- (1.) ALLOWED . Amended substantial questions of law are taken on record. CEA No.3 of 2014
(2.) THIS appeal has been preferred by the assessee under Section 35G of the Central Excise Act, 1944 (in short, "the Act") against the order dated 26.6.2013, Annexure A.4 in Appeal No.3737/2005 passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (in short, "the Tribunal"), claiming following substantial questions of law: - i) Whether the Hon'ble CESTAT erred in holding that process carried out by appellant amounts to 'manufacture'. The appellant undertook only the process of polishing through buffing processes? ii)Whether Hon'ble CESTAT erred in rejecting the contention of the appellant that there are no change in name, use and characteristics before and after employing the processes by them and process employed by them does not amount to manufacture as per section 2(f) of the Central Excise Act, 1944? iii)Whether Hon'ble CESTAT was justified in demanding duty involving extended period under Section 11A of the Central Excise Act, 1944 when issue relates to interpretation of law and technicality of examination? iv)Whether demand of Central Excise duty under extended period is justified when penalty has been set aside?
(3.) A few facts relevant for the decision of the controversy, as narrated in the appeal may be noticed. The appellant -assessee is engaged in the manufacture of valve guides falling under heading 8409 of the Central Excise Tariff Act, 1985. It is holding Central excise registration. During the years 1998 -99 to 2000 -01, the assessee purchased value seats in manufactured condition and carried out only minor processes of polishing through buffing process. The appellant after employing the processes of polishing and packing cleared the same valued at Rs. 7,75,499/ - without payment of duty. The assessee did not pay the duty on the said goods as it did not employ any processes which tantamount to manufacture as per section 2(f) of the Act. Show cause Notice dated 11.12.2002, Annexure A.1 was issued to the assessee alleging that it purchased value seats from M/s Davindra Engg. Works, Village Atta, PO Goraya in a semi finished condition and sold the same after processing without payment of duty amounting to Rs. 1,01,183/ -. The assessee submitted reply to the notice dated 13.1.2003. The Assistant Commissioner, Central Excise Division, Phagwara vide order dated 13.2.2004, Anenxure A.2 dropped the show cause notice proceedings. It was held that semi finished goods was a complete item in itself and could be used as it was. It was further held that the processes carried out by the assessee did not amount to manufacture. The revenue filed appeal before the Commissioner(Appeals) Jalandhar. Vide order dated 28.4.2005, Annexure A.3, the Commissioner (Appeals) allowed the appeal and demand of duty of Rs. 1,01,183/ - alongwith interest was raised against the assessee. The penalty of equal amount was also imposed under section 11AC of the Act. Aggrieved by the order, the assessee filed appeal before the Tribunal. Vide order dated 26.6.2013, Annexure A.4, the Tribunal dismissed the appeal, upholding the order passed by the Commissioner (Appeals). Hence the instant appeal by the assessee. The primary issue that arises for consideration in this case is whether the activity of grinding/buffing/polishing and packing of valve seats which was undertaken by the assessee amounted to manufacture or not. If it amounted to manufacture, the assessee was liable to pay Central excise duty during the relevant period.;