AMRUT BHAGINI MANDAL (TRADING UNIT) Vs. CCE, PUNE-II
LAWS(CE)-2015-1-67
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on January 14,2015

Amrut Bhagini Mandal (Trading Unit) Appellant
VERSUS
Cce, Pune -Ii Respondents




JUDGEMENT

P.K.Jain, Member (T) - (1.)BRIEF facts of the case are that the appellants are receiving duty paid PVC sleeves in the form of flatten PVC tubes, either whole or cut into pieces of specific sizes. The sleeves are cut into horizontal pieces of required width which are then mounted on moulds of specific shape and dimensions (as per the packing container of the user of such sleeves) and such cut sleeves heated upto a specified temperature to get particular shape and so formed sleeves are thereafter used to seal the caps of plastic containers. Revenue's case is that the above process amounts to manufacture and therefore appellant is liable to pay excise duty. Appellant on the other hand contends that no new commodity has come into existence and therefore the process undertaken by them will not amount to manufacture and therefore no excise duty is liable to be paid. After investigation which included testing of the goods in the Central Excise Laboratory and recording of statement etc., a demand notice was issued which was adjudicated. The adjudicating authority confirmed the demand, interest and penalty under Section 11AC of the Central Excise Act, 1944. Appellant filed an appeal before the first appellate authority who confirmed the contention of the original authority. However, the first appellate authority granted benefit of cum -duty thereby reducing the duty liability, interest and penalty under Section 11AC. Not satisfied with the said order the appellant is before this Tribunal.
(2.)LEARNED Counsel's main argument was that the process of forming is a simple process wherein the shape of the PVC sleeves received by them is changed or formed and these sleeves are thereafter sold by them to their customers who uses the said sleeves for sealing their plastic containers. Learned Advocate contended that no new commodity has come into existence from the said the process. The goods continued to be PVC sleeves only and it is only the shape that has changed. Learned Counsel's second argument was that the goods before forming and as also after the forming continues to be classified under the same heading and therefore the process will not amount to manufacture. Another argument of the learned Counsel was that the department knew about the process in 2000 itself and show -cause notice has been issued in 2003 invoking extended period of limitation and since the whole thing was in the knowledge of the department, extended period of limitation cannot be invoked. Another contention raised by the learned Advocate was that the inputs received were duty paid and therefore they would be entitled to get CENVAT Credit on inputs. This plea was taken by them before the original authority and the first appellate authority but no findings have been given by both the authorities on the said contention. If benefit of CENVAT Credit is given, the demand itself will get reduced substantially. Learned Counsel quoted the following judgements in support of various contentions:-
"1. CCE v. Dhariyal Chemicals : 2014 (309) ELT 727 (Tri.)

2. CCE v. Nagad Narayan Food Products : 2012 (284) ELT 628 (Tri.)

Cce v. GTC Industries Ltd., - : 2011 (266) ELT 160 (Bom.)

3. PSL v. CCE : 2009 (16) STR 247 (Tri.)

4.TRUE Forge Pvt. Ltd. v. CCE : 2003 (159) ELT 1175 (Tri.)

Xi Telecom Ltd. v. CCE : 1999 (105) ELT 263 (A.P.)

5.NEPTUNE Equipment Pvt. Ltd. v. CCE : 2013 (291) ELT 385 (Tri.).

6.RUKMANI Pakkwell Traders v. CCE : 2008 (225) ELT 149 (Tri. Chennai).

Cce & Cus. Gujarat v. Pan Pipes Resplendents Ltd., 2006 (193) ELT 129 (S.C.)"

(3.)Learned A.R. on the other hand contended that it is not a simple process, what is being received is flatten PVC rolls and sometime horizontally cut PVC sleeves. PVC rolls can be used for normal packing of any goods. However, the goods so received are horizontally cut in the required width and thereafter put on the moulds. The moulds are heated to a required temperature and the sleeves are kept on the moulds for specific time wherein the shape of the PVC sleeves gets formed and gets converted into shape required for sealing. Thus the tube is a sealant sleeves while the input is normal PVC sleeves. It was further submitted that the inputs are bi -axially oriented plain sleeves and on formation these gets to fully oriented blown/formed sleeve for the purpose of shrink wrap as is evident from the report of the Chemical Examiner. Thus even the characteristics of the goods changes so also the use changes. Once the sleeves are so formed these cannot be converted into original shape by any process and has to be used only as sealing sleeve on the plastic container. In view of this position a new product with different name, characteristic and use has emerged and the process therefore amounts to manufacture. Learned A.R. also stated that extended period of limitation is correctly invoked as the investigation though started in 2000 continued due to various representations etc by the appellant and could be finally concluded in 2003. He also quoted the judgement of the Hon'ble Gujarat High Court in the case of Cce Surat v. Neminath Fabrics Pvt. Ltd. : 2011 -TIOL -10 -HC -AHM -CX to argue that the knowledge of the department is not relevant for invoking proviso to Section 11A. Learned A.R. also quoted the case before the Authority for Advance Rulings, New Delhi in the case of ELG India Pvt. Ltd. : 2014 (303) ELT 283 (A.A.R.) to argue that even the segregation of scrap of different grades amounts to manufacture. Further the learned A.R. also quoted the judgement of the Hon'ble Supreme Court in the case of Flex Engineering Ltd. v. Cce : 2012 (276) ELT 153 (S.C.) to argue that the process amounts to manufacture.
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