The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata has held that the Appliance Calibration Test and Customised Upgradation/ Configuration Service of appliances does not amount to “manufacture” under the Central Excise Act, 1944 and hence Central Excise duty is not applicable on the said activity as it does not involve the creation of a new product with a different name, character, or use.
The appeal was filed by M/s. M.B. Control & Systems Private Limited against the order of Commissioner of Central Excise demanding central excise duty along with interest under Section 11AB and penalty under Section 11AC of the Central Excise Act, 1944.
The demand was related to the period from 2005-06 to 2009-10 when the appellant was undertaking Appliance Calibration Tests and Customised Upgradation/Configuration Services of various electronic goods, which were then sold to manufacturers and customers.
The appellant had initially taken Dealers Registration in 2001 and mostly imported electronic goods along with procuring some items from the domestic market. After facing difficulties as a trader due to the requirement of disclosing suppliers’ information on Central Excise invoices, the appellant took Central Excise Registration as a manufacturer in March 2009.
The appellant, represented by Shri N.K. Chowdhury contended that the activities undertaken by them are Calibration Test and Customised Upgradation/Configuration Service of appliances which does not come under the purview of central excise duty.
The respondent revenue, Commissioner of Central Excise, represented by Shri A. Roy reiterated the findings and argued that the same process undertaken by the appellant before and after the Central Excise Registration as a manufacturer was amounting to “manufacture” leading to the demand for Central Excise duty on clearances made during the period as a dealer.
The CESTAT held that the activity of Appliance Calibration Test and Customised Upgradation/Configuration Service does not result in the creation of a new product with a different name, character, or use. Therefore, it cannot be considered as “manufacture” under the Central Excise Act, and hence central excise duty does not apply to such activities.
The bench also pointed out that the demand raised against the appellant is barred by limitation. The appellant’s activities were well-known to the revenue as they were regularly submitting Dealer’s quarterly returns and subsequently Manufacturer’s Excise Return-1 (ER-1). Thus, the Show Cause Notice (SCN) issued invoking the extended period of limitation is not valid, the bench held.
In result, the two-member bench consisting of Mr. Ashok Jindal (Judicial Member) and Mr. K. Anpazhakan (Technical Member) set aside the order and allowed the appeal with consequential relief for the appellant.
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