TaxTMI 
TaxTMI 
2023 (12) TMI 901
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....n their factory, cleared the complete layered flux cored wires in domestic market on payment of appropriate Excise Duty. The Appellant had paid Countervailing Duty ("CVD") and additional Special Excise Duty on the imported Flux cored wires and availed CENVAT credit of these duties which were then utilised while paying duty on removal of finished goods. The present dispute relates to availment of aforesaid credit. It is the case of the Department that process under taken on the aforesaid unlayered flux cored wire does not amount to manufacture. 4. A search operation was carried out on 28.10.2016 at the factory premises of the Appellant during which the officers formed a view that the process undertaken on the unlayered flux cored wire did not amount to manufacture since the goods imported and subsequently cleared by the Appellant were classified under the same tariff heading. The Department therefore alleged that the Appellant had wrongly availed CENVAT credit of duty paid on imported goods. To record the search proceedings a panchnama was drawn at the factory premises of the Appellant and statements were recorded of the Appellant's official namely Mr Pradip Sahu, Mr Umesh Patel,....
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....rovided at the time of hearing. Another interesting aspect that needs to be recorded is that statement of Mr. Shinde, which forms part of the Panchnama, was not recorded under Section 14 of the Central Excise Act, and the same obviously is not a part of the SCN or the statement of demand, as the Panchnama was recorded after the issuance of the said two documents and after the remand order of this Tribunal. 10. Pursuant to the remand order, the adjudicating authority passed the Order-in-Original No. DMN-EXCUS-000-COM-054-055-20-21 dated 31.12.2020 ("Impugned Order") wherein the Respondent rejected the contention that process undertaken on the imported goods amounts to manufacture, however allowed the adjustment of duty paid against the demand of CENVAT credit. The Respondent while passing the impugned order has observed that the Appellant failed to produce any evidence that semi layered goods were converted to complete layer and further the Appellant has not produced any evidence to show that goods imported as such were not marketable. The Impugned order has been passed against the Appellants on both merits and limitation. 11. In effect, vide the impugned order, the Respondent....
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.... Once the activity was accepted as manufacture, credit could not be denied. That statement of Mr Shinde cannot be relied for following reasons: a) The statement is beyond the scope of show cause notice dated 08.05.2017 and statement of demand dated 30.01.2019, as the said statement has not been recorded during investigation which led to issuance of the aforesaid show cause notices b) Mr. Shinde was not the employee of the Appellant during the period in dispute; c) the statement was not recorded under Section 14 of the Central Excise Act,1944 but as a part of panchnama which is not permissible under law. For a statement to have evidentiary value the same should be recorded under section 14 of Central excise Act,1944 ; d) statement was contrary to chartered engineer certificate dated 07.11.2017 who is an expert in the field. It is settled law that in case of conflict between the documentary evidence and oral evidence then the weightage needs to be given to documentary evidence. Hence, the chartered engineer certificate will prevail over the statement of Mr Shinde. That demand is barred by the limitation as the ingredients to invoke extended period of limitation is a....
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....o 170) was submitted by the Appellant during the hearing. 14. The Shri Tara Prakash, learned Deputy Commissioner (AR) at the time of hearing has reiterated the findings of the Impugned Order. He also placed reliance on the judgment in the case of CCE, Chandigarh vs. North India Pre-stressers reported at 2013 (290) ELT 680 (Tri. Del.). 15. We have heard both sides at length. We have perused the copies of documents available on record including the SCN, Statement of demand, impugned order and also the submissions made by the Appellants both in Appeal memorandum and Written submissions filed by them post hearing on 09.11.2023. 16. The following questions for our consideration: (i) Whether the activity of converting unlayered semi finished flux cored wire 400-700mm into layered flux cored wire 800-100mmamounts to manufacture? (ii) Whether Cenvat credit can be denied once the duty has been paid and collected on the final product? (iii) Having collected the duty on final product, can the department be permitted to argue that activity did not amount to manufacture? (iv) Whether the Respondent has passed the Impugned Order beyond the scope of sh....
