Activity of Providing BPL Kits would not amount to “Manufacture”, Excise Duty not Leviable: CESTAT [Read Order]

Quashing the demand of excise duty on the activity of providing BPL Kits, the Delhi bench of the CESTAT observed that to levy central excise duty on any goods, the same should have been produced or manufactured in India.

The division bench of the Tribunal held so while hearing an appeal by M/s TGL Enterprises Pvt Ltd who is engaged in the activity of providing BPL kits in order to provide electricity connection to below poverty line (BPL) households. The present Kit supplied by the appellant neither controls nor distributes electricity.

The Revenue entertained a view that the assessee is liable to Central Excise Duty on such BPL kits cleared by them to their clients. Proceedings were initiated against the appellant for classifying the BPL kit under CETH 85371000 and to demand a Central Excise Duty and Both the parties filed an appeal against the orders.

The Tribunal found that Revenue is pleading for the confirmation of full duty demand on all types of goods cleared by the appellant-assessee by classifying the same under tariff item 85371000.

The Tribunal also stated that assessee cleared, at least, part of their sales in original bulk packing as procured by them from the market/manufacturers without any process undertaken by them.  The tribunal also added that to levy central excise duty on any goods, the same should have been produced or manufactured in India and the term manufacture is clearly explained in Section 2(f) of the Central Excise Act, 1944.

The scope of the term “manufacturing” has been a subject matter of various decisions by the Apex Court which were also stated by the tribunal. The Revenue contends that the assessee assembled various electrical components and manufactured BPL Kit which should be liable to duty under heading 85371000. Regarding that bench declared that mere putting together of two or more items by itself will not make an assembly of a new item and that contention too rejected.

Finally while considering all aforesaid facts the bench declared that the appellants have not manufactured any dutiable item attracting central excise levy during the material time and found impugned order is not sustainable in so far as it confirms certain duty liability on part of the clearances, on the assessee.