FACTS:
The appellant, during the course of manufacture of electrical and electronics equipments, also manufactured machinery in the nature of testing equipments to test the final products of the assessee company costing Rs. 31,27,405/-. A show cause notice was issued to the appellant directing them to show cause as to why central excise duty should not be levied on it along with interest and penalty. The appellant submitted its reply. It was, inter alia, contended that under Section 3 of the Central Excises and Salt Act, 1944 the imposition of excise duty is on the act of manufacture or production and when there is no manufacture or production, there cannot be any duty so leviable, particularly, when the aforesaid processed material was not marketable.
The Additional Collector, Central Excise after consideration of the contentions confirmed the demand of duty amounting to Rs. 4,92,566.28 and imposed a penalty of Rs. 50,000/- holding that in view of the documentary evidence and the balance sheet it had been proved beyond doubt that they had manufactured plant and machinery/testing equipments worth Rs. 31.26 lacs. Being aggrieved by the said order, an appeal was filed before the Collector (Appeals), who dismissed the said appeal. Still aggrieved, the appellant filed an appeal before the Customs, Excise & Gold [Control] Appellate Tribunal which was also rejected.
Thereafter, the appellant has filed the present appeal.
ISSUE FOR CONSIDERATION:
This appeal seeks to challenge the judgments and orders passed by the authorities including the CEGAT demanding duty of Rs. 4,92,566.28 from the appellant on the plant and machinery including testing equipments manufactured by them.
ARGUMENTS BY THE APPELLANT:
The appellant argued that they have their own research and development wing in which trials and experiments are undertaken from time to time for the developmental jobs based on latest technology and that during the course of such trials and experiments they bought out various parts and components which were assembled by them and that after the research is done the same were disassembled and, therefore, such research and development process undertaken by them cannot be said to be manufacturing process by any stretch of imagination. It was also submitted by the counsel that the aforesaid equipments were not taken out from the factory premises of the appellant and rather they were dismantled and, therefore, the respondent acted illegally in levying tax on the said goods. Further, the department was also not entitled to invoke the extended period of limitation inasmuch as there was no cause for invoking the provision of extended limitation.
HELD:
The apex Court held that once the appellant has themselves made admission in their own balance sheet, which was not rebutted and was further substantiated in the Director’s report, the appellant now cannot turn around and make submissions which are contrary to their own admissions. Moreover, they have also clearly taken a stand in their reply that they bought various parts and components to develop the testing equipments for use within the factory and that such steps were undertaken to avoid importing of such equipments from the developed countries with a view to save foreign exchange.
Further, the fact that the equipments were marketable and saleable is also an admitted position as the appellant has admitted it in their reply.
Consequently, the Court found no merit in the present appeal.
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