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...., there are other documents and literature which have established that the activity amounts to manufacture which has not been produced and also not considered by the lower authority. In this position we are of the view that the matter needs to be considered afresh." 19. It is clear from the above the adjudicating authority was expected to decide the case afresh after looking into the provisions of Central Excise Tariff more particularly Note 10 of Section XV. We note that the adjudicating authority instead of deciding the case on the basis of allegations made in the SCN, has gone ahead and carried out a Panchnama in the factory of the Appellant. Apart from the above, during the recording of the Panchnama, Statement of one Mr. Ajay Shinde who introduced himself as the Plant head has been recorded as a part of the Panchnama. It is important to record that his statement has not been recorded under Section 14 of the Central Excise Act but is made as a part of the Panchnama. Also, no question was asked to the said Mr. Shinde on whether he was part of the company during the period of dispute. Whether the department can be permitted to better their case after the issuance of SCN and be....
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.... customers in India. The flow chart of production mechanical operation process is as per Annexure-1. Details of the Machinery used for mechanical processes. 1. Forming and Flux Filing - Forming Mill - Make: MTM, Italy 2. Pre Drawing - 3+1 Block Wire Drawing Machine - Make: WWM, Italy 3. Stem Winder Machine - Made in India 4. Re-drawing - 8 Block Wire Drawing Machine - Make: WWM, Italy 5. Winding on DIN800 Bobbin - Make: WWM, Italy 6. Unwinding Machine - Make: WWM, Italy 7. Layer Winding and Cast & Helix Control - Make: WWM, Italy Industries Catered : The final end product namely Flux Cored Arc Welding Wires are widely used for various industries namely Pipeline, Oil & Gas, Ship Building, Railways, Construction and Infrastructure, Nuclear Energy, Power, Automotive & Defence Sector in welding application. The catalogue on this continuous welding consumables (Wires and Fluxes) being manufactured along with their product name and AWS code is attached as per Annexure 2. Flux Cored Wire Advantages : The Flux Cored Wire (FCW) many advantages, including excellent weld metal quality, ....
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....oods in the Section or Chapter notes of the Fourth Schedule as amounting to manufacture; or iii. which, in relation to the goods specified in Third Schedule involves packing or re-packing of such goods in a unit container or labeling or re-labeling 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; 24. While 2(f)(i) provides that any activity incidental or ancillary to the completion of a manufactured product will be treated as Manufacture, sub clause (ii) of Section 2 (f) of the CEA, 1944, is a deeming fiction as per which any activity specified in relation to any goods in the Section or Chapter notes of the Fourth Schedule as amounting to manufacture will be deemed to be treated as manufacture. 25. Undisputedly the final product cleared by the Appellant viz. Flux Cored Wire falls unde....
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.... the adjudicating authority has further relied upon the meaning of term "drawing" from Wikipedia. We find the aforesaid approach of the Adjudicating authority is strange if not erroneous. 28. In our view the adjudicating authority is not an expert to challenge an expert opinion. If he desired to do so he ought have, challenged the same by countering it with another expert opinion. He also could have cross examined the chartered engineer to satisfy his doubts or question the correctness of the report, which was given after thorough examination of process carried out by the Appellants. The said view has been settled by the Hon'ble Supreme Court in Commissioner v/s International Tobacco Co Ltd reported in 2008 (231) E.L.T 207 (S.C). Further Reliance placed on Wikipedia itself is erroneous in view of law settled by Hon'ble Supreme Court in Ponds India reported in 2008 (227) E.L.T. 497 (SC). In fact in our view, not relying on Chapter Note 10 of Section XV shows that the said certificate has been issued with independent application of mind and has been provided strictly basis the manufacturing activity carried out by the Appellant. The chartered engineer in our view has nothing to do....
