TaxTMI 
TaxTMI 
2023 (7) TMI 299
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....n Power Supply Controllers SC Adopter, Duplex MM/SC Digital MM and selling the same to the manufacturer of excisable goods and the manufacturers. The appellant was maintaining records in RG 23D Accounts and issuing Central Excise Invoices to enable the customers to avail CENVAT Credit. The appellant was selling the goods to their customers after calibration tests and upgradation/configuration of the appliances according to the requirements/specifications of the customers. Such process was not required in all cases. Such process is not amounting to manufacture since the same would not change the nomenclature, character and use of such appliances. This process continued during the period from 2001 to February 2009. The appellant was also submitting the returns as a Dealer. The appellant was also undertaking manufacturing of some dutiable goods but since the value of clearance was below the SSI Limit, no Central Excise Registration was taken. The appellant was experiencing difficulties in their business as a trader because they had to disclose the name of the supplier and price at which the goods were purchased in their Central Excise Invoices. Disclosure of such information, causing ....
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....e purchased as Power Meters and sold also as a Power Meters. The same is also in respect of other goods. They relied on some decisions in support of their contentions. Some items were manufactured by them did not exceed 50(fifty) Lacs. They also relied upon Board Circular dated 12-04-1999 to contend that upgradation is not a process of manufacture. The appellant prayed for dropping the case. They enclosed the Quarterly Returns and ER-1 Returns. 2.3 The appellant was granted Personal Hearing on 05-08-2011 when the appellant appeared before the Commissioner of Central Excise, Kolkata - 'V' Commissionerate and made submission. The appellant was further issued with a notice for Personal Hearing on 30-08-2011 vide letter dated 24-08-2011 in view of the fact that the Ld. Commissioner has been changed and there was requirement of fresh Personal Hearing. The appellant appeared on that date before the Ld. Commissioner, Kolkata - V Commissionerate and found that the earlier Commissioner, Dr. Sanjay Agarwal, who heard the matter resume duties as Commissioner, Kolkata - V Commissionerate, due to change of posting and it was learnt from the Ld. Additional Commissioner that no further Persona....
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....nt Kumar. This is bad in law and the same is well settled in this regard. 3.1 He further submits that Order is also non-speaking for non-considerations of submissions and decisions cited, which seriously affected the decision-making process, resulting violation of principles of natural justice again. 3.2 He further submits that the process of calibration and upgradation required in some cases as per specification of the customer is not amounting to manufacture since it does not emerge any new article and also did not change the nomenclature, character and use of such appliances. The manufacturing licence was taken for business convenience and the payment of duty by itself does not make the process amounting to manufacture. Further, such tests are not done in all cases. He further submitted that as per Note - 6 of Section XVI and the decision in the case of - Indo Asian Fues Gear Ltd. - 1993 (68) ELT 207 (Tri. - Del.) have no manner of application for inferring the process of calibration amounts to manufacture. 3.3 He further submitted that the demand is also barred by limitation. The finding in this regard is contrary to record and not sufficient for establishing the circu....
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.... impugned order. 8. In that circumstances, we hold that non-consideration of the judicial pronouncement submitted by the appellant is in gross violation of principles of natural justice. Therefore, we answered the said issue in favour of the appellant. Issue (b) Whether the activity undertaken by the appellant amounts to manufacture of not ? 9. We find that it is a fact on record that the appellant was engaged in the import as well as acquiring product from the independent market and after going through the necessary calibration tests used to sell those products and passed on the cenvat credit by issuing dealer's invoices. In March, 2009, the appellant surrendered dealer's registration and got themselves registered as a manufacturer. It is also on record that the test report generated by the appellant prior to take the registration as a manufacturer and after taking registration as manufacturer, remained absolutely the same in nature and contents. The process of the imported goods is that the appellant was selling the goods to their customers after calibration tests and upgradation/configuration of the appliances according to the requirements/specifications of the....
