steelway Limited vs. Commissioner - 2014 (3 10) E.L.T. 194 (Tribunal) wherein it was held that as per the clarification given by the Central Board of Excise and Customs in 2006, there is no dual requirement in as much as the word andwas missing between the various clauses in the definition of manufacture under Section 2(f) of Central Excise Act, 1944, and hence any process which is incidental and ancillary to the completion of the manufactured product also amounts to manufacture. He also relied upon the decision of the Hon'ble Apex Court in the case of Brakes India ....
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..... vs. CCE, Mumbai - 2015 (319) E.L.T. 578 (S.C.). In this decision, the Hon'ble Apex Court was concerned whether sterilisation of syringes and needles amounts to manufacture. The Hon'ble Supreme Court has laid down for clarity various principles. One of the tests laid down endorsing the judgement in the case of Brakes India Limited (supra), was that of test of no commercial use without the process. It was further explained that, when a different finished product comes into existence as a result of a process which makes the said product commercially usable, the same leads to manufacture. It has been held that there would be manufacture as in the Brakes India Limited (supra) case where after the particular process they achieve a new use. That also in cases where the goods are transformed into goods which are different or new after a particular process, manufacture of goods can be said to have taken place. Thus, applying either the analogy of Brakes India case or the test of new or different goods after a particular process, or the activity of M/s. GM of making refined lead ingots and lead alloy ingots, amounts to manufacture. He submits that, in fact the process of sterilisation wher....
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....relied on the decision of the Hon'ble Apex Court in the case of R.C.Tobacco Private Limited vs. UOI - 2005 (188) E.L.T. 129 (S.C.) wherein it has been categorically held that refunds made under the notification have no errors and hence, are not an erroneous refund, but benefit provisionally granted. Consequently applying this ratio, where the self-credits have attained finality and not dealt with as per the provisions of clause 2(C)(e), then invocation of Section 11A does not arise. That, when there is a special procedure laid down then the provisions of section 11 A cannot be invoked directly, but only by the procedure of clause 2(C)(e) to be followed. To support, he relied upon the decision in the case of Shree Bhagwati Steel Rolling Mills vs. CCE (2016) 3 SCC 643 and Hans Steel Rolling Mill vs. CCE (2011) 3 SCC 748. Further, the provisions of Section 11A cannot be invoked as has been done in the instant case since there is been no erroneous refund under the provisions of the notification under clause 2C(e) read with clause 2C(g). Therefore, he prays that the impugned order is not sustainable and their appeal is allowed. 10. With regard to the appeal filed by Revenue against th....
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....and cleared to the raw material supplier. He submits that as far as the M/s. GMI are concerned, they had canvassed that no duty liability can be visited on them and, the demand should only be raised on the raw material supplier. In support, he relied upon the decision in the case of Aggarwal Rolling Mills vs. CCE , New Delhi 1997 (93) ELT 615 (Tri. Delhi), Moon Chemicals vs. CCE 2007 (215) ELT 434 (Tri. Chennai) and Bharat Industries vs. CCE, Mumbai-V 2008 (227) ELT 281 (Tri. Mumbai). In the alternative, it was also submitted that the appellants herein are themselves availing the benefit of exemption Notification 56/2002-CE for other products being manufactured and cleared from the factory, which the Commissioner also recognises in the impugned order, however denies the benefit on the ground that, procedure under Notification No. 56/2002-CE has not been followed. He submits that the raw material supplier had been granted a licence to manufacture the goods in the factory namely, refined lead as also alloy lead ingots from unrefined lead. For a number of years the benefit of the exemption Notification No. 56/2002-CE has also been extended to the raw material supplier i.e. M/s GM. Sim....
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....ctivity or process in order to amount manufacture must lead to emergence of new commercial product, different from the one with which the process started. He also relied upon the following decisions; Gujarat Steel Tubes Limited vs. State of Kerala 1989 (42) ELT 513 (SC), CCE vs. Technoweld Industries 2003 (155) ELT 209 (SC), CCE vs. Kayes Agro Industries 2001 (132) ELT 701 (Tri. Chennai),CCE vs. S.R. Tissues Pvt. Ltd 2005 (186) ELT 385 (SC), Aman Marble Industries Pvt. Limited vs. Collector of Central Excise, Jaipur 2003 (157) ELT 393 (SC), Pemji Haridas vs. Municipal Corporation of Greater Mumbai 1997 (89) ELT 658 (Bom- HC), Mineral Oil Corporation vs. CCE 1994 (114) ELT 166 (CESTAT), Shyam Oil Cakes Limited vs. Collector of Central Excise, Jaipur 2004 (174) ELT 145 (SC), Tungabhadra Industries Limited vs. The Commercial Tax Officer, Kurnool 1961 (2) SCR 14, CCE vs. Osnar Chemical Pvt. Ltd (2012) 276 ELT 162 (SC), Dabur India vs. CCE 2004 (174) ELT 261 (CESTAT) and National Tar Products vs. CCE, Vadodara 2001 (135) ELT 1388 (Tri. Mumbai). Ld. AR therefore, prays that the impugned order has correctly confirmed the demand and M/s. GM is not entitled to avail Cenvat credit on the inp....
