CX - Apart from cutting & slitting of coils, appellants are putting of layer of plastic for improving drawability & applying inter-leaving paper for protection of material for end use application - such activity is ancillary to completion of manufactured product and, therefore, amounts to manufacture: CESTAT
By TIOL News Service
MUMBAI, SEPT 05, 2014: THE appellants are engaged in the activity of cutting and slitting of coils. In addition to that they carried out slitting into desirable width as per the customers' requirement; larger weight coils are cut into smaller weight as per the customers' requirement; that the coils are coated and layered with plastic for improving drawability of, besides applying inter-leaving paper for protection of the material so as to be fit for end use application. The appellant took registration as a manufacturer in the 2006 & thereafter they procured capital goods and inputs for the manufacturing activity.
CENVAT credit availed on these capital goods, inputs and input services is denied by the CCE, Raigad on the ground that the activity undertaken does not amount to manufacture.
The appellant submitted that they had taken Central Excise Registration in the year 2006 by declaring their activity and, therefore, the allegation of suppression cannot be invoked. It is also submitted that registration was granted to their Gurgaon division and there also a SCN was issued holding that the activity undertaken by the appellant does not amount to manufacture but in adjudication it was held otherwise. Inasmuch as a different treatment cannot be given at Raigad in Maharashtra in respect of the same activity of the same manufacturer and, therefore, orders are required to be set aside. Reliance is also placed on the decision in Ajinkya Enterprises - 2012-TIOL-578-HC-MUM-CX to submit that the duty paid by them amounts to reversal of CENVAT credit availed.
The Revenue representative placed reliance on a plethora of case laws and submitted that as per the CBEC circular no. 811/8/2005-CX dated 02.03.2005 it is clarified that the activity of cutting and slitting does not amount to manufacture and that the decision of the Gurgaon Commissioner is not binding on the Adjudicating Authority.
The Bench observed that the appellants are not merely undertaking the activity of cutting and slitting of coils, but they are doing the activity of putting of layer of plastic for improving drawability of material and applying inter-leaving paper for protection of the material so as to be fit for end use application .Furthermore, in view of the definition of manufacture as contained in section 2(f) of CEA, 1944 read with CBEC letter F. No. 4/3/2006-CX.I dated 19.06.2006 the appellant were doing an activity ancillary to completion of the manufactured product and in view of the apex court decision in S.D.Fine Chemicals Pvt. Ltd. - 2002-TIOL-101-SC-CX, the same amounts to manufacture.
The case laws cited by the Revenue representative were distinguished by observing that in those cases the definition of ‘manufacture' has not been examined by taking cognizance of the contents of CBEC letter F.No. 4/3/2006-CX.I dated 19.06.2006 wherein it has been clarified that there is no word “and” between Section 2(f)(i) and 2(f)(ii).
Holding that the Bench concurs with the view of the Commissioner of Central Excise, Delhi III, Gurgaon and that the extended period of limitation cannot be invoked and in view of the Bombay High Court decision in Ajinkya Enterprises, the orders were set aside and the appeals were allowed.
(See 2014-TIOL-1677-CESTAT-MUM)