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....pellant could not produce evidence of one single case of marketing of refined oil without deodorisation. Instead of that Mr. Pathak produced before us copies of extracts of a book by Alton Bailey of the name "Cottonseed and Cottonseed Products" and another book by the same author of the name, Industrial Oil and Fat, Products" and a third book of the name, "Vegetable Fats and Oil" by G.S. Jamiesom. Mr. Jamiesom's statement does not at all make it clear that refined oil is put on the market without deodorisation. Mr. Bailey appears to have stated in his book on "Industrial Oil and Fat Products" that the term "refining" refers to any purifying treatment designed to remove free fatty acids phosphatides or mucilaginous material or other gross impurities in the oil; it excludes "bleaching" and also "deodorisation". The extracts from this book also do not clearly show that before deodorisation, the oil which has been refined by the purifying treatment, is put on the market. The extract from Bailey's book on "Cottonseed and Cottonseed Products" contains a passage in these words :- "In a discussion of the composition and characteristics of cottonseed oil, three kinds of oil are to ....
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....n as by the application of one or more processes, the raw material undergoes some change. To say this is to equate "processing to manufacture" and for this we can find no warrant in law. The word "manufacture" used as a verb is generally understood to mean as "bringing into existence a new substance" and does not mean merely "to produce some change in a substance," however minor in consequence the change may be. This distinction is well brought about in a passage thus quoted in Permanent Edition of Words and Phrases, Vol. 26, from an American judgment. The passage runs thus :- "Manufacture implies a change, but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation. But something more is necessary and there must be transformation; a new and different article must emerge having a distinctive name, character or use." 15 It is helpful to consider also in this connection the ordinary meaning of the word "goods". For, by the very words of the Central Excises and Salt Act 1944, excise duty is leviable on "goods". The Act itself does not define "goods" but define "excisable goods as meaning" "goods spe....
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....versy that if power is used for any of the numerous processes that are required to turn the raw material into a finished article known to the market the clause will be applicable; and an argument that power is not used in the whole process of manufacture using the word in its ordinary sense, will not be available. It is only with this limited purpose that the legislature, in our opinion, inserted this definition of the word 'manufacture' in the definition section and not with a view to make the mere "processing" of goods as liable to excise duty." 12. Further, in the case of Hindustan Polymers Vs. Collector of Central Excise reported in 1989 (43) ELT 165 (S.C.), again the Hon'ble Apex Court has examined the issue. 13. In the case of South Bihar Mills Limited Vs. Union of India reported in 1978 (2) ELT J336 (SC), the Hon'ble Apex Court has an occasion to examine the issue what is the manufacturing and the Hon'ble Apex Court has observed as under : "14. The Act charges duty on manufacture of goods. The word "manufacture" implies a change but every change in the raw material is not manufacture. There must be such a transformation that a new and different article must em....
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....nts for the purpose of manufacturing vanaspati did not become at any stage "refined oil" as known to the consumers and the commercial community." 14. Further, in the case of Collector of Central Excise, Chandigarh Vs. Steel Strips Limited reported in 1995 (77) ELT 248 (S.C.), the Hon'ble Apex Court has observed as under : "6. It cannot be sufficiently emphasised that when it is the case of the Excise Authorities that an article is the result of a process of manufacture and it is commercially distinct and known as such, it is for the Excise Authorities to lay evidence in this behalf before the first adjudicating authority regardless of the fact that he is an officer of the Excise Department. There should, ordinarily, be no difficulty in establishing that the article is the result of a process of manufacture; in the event of difficulty, it would be open to the Excise Authorities to seek a direction requiring the assessee to set out in writing what it does to obtain the article. Too often, as our experience in this Court and in the High Courts, before the Tribunal was established, shows, lack of evidence has led to the failure of the case of the Excise Authorities and, con....
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....he appellant was well-known to the Department on 13.03.2009 and also on the visit done on 11.12.2009 for examination of Books of Account and other activities undertaken by the appellant and the appellant was also submitting ER Returns to the Department. In that circumstances, the show-cause notice issued on 27.12.2010 by invoking extended period of limitation, is not sustainable. 17. Accordingly, we hold that all the demand against the appellant is barred by limitation. Hence, this issue is also answered in favour of the appellant. 18. In view of the above observations, we do not find any merit in the impugned order and the same is set aside. 19. In the result, the appeal is allowed with consequential relief, if any. (Pronounced in the open court on 04.07.2023) ============= Document 1 52470 Annexure-F Manufacture-Upgradation of computer system and addi- 1634 tion of hard disk not amounts to manufacture Circular No. 454/20/99-CX., dated 12-4-1999 Government of India [From F.No. 154/4/97-CX.4] Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi EXCISE & CUSTOMS CIRCULARS AND CLARIFICATIONS I am di....