TaxTMI 
TaxTMI 
2026 (10) TMI 1947
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....e kits were cleared to various buyers/ dealers. According to Audit Officers, appellant has not paid central excise duty is payable by appellant on clearance of LPG/ CNG kits to various dealers. The statement of Shri Upendra C Shah, Manager (Accounts) of the appellant firm was recorded by the officers on 18.01.2011, wherein, he explained that the company procures various duty paid parts such as Reducer, Solenoid Valve, Tank, Switch, High / Low Pressure Pipe, Filling Pipe, Filling Valve etc. and non duty paid parts such as Nuts, bolts, Pipes, Tank Stands etc. After conducting investigation, a show cause notice dated 26.04.2012 was issued to appellant proposing- (i) classification of LPG/ CNG kits under CTH 8409 of the Central Excise Tariff Act, 1985, (ii) confiscation of LPG/CNG kits valued at Rs.16.56 Crs. cleared during the period 2007-08 to 2009-10 under Rule 25 of the Central Excise Rules, 2002, (iii) demanding central excise duty of Rs.2,37,06,413/- on above clearances made during above period under proviso to Section 11A(1)/ Section 11A(4) of the Central Excise Act, 1944 along with interest under Section 11AA and (iv) penalty under Section 11....
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....d invocation of extended period against them whereas, they had informed the proper Central Excise Officer in October, 2006 by submitting a letter that the company was selling LPG and CNG Automobile Conversion Kits, which activity does not amount to manufacture. As they had explained all the details to Revenue Authorities in the aforesaid letters, there was nothing on their part which was suppressed. On the other hand, Central Excise Officers never informed/ clarified to the appellant that the activity was amounting to manufacture under Section 2(f) of the Act and they were liable to pay the appropriate excise duty. They had also brought the contents of the letter dated 26.08.2006 to the notice of Audit Officers which supports their contention that extended period is not invokable. 2.4 Hon'ble Apex Court in the case of Padmini Products reported at 1989 (43) ELT 195 (SC) and in case of Chemphar Drugs & Liniments reported at 1989 (40) ELT 276 (SC) has held that if assessee was under a bonafide impression that it was not duty bound to disclose such information, it would not be a case of suppression of fact. They also rely on the decision of Hon'ble Supreme Court in the case of Conti....
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....Rs. 1,64,68,644/-. However on 25.03.2013 the Deputy Commissioner issued another letter rectifying the error of mentioning the incorrect amount of admissible CENVAT credit in previous letter dated 14.03.2013 and confirmed that the admissible CENVAT Credit was Rs. 1,70,17,818/- for the period. We further observed that in the present matter appellant also claimed the benefit of cum-duty price which was denied by the learned Commissioner on the ground that no evidence of inclusion of excise duty in the price charged from the buyer has been produced by the Appellant before him. However we find that the benefit of the same is liable to be extended to the appellant. In the case of National Plywood Industries Ltd.-[2000 (125) E.L.T. 986 (Tribunal) Supra the benefit of cum duty was extended to them and the price was considered to be cum-duty prices. The relevant observations made in para 8 of the said order are being reproduced below:- "8. The appellants had pleaded that in the facts and circumstances of the case the benefit of Modvat credit should be extended in their favour if the demand of duty is to be enforced and that the procedural requirements could not be followed at the a....
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....de novo adjudication process may be completed within a period of three months from the date of this order after allowing opportunity of hearing to the appellant. 5. The impugned order is set aside and appeals are allowed by way of remand to the adjudicating authority." 4. The appellant filed an appeal against the above order before Hon'ble Gujarat High Court which vide order dated 16.07.2026 in Special Civil Application No.17604/2023 set aside the Tribunal's order dated 28.06.2023 and remanded the matter to CESTAT for deciding the party's appeal a fresh, on merits after hearing both sides. Relevant para 5, 6 and 7 of the above decision are reproduced below:- "5. The petitioners filed the Excise Appeals Nos.10532 and 10533 of 2013 challenging the actions of the respondents in levying the excise duty by construing the process undertaken by the petitioners as manufacture within the meaning of Section 2(f) of the Act. The petitioners were subjected to the proceedings by issuance of show cause notice dated 26.04.2012 seeking recovery of duty for the period from 2007-2008 to 2009-2010 along with interest under Section 11AB of the Act and also for imposing the penalty....
