PRAGATI SILICONES LTD. Vs. CCE

JUDGEMENT

(1.) M /s. Pragati Silicones Ltd., have challenged confirmation of demand of Central Excise duty and imposition of penalty on them by the Commissioner (Appeals) under Order -in -Appeal No. 26/04 dated 8.1.2004.

(2.) SH . R.C. Gupta, learned Advocate, submitted that the appellants, besides manufacturing motor vehicle parts, also undertake the job work of electro -plating; that they received the duty -paid plastic moulding for electroplating from certain component suppliers under the job work challans under Rule 4(5)(a) of the Cenvat Credit Rules, 2002 (Earlier Rule 57F(4) of Central Excise Rules, 1944); that though they were not required to pay any Central Excise duty on the goods cleared after doing the job work, they were clearing the electroplating mouldings after payment of Central Excise duty only on job charges; that now the demand of duty has been confirmed and penalty has been imposed on them on the ground that the value of the plastic components should have been included in the assessable value for the purpose of discharging the Central Excise duty. He, further, submitted that the process of electroplating of the plastic components does not amount to manufacture as no new product comes into existence; that, further, when the goods are received under Rule 4(5) of CENVAT Credit Rules, 2002, no duty is required to be paid by the job worker. We also heard Mrs. K.A. Mishra, learned S.D.R.

(3.) WE have considered the submissions of both the sides. Without going into other aspect of the matter, we allow the appeal filed by the appellants as the process of electroplating undertaken by them does not amount to manufacture since no new product comes into existence. It is well settled law, since the decision of the Supreme Court in the case of Union of India and Ors. v. Delhi Cloth & General Mills Co. Ltd. and Ors. 1977 ELT (J199) : 1973 April Cen -Cus 56 (SC) : ECR C 216 SC that manufacturing must lead to emergence of new commercial product different from the one with which the process started. As in the present matter, no new different commercial product having new name, character or use emerges as a result of electroplating, there is no manufacture. Hence, no duty is liable to be paid by the appellant. We, therefore, allow the appeal. (Operative part of order pronounced in open Court on 11.8.2004).