Goods Manufactured meant for use by Other Manufacturers also, can’t be subjected to Levy of Central Excise Duty: CESTAT [Read Order]

The Customs, Excises, Service Taxes Appellate Tribunal (CESTAT) held that the goods manufactured meant for use by other manufacturers also, cannot be subjected to levy of central excise duty under Section 4A of the Central Excise Act, 1944.

The appellant, T.M. Tyres Limited is engaged in the manufacture of Butyl rubber inner tubes, classifiable as excisable goods, under Central Excise Tariff Act, 1985. The appellant discharges central excise duty liability on the assessable value determined, under Section 4 of the Central Excise Act, 1944. The Central Government notified certain goods, as the goods to which the provisions of Section 4A shall apply, which was by inserting “parts, components and assemblies of automobiles” in order to fall under the provisions of Section 4A.

Based on the notification, the department initiated show cause proceedings against the appellants to deposit the Central Excise Duty under Section 4A based on the MRP rates. The matter was adjudicated by the impugned order, wherein the Commissioner of Central Excise has confirmed differential central excise duty under section 11A of the Act along with interest and also imposed penalty under Rule 25(1) of the Central Excise Rules, 2002.

The authority consisting of a Judicial Member S.K. Mohanty and a technical member P. Venkata Subba Rao held that It cannot be said that the product manufactured by the appellant is exclusively meant for the automobile industries for use as parts and components and are not capable for use in other purposes.

“Since the goods manufactured by the appellant are meant for use by other manufacturers also, in our opinion, such manufactured goods cannot be subjected to levy of central excise duty under Section 4A of the Central Excise Act, 1944,” the tribunal observed.