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....hat we have not examined the matter on merits with regard to the claim of the petitioner. All the rights and contentions of the respective parties are left open." 5. During arguments, learned Advocate mentioned that the very same issue has been decided by CESTAT Delhi in the case of M/s. CEV Engineering Pvt. Ltd. (cited supra), wherein, it has been held that procuring different components (both imported as well as indigenously purchased) and packing them and selling them as CNG kit was not 'manufacture' under Section 2(f) of the Central Excise Act, 1944 and no excise duty was chargeable on such activities. Upon challenge by Revenue, Tribunal's above decision was upheld by Hon'ble Supreme Court by observing that the appeals are devoid of any merit and liable to be dismissed. In CEV Engineering case, unit was selling CNG kits to individual customers and also installing in the customer's vehicles. They were also selling CNG kits to independent traders. Learned Advocate argued that while deciding CEV Engineering Pvt. Ltd. case, the Tribunal relied on the decision of Hon'ble Andhra Pradesh High Court in XI Telecom Ltd., decisions of Tribunal in Dalmia Industries case and in TI Diamon....
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....ed copies of the letter issued by the Deputy Commissioner dated 14.03.2013 and 25.03.2013 regarding admissibility of the Cenvat Credit amount. 6. Opposing the pleadings of the learned Advocate, learned AR Shri Rajesh Kumar Agarwal submitted that the appellant was purchasing duty paid goods such as Reducer, Solenoid Valve, Tank, Switch, High / Low Pressure Pipe, Filling Pipe, Filling Valve, Nut, Bolt, Tank Stands etc. and cleared LPG/ CNG conversion kits which are distinctly known in the trade and have a distinct name, character and use. The appellant selects components suitable for a particular car model and puts them in a box, affixes MRP and their brand name and then marketing it as CNG/ LPG kit. The tank and it's stand is not put in the box and supplied separately. He submits that under Section 2(f) of the Central Excise Act, "Manufacture" includes processes incidental or ancillary to completion of manufactured product and therefore, assembly of components in a box also amounts to manufacture which have acquired a separate commercial identity. The second test for manufacture is that the inputs should be transformed in to a new and different article having distinct name, chara....
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....support his case that CNG/ LPG kits cleared by the appellant amount to manufacture and are leviable to excise duty. He mentions that in this case, appellant did not sell bought out components on random basis but carefully selected the components, grouped them as per specific vehicle requirement in a box with description as CNG/ LPG conversion kit, affixed the brand name and MRP before their clearance. This establishes a distinct commercial identity of the cleared goods beyond individual components. He also pleads that "Parts, Components and assemblies of automobiles" falling under any chapter attracted MRP based valuation as per Sr. No. 107 of the Notification No 14/2008-CE (N.T.) dated 01.03.2008 as amended by Notification No 49/2008- CE (N.T) dated 24.12.2008. 7. We have heard both sides. The issue to be decided in this case is whether various bought out items such as Reducer, Solenoid Valve, Switches, High / Low Pressure Pipe, Filling Pipe, Filling Valve, Nuts, bolts, Pipes etc., kept in a box and marketed by the appellant as LPG/ CNG kit, duly affixed with brand name, printed MRP and car model to which these were meant would amount to manufacture? 7.1 Learned Advocate has....
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.... of similar activity the act of making cable jointing kit, Hon'ble High Court of Andhra Pradesh in case of XI Telecom Ltd. (supra) has held that making cable jointing kit does not amount to manufacture. Similarly the Tribunal in the case of Dalmia Industries v. CCE (supra) held that collecting bottles, feeder nipples and bottle lids from diverse sources in the market, packing them in a combine pack after sterilization and selling the product under name of "Milk Care Designer Feeder" would not amount to manufacture and this judgment of the Tribunal has been affirmed by the Apex Court. Similarly, the Tribunal in the case of TI Diamond Chain Ltd. (supra) has held that procuring sprockets, and packing them after testing and branding along with automotive chains and connecting links in a kit does not amount to manufacture, even if various items of the kit after being procured from different sources had been subjected to testing and branding and this judgment of the Tribunal has also been affirmed by the Apex Court. The ratio of the above judgments of the Tribunal, Hon'ble Andhra Pradesh High Court and of the Apex Court is squarely applicable to the facts of this case. The judgment of th....
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....stinct name or character or use at the end of the process. The decision in Servo-Med (supra) clarified that both the essentials i.e., the transformation test and the marketability test must be fulfilled for an activity to amount to "manufacture". That means, they must be read cumulatively. In Alupro case, Hon'ble Apex Court in para-76 noted that, "From the reading of the aforesaid exposition, there is no doubt that by cutting the Aluminium Composite Panels (ACPs) into various sizes and routing them, the ACPs are undergoing a process which brings a change. However, it is only when a change or series of changes result in a new and distinct goods that manufacturing is said to take place. Even after undergoing processing, if goods retain their substantial identity, they would be processed and not manufactured in terms of Section 2(f) of the Act, 1944." Second Limb is that the transformed goods are marketable as distinct goods. At para-97, Hon'ble Apex Court in the said case concluded that- "(iv) The process of making superficial changes in order to facilitate the use of goods, which do not alter the fundamental properties of the goods, does not create a distinct pr....