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....abelling 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 said expression has been examined by various Courts and have examined severely and decided. In the impugned order, Ld. Commissioner has relied on the decision in the case of Hindustan Cables Limited (supra) to say that activity does not amount to manufacture. We have gone through the decision, wherein the claim of the appellant is that alloy itself contains certain percentage of antimony but for the purpose of increasing hardness, further 0.85% of antimony is mixed with lead by the process of melting the material. Admittedly the product itself was same but some antimony has been further mixed and in that situation, it was held by this Tribunal that activity does not amount to manufacture. Further, in the case of Exide Industries Limited....
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.... to impress upon that slitting/cutting of jumbo rolls of plain tissue paper/ aluminium foil into smaller size does not amount to manufacture on first principles as character and end use did not undergo any change on account of winding, cutting/slitting and packing. Ld. Commissioner has also relied on the decision in the case of Aman Marble Industries Pvt. Limited (supra) to say that cutting of marble blocks into slabs is not bringing a new substance into existence therefore, does not amount to manufacture and it was held that said activity does not amount to manufacture. The ld. AR heavily relied upon the decision of Shyam Oil Cakes Limited (supra) to say that refining/ processing of edible vegetable oil, neither in Section note nor in Chapter note nor in Tariff item process indicated as amounting to manufacture and the product even after refining, remains edible vegetable oil. As actual manufacture has not taken place, deeming provision cannot be brought into play in absence of it being specifically stated that the process amounts to manufacture. The ld. Commissioner has concluded that the essence of the concept of manufacture in Central Excise is that whenever a commodity undergo....
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....application. The said activity was examined by this Tribunal, as defined under Section 2(f) wherein the process incidental or ancillary, was held to amounts to manufacture. 16. Admittedly, in this case, M/s. GM is engaged in the activity of removing impurities from unrefined lead ingots for making lead alloy and thereafter alloy ingots. The refined lead has been recognised in Chapter 78 of Central Excise Tariff Act, 1985. In this Chapter, the expression refined lead means metal containing by weight at least 99.9% of lead, provided that the content by weight of any other element does not exceed the limit specified in the following Table: TABLE OTHER ELEMENTS Element Limiting content % by weight Ag Silver 0.02 As Arsenic 0.005 Bi Bismuth 0.05 Ca Calcium 0.002 Cd Cadmium 0.002 Cu Copper 0.08 Fe Iron 0.002 S Sulphur 0.002 Sb Antimony 0.005 Sn Tin 0.005 Zn Zinc 0.002 Other (for example Te), each 0.001 From the above reading, it is clear that refined lead means the metal weight at least 99.9% of lead and with some other antimony, as prescribed in the Chapter heading note. Therefore, to classify under Chapter 78, first it sho....
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....d lead ingots. Therefore, as per the case of in the case of Brakes India Limited (supra), we find that without such process the unrefined lead is not marketable to manufacture lead acid battery and the said issue has been examined by Hon'ble Apex Court and the observed as under :- We have heard the learned Counsel for the appellant. The short question is whether brake lining blanks purchased by the appellant when put to the process of drilling, trimming and chamfering can be said to amount to manufacturing within the meaning of Section 2(f) of the Central Excises and Salt Act, 1944. The High Court has examined this question in considerable detail and has then observed in paragraph 15 as under : If by a process, a change is effected in a product, which was not there previously, and which change facilitates the utility of the product for which it is meant, then the process is not a simple process, but a process incidental or ancillary to the completion of a manufactured product. It will not always be safe solely to go by a test as to whether the commodity after the change takes in a new name, though in stated circumstances, it may be useful to resort to it. This may prove deceptive....
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....vely consumed into medical field while ordinary cotton has so many uses. The main chemical properties desired in a surgical dressing are inertness and lack of irritation in use, which is provided by the surgical cotton only if manufactured as per the standards specified. Raw cotton is purified by a series of processes and rendered hydrophilic in character and free from other external organic impurities for use in surgical dressings. Surgical cotton is, thus, completely different from ordinary cotton. 34. ..... ...... 35. It is trite to state that manufacture can be said to have taken place only when there is transformation of raw materials into a new and different article having a different identity, characteristic and use. While mere improvement in quality does not amount to manufacture, when the change or a series of changes transform the commodity such that commercially it can no longer be regarded as the original commodity but recognised as a new and distinct article. In the instant case, after going through the various steps that are carried out by the assessee for getting surgical cotton from raw cotton, we can certainly say that cotton has undergone a change into a new ....
