Packing/repacking of parts of a device is not manufacturing u/s 2(f)(iii) of Central Excise Act: CESTAT sets aside Excise Duty Demand [Read Order]

The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has ruled that no excise tax is due since the packing and repackaging of vibrator compactor parts does not constitute manufacturing under Section 2(f)(iii) of the Central Excise Act.

Case New Holland Construction Equipment (India) Private Limited, the assessee/appellant, is engaged in the manufacture of earth moving construction equipment: Wheeled Tractor Loader Backhoe and Vibratory Compactor. These two shall be collectively referred to as construction equipment. They were classifiable under Excise Tariff Item 7 8430 50 90 of the First Schedule to the Central Excise Tariff, 1985.

The appeal was for setting aside that part of the order dated 27.02.2012 passed by the Commissioner, that while adjudicating four show cause notices confirms the central excise duty demand against the appellant and also orders for recovery of interest and also imposes penalty. The order also confiscates the seized goods under the provision of rule 25 of the Central Excise Rules, 2002 , but, as the goods were provisionally released, redemption fine has been imposed upon the appellant. The order also confiscates the goods manufactured and cleared by the appellant without payment of duty but as the goods were cleared redemption fine has been imposed.

M/s Shri Balaji Tractor House, the Appellant No. 2 is only a warehouse where packing/repacking of spare parts of construction equipments, namely, seal, hose assembly, primary element assembly, gear pump were undertaken.

A show cause notices was issued on a common premise that the goods are parts of Motor Vehicles, which are Automobile, and so all such parts would fall within the ambit of Serial No. 100 of the Third Schedule to the Excise Act which covers “parts, components and assemblies of Automobiles” and accordingly, the activity of packing / repacking of such parts, carried out by the assessee would amount to manufacture under section 2(f)(iii) of the Central Excise Act.

Tribunal Cannot Interfere with Decision of Original Authority w/out Evidence, Illogicality, or Procedural Impropriety: CESTAT [Read Order]

The Commissioner confirmed the entire demand of excise duty along with interest and penalty upon all the assessee. Redemption fine was also levied on the goods found lying in the factory premises of the assessee at the time of search.

The sole issue that arises for consideration in respect of the period prior to 29.04.2010 is whether the two constructions equipments namely WTLB and VC are „Automobiles‟, because only then the activity of packing/repacking of parts of the WTLB and VC would amount to manufacture under section 2 (f) (iii) of the Central Excise Act.

The two member bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) ruled that “the amended Serial No. 100A that was inserted in the Third Schedule would not cover Vibrator Compactors as they are classifiable under ETI 8430 50 90, which is not included in Serial No. 100A. Therefore, no excise duty would be leviable on the packing/repacking of parts of such Vibrator Compactor.”

The Tribunal, while allowing the appeal, observed that the period involved in all the three appeals is from 01.06.2006 to 30.06.2011. No excise duty would be levied on the packing/repacking of the parts of the two construction equipment prior to 29.04.2010 and set aside the impugned order passed by the Commissioner.

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