TaxTMI 
TaxTMI 
2018 (3) TMI 167
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....ey were dispatched to the godown/depots for sale. The case of the Revenue is that the process of alignment and testing/inspection does not amount to manufacture and as the appellant has sold all these parts as such after the re-packing, therefore, they are not entitled to avail cenvat credit on all these inputs. It was also purposed that whatever amount they have collected is payable to the department under Section 11(D) of the Act, penalties under Rule 15(2) of the Cenvat Credit Rules, 2004 were also purposed. The matter was adjudicated and it was held that the process undertaken by the appellant does not amount to manufacture, therefore, they are not entitled to avail cenvat credit on engines, pump and base frames. Consequently, the demand was confirmed against the appellant. The proposals made in the show cause notice for deposit the amount collected as duty under Section 11D of the Act was dropped and penalty under Rule 15(2) of the Cenvat Credit Rules, 2004 was also held not imposable on the appellant but penalty under Rule 15(1) of the Cenvat Credit Rules, 2004 was imposed. Aggrieved from the said order, the appellant is before us for confirmation of demand and imposition of ....
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.... Further we find that Note 6 to Section XVI of Central Excise Tariff Act which is extracted here as under: "6. In respect of goods covered by this Section, conversion of an article which is incomplete or unfinished but having the essential character of the complete or finished article (including blank that is an article, not ready for direct use, having the approximate shape or outline of the finished article or part, and which can only be used, other than in exceptional cases, for completion into a finished article or part), into complete or finished article shall amount to manufacture" It is clarifies that the activity undertaken to make the product marketable of un-finished or incomplete article amounts to manufacture. In that circumstances, the activity of inspection and alignment of the pumps, engines and base frame makes marketable as pump set, in that circumstances, the process undertaken by the appellant amounts to manufacture. The same view has taken by this Tribunal in the case of Western Refrigeration Pvt. Ltd. (Supra) wherein this Tribunal observed as under: 4. We have considered the submissions made by both the sides. Appellants have relied upon Note 6 to Section 1....
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....erved as under: 9. Semi finished/incomplete batteries received by the appellant and by the process undertaken by the appellant have become complete batteries/marketable. Therefore, the activity undertaken by the appellant is squarely covered by the section Note 6 of Section 16 of Tariff Act, 1985. Therefore, we hold that activity undertaken by the appellant amounts to manufacture. Therefore, they have rightly taken the Cenvat Credit on semi finished/incomplete batteries received from their sister unit to do the process making them marketable in complete condition. The appellant has succeeded on the issue that whether their activity amounts to manufacture or not. 9. We also hold that as per the decision of Hon'ble High Court in the case of Ajinkya Enterprises (supra) wherein it has been held that if activity does not amount to manufacture, the goods cleared on payment of duty shall amount to reversal of credit. In that situation also appellant is not required to reverse Cenvat credit. 10. In view of the above analysis, we hold that the appellant has correctly taken the cenvat credit, therefore, the show cause notice/adjudication order is set aside. Consequently, the appeal is....
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....packing. (These three items were repacked in a bigger packet under the brand name of Usha Portable Pump Set Powered by Honda Engines). In this regard statement of Sh. R.C. Duria, Manager (Annexure- 'A') was recorded on the spot under Section 14 of the Central Excise Act In his statement Sh. R.C. Duria, Manager stated that he had been working as Manager and looking after production of KPS pumps sets since October, 2006. He further stated that there were three main parts of KPS i.e. Engine, Pump and Frames. On being asked regarding procurement of these parts he stated that the engines were purchase from M/s Honda Siel Power ltd. Greater Noida, the pumps were manufactured and supplied by M/s Cast and Blower Co. Rajkot and M/s Kiran Udyog, Plot No.47, Anand Parbat Industrial Area, New Delhi with Brand name of Usha International ltd. and frames are supplied by M/s Rajshree Industries, Plot No.26, NIT Faridabad. He further stated that the cartons containing these parts are opened and the inspections of the engines were conducted as specified norms and if found O.K., they were again re-packed in the same cartons and the cartons taped. He further stated that the pumps and frames are al....
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....of installation and use. 16. The appellant have relied upon the case laws of Westron Refrigeration Pvt. Ltd (Supra) and Indo Asian Fuse Gear Ltd (Supra). In the latter case, the process carried out was calibration and testing in order to make MCBs a marketable product, which was deemed by the Tribunal to be covered under Note 6 of Section XVI of the Central Excise Tariff Act. In the case of Western Refrigeration Pvt Ltd. (Supra), this Tribunal had accepted the activities in respect of such products as falling under the Note 6 of the Section XVI of the Central Excise Tariff Act, as amounting to manufacture on the basis of the judgments in Indo Asian Fuse Gears Ltd. (Supra). The details of the process included processes like programming, PDI, Leak Testing, Fitting of Caster Wheel, Assembly of conversion kit from Natural Gas to LPG etc. 17. I find that unlike in the case laws relied upon by the appellant, no treatment, labour and manipulation resulting in transformation of inputs takes place in the premises of the appellants. As admitted by Shri. Lokesh Kaul, AGM in his statement dated 12.01.2017, the assembly of P.D. Pumps sets is done by the farmer/user at the place of use. Hence,....