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.... the goods remain exactly the same even after a particular process, there is obviously no manufacture involved. Processes which remove foreign matter from goods complete in themselves and/or processes which clean goods that are complete in themselves fall within this category. (2) Where the goods remain essentially the same after the particular process, again there can be no manufacture. This is for the reason that the original article continues as such despite the said process and the changes brought about by the said process. (3) Where the goods are transformed into something different and/or new after a particular process, but the said goods are not marketable. Examples within this group are the Brakes India case and cases where the transformation of goods having a shelf life which is of extremely small duration. In these cases also no manufacture of goods takes place. (4) Where the goods are transformed into goods which are different and/or new after a particular process, such goods being marketable as such. It is in this category that manufacture of goods can be said to take place. We find that in the said case the issue was whether the activity undertaken amounts to ma....
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....ne by M/s. Gravita Metals. (c) Para 4. of reply received from Hyderabad Commissionerate, letter dated 04.10.2016 4. By comparing these two flow charts, it is to submit that the process adopted by M/s. Supreme Batteries Pvt. Limited which falls under Kothur Division of this Commissionerate for manufacture of Lead appears to be identical to the process adopted by M/s. Gravita Metals. It is being treated as amounting to manufacture and the assessee, M/s. Supreme Batteries Pvt. Limited are discharging duty at the applicable rates i.e. presently @ 12.5%. (d) Extract from reply received from Dankuni Range, Chandannagore, Hooghly, Kolkata, letter dated 07.10.2016 In this connection it is intimated here that M/s. Raj Finoxides Pvt. Limited, Kharial, Dankuni, Hooghly 712136 falls under the Range-III of Dankuni Division of Central Excise. We find that in all the above mentioned cases, in all over the country, the activity undertaken identical to M/s. GM is held to be a process of manufacturing and all the units are paying duty. Therefore, the observation that process undertaken by other units, held to be a process amounts to manufacture, whereas the same process undertaken by M/s. GM....
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....t of M/s. Chandulal K.P. Patel and Company and that the appellants product should be similarly classified under Heading 24.01. While upholding the decision of the Assistant Collector, the Collector did not consider this aspect of the matter at all. The point was again taken specifically in the appellants appeal before the Customs, Excise and Gold (Control) Appellate Tribunal. The Tribunal however dismissed the appeal and said : The appellants have stated that some of the manufacturers who were producing similar goods, were not paying any excise duty on their production. These matters are not before us and it is neither possible nor desirable for us to deal with these matters. Suffice it to say that each and very case has to be examined in the light of our above observations, and it is for the competent Central Excise Officers to come to correct decisions in consonance with the principles of uniformity, equity and justice. 4. It is difficult to understand the reasoning of the Tribunal. The least that the Tribunal could have done in the interest of uniformity was to call upon the Revenue Authorities to explain why they were making a distinction between the appellants product and ....
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....iss-cross patches of vulcanized rubber manufactured by the appellant are classifiable under sub-heading 4008.21. 3. One of the contentions raised by the appellant before the Tribunal was that the classification for identical rubber patches was being done by the Department under sub-heading 4016.99. In support of this submission, the appellant relied upon Order-in-Original No. V/40/3/5/87-VC dated 19th December 1991 passed by the Assistant Collector of Central Excise, Dindigul and Order-in-Original No. V/40/30/91/94-C.E., dated 29th November 1996 passed by the Assistant Commissioner of Central Excise, Coimbatorr, II Division, Coimbatore. Apparently, in the impugned order, the tribunal has not recorded any finding on the said contention. 4. This Court in an identical situation arising in the case of Damodar J. Malpani v. Collector of Central Excise reported in 2002 (146) E.L.T. 483 (S.C.) held that the least the Tribunal could have done in the interest of uniformitywas to call upon the Revenue Authorities to explain why they were making a distinction between the appellants product and that of another manufacturer allegedly manufacturing the same product. This court, in these circ....
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....n notification under Customs Notification No. 96/2009-Cus. We find that M/s. GM were importing unrefined lead and after manufacturing, were exporting refined lead and alloy ingots and availing benefit of Customs exemption Notification No. 96/2009-Cus. Therefore, it is recognised that there is a process of manufacture when making refined lead from unrefined lead even as per the Customs authorities, read with the Import Export Policy, the FTP requires to bring into existence a new product having a distinct name, character and use, basis which the advance licences were granted to M/s. GM. Therefore, it is clear that even from this evidence, the process of making the refined lead and lead alloy ingots amounts to manufacture. Therefore, we hold that the process undertaken by M/s. GM amounts to manufacture in terms of exemption notification under Customs Notification No. 96/2009-Cus. 22. As regards the issue (d) whether the ld. Adjudicating Authority is right to drop the demand on account of Cenvat credit utilised for payment of duty or not. We find that M/s. GM has utilised Cenvat credit of inputs for payment of duty on their final product. The case of the Revenue is that as the goods....