The Customs, Excise & Service Tax Appellate Tribunal, Bangalore, ruled that mere supply of additional redundant goods along with SMPS used in MCBs would not result in manufacturing for attracting excise duty.
The tribunal noted that the appellant was initially obtained a dealer’s registration since they were trading on imported rectifiers. During the period in question i.e. December 2004 to February 2005, they cleared SMPS without payment of duty even though along with SMPS, certain addendums had been supplied to the customers.
The bench found that the objection had been raised by the audit during the course of scrutiny of their records subsequent to obtaining their registration as a manufacturer. The period in question is relating to time when they were engaged in trading of rectifiers of SMPS. The relevant invoices against which the SMPS were purchased by the appellant from UTL are enclosed with the paper book.
The tribunal stated that the Revenue could not produce any evidence that supply of additional items along with SMPS purchased from UTL resulted into emergence of a new manufactured product and the activity of assembly carried out by them amounts to manufacture.
Facts
The appellant was initially registered as a dealer and later had taken registration for manufacture of ‘Rectifier Power Supply Systems’ falling under Chapter sub-heading No.85044010 of Central Excise Tariff Act, 1985.
During the course of audit, it was observed that in their Profit & Loss account for the year 2004-05 has shown the sales income as Rs.2,78,69,001/-, out of which Rs.2,46,40,000/- in respect of sale of Rectifier Modules and Rs.32,29,001/- in respect of sale of regular Switchmode Power Supply (SMPS) systems.
On verification of the invoices, it revealed that 39 numbers of SMPS were sold as regular systems during the period December 2004 to February 2005 without discharging duty.
Consequently, show-cause notice was issued to them for recovery of duty of Rs.5,26,973/- on the said 39 numbers of SMPS alleging that these were assembled/manufactured in the factory and cleared during the said period without payment of duty. On adjudication, the demand was confirmed with interest and penalty. Aggrieved by the said order, they filed an appeal before the learned Commissioner(Appeals) who in turn rejected their appeal.
Submissions
Advocate for the appellant submitted that during the relevant period December 2004 to February 2005, the appellant was registered as a dealer and not as a manufacturer.
He has submitted that the SMPS manufactured by M/s. United Telecoms Ltd. and supplied the said goods to the appellant on payment of duty.
He further submitted that on the face of the clear documentary evidences indicating payment of duty by UTL, the demand has been confirmed wrongly.
Conclusion
The tribunal observed that neither investigation initiated nor statements have been recorded from the appellant about the activity of assembling, if any, of the additional items supplied with SMPS as observed in the order.
The bench did not find merit in the order and Consequently, the same was set aside and appeal was allowed with consequential relief to the appellant.
Case Details
Case Name: M/s. Valere Power (I) Pvt. Ltd. v/s The Commissioner of Central Excise, Bangalore
Citation: Central Excise Appeal No. 22 of 2012
Tribunal: CESTAT Bangalore
Coram: Dr. D.M. Misra, Member (Judicial) and Mrs R Bhagya Devi, Member