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....mendment in Rule 16 is aimed at facilitating "wire drawing units", which had paid a sum equal to the duty leviable on "drawn wire" after availing the credit of duty paid on inputs for the said period. It is aimed at regularizing availment of credits at two stages and payment of an amount representing duty at one stage. The purpose of the amendment is to regularize credit taken at the input stage (on wire-rod), credit taken by the downstream user of "drawn wire" and the amount paid as central excise duty on clearance of drawn wire. In other words, wire drawing units, which had paid a sum equal to duty leviable on drawn wire, would be eligible to avail the credit of duty paid on inputs and utilize the same for payment of duty on drawn wire for the period of amendment. The sum paid by the wire drawing unit in such cases will be treated as duty and shall be allowed as credit to the buyer of drawn wire, in terms of the amendment. This amendment would not create any additional liability on any wire drawing unit which did not pay duty on drawn wire during the period of amendment. ........ It can be seen from the above reproduced Circular that in para 4.4 the Board has sp....
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...., they contain a natural spring-back characterized by cast and helix. Cast and helix cause the wire to rub on the inside of the contact tube. The slight bend in electrode wire ensures positive electrical contact between the contact tube and filler wire. Improper wire cast and helix reduces weld quality and adds to direct labour and factory overhead costs." 34. From the above prima-facie it appears to us that the aforesaid activity/process is undertaken by the Appellant as proper cast, helix and layering are important for weld accuracy and improper wire cast and helix reduces weld quality and adds to direct labour and factory overhead costs. The said process independently also enhances the performance of the Final product manufactured by the Appellant and therefore even if it is assumed that the allegation made by the department that the input in its imported form is a fully manufactured product is accepted to be true, even then the process undertaken by the Appellant on the imported goods being incidental to the completion of the manufactured goods and would amount to manufacture in terms of Section 2(f)(i) of the CEA, 1944. The process carried out by the Appellant enha....
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....the activity does not amount manufacture is also flawed and contrary to law settled by Hon'ble Supreme Court in Laminated Packings (P) Ltd. Versus Collector Of C. Ex. [1990 (49) E.L.T. 326 (S.C.)]wherein the Hon'ble Supreme Court has held that duty paid kraft paper and the resultant laminated kraft paper belonging to the same Tariff Entry is not relevant because both of them are different identifiable goods known as such in the market. The Hon'ble Court further in Para 5 and 6 has held that if duty has been paid on the kraft paper then the benefit or credit for the duty paid would be available to the manufacturer under Rule 56A of the Central Excise Rules, 1944. 38. While we have held the above, it will be important to deal with another important issue i.e. whether it was open for the adjudicating authority to introduce a new document after the issuance of SCN and first stage of remand. 39. In the first round of litigation, vide order dated 02.04.2019 the case was remanded back for fresh adjudicating by this Tribunal with a specific direction that the vital argument on applicability of Note 10 to Section XV of CETA has not been considered. 40. The Respondent in compliance ....
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....artment has tried to circumvent the provisions of Section 11A which permits issuance of show cause notice for a maximum period of 5 years from the date of issuance of Notice in case of fraud suppression or wilful mis-statement. Show cause notice dated 08.05.2017 was issued demanding cenvat credit for the period 2012-2017 by invoking extended period of limitation of 5 years. The Respondent by placing reliance on the Panchnama dated 05.06.2020 has totally introduced a new case and if the said document is admitted as evidence the period for which demand was sought to be confirmed will go much beyond the statutory period of 5 years. The same is beyond the provisions of Central Excise Act and we therefore hold that the Respondent had no jurisdiction to change the case made out in original show cause notice by introducing a new document post issuance of the same. 43. Having held the above, we are of the view that the said Panchnama cannot be relied upon in any event. Admittedly the same records statement of Mr. Shinde who joined as Plant head post period of dispute. The said argument of the Appellant has not been disputed by the department. The department therefore could not have reli....