P.R. Chandrasekharan
1. The appeal and stay application are directed against Order-in-Appeal No. RBT/203/2011 dated 02.05.2011 passed by the Commissioner of Central Excise (Appeals), Mumbai Zone I.
2. The appellants, M/s Precision Punches and Dies (Unit III), District Thane, are manufacturers of goods falling under Chapter 82 of the Central Excise Tariff Act, 1985. The appellants are registered with the Central Excise department at three different galas at three different places. These different galas are numbered as Unit I, Unit II and Unit III. Examination of the records maintained by the assessee revealed that there is no manufacturing activity undertaken at Unit No. III and the said Unit is for storing of imported raw materials which are then stock-transferred to Unit II. Since Cenvat credit is taken in Unit III, the full amount of credit is reversed while stock-transferring the inputs to Unit II. Investigation conducted revealed that due to shortage of space in their manufacturing unit, they took Central Excise registration for Unit III but no manufacturing activity was undertaken in the said Unit III except for certain minor activities such as checking and inspecting the raw materials received in respect of the quality. Accordingly, a Show Cause Notice dated 28.4.2002 was issued to the appellants for revocation of their Central Excise registration in terms of Rule 9 of the Central Excise Rules, 2002 read with Notification No. 35/2001-CE (NT) dated 26.01.2001 and proposing to impose penalty. The case was adjudicated and the Central Excise registration issued to Unit III was revoked, apart from imposing a penalty of Rs 1000/- on the appellants under Rule 27 of the Central Excise Rules, 2002.
3. The appellants preferred an appeal before the Commissioner (Appeals), who, vide the impugned order rejected their appeal. Hence the appellants are before us.
4. The learned counsel for the appellants submits that it is true that they are not undertaking any manufacturing activity at Unit III. However, they are receiving the imported raw materials at Unit III and the same are subjected to quality inspection/testing. Since testing is an essential process in the overall process of manufacture, they are rightly entitled for registration of the said premises under the Central Excise law and accordingly, orders be issued for restoration of the Central Excise registration in respect of Unit III. He also relies on the judgment of the hon’ble apex court in the case of Tata Iron and Steel Co Ltd vs Union of India and Others 1988 (35) ELT 605 (SC) and the decision of this Tribunal in the case of Daksha Cable Industries Pvt Ltd vs CCE, Mumbai 2004 (173) ELT 371 (Tri-Mum) in support of his contention.
5. The learned Deputy Commissioner (A.R) appearing for the Revenue reiterates the findings of the lower authorities.
6. We have carefully considered the rival submissions. As the issue involved lies in a narrow compass, we are of the view that the appeal itself can be taken up for disposal at this stage. Therefore, after granting waiver of the pre-deposit of the dues adjudged, we take up the appeal for consideration.
7. Rule 9 of the Central excise Rules, 2002 provides that ‘every person who produces, manufacturers, carries on trade, holds private storeroom or warehouse or otherwise uses excisable goods shall get registered. Sub-rule (3) of the said rule provides that the registration shall be subject to such conditions, safeguards and procedures, as may be specified by Notification by the Board. The question is whether in respect of a premises where no manufacturing activities undertaken and where only duty paid raw materials are stored which are then stock-transferred to the manufacturing unit, Central Excise registration can be granted or not. Rule 9 contemplates grants of registration in respect of a premises where excisable goods are produced, manufactured or traded or warehoused. In the instant case, there is no production, manufacture or trading of goods in Unit III. The only question that remains is whether warehousing is involved or not. Warehousing should be in respect of ‘excisable’ goods. As per the definition of ‘excisable goods’ under Section 2 (d), it means goods specified in the First Schedule and Second Schedule to the Central Excise Tariff Act, 1985 as being subjected to a duty of excise and includes salt. The raw materials which the appellants have received are imported goods as per the records. Therefore, they cannot be considered as excisable goods. Secondly, even if they receive some duty paid raw materials indigenously, the same can be considered as only ‘excised goods’ and they are not ‘excisable goods’ on which duty liability has to be discharged. Therefore, for mere storage of imported goods/excised goods, the appellants cannot claim Central Excise registration under Rule 9 of the Central Excise Rules, 2002. Accordingly, we do not find any merit in the arguments putforth by the appellants.
8. As regards reliance placed by the appellants on the decision of the Honble Supreme Court in the case of Tata Iron and Steel Co Ltd (supra), the issue before the Hon’ble Court was whether the processes of machining and polishing undertaken by the appellant would constitute manufacture. The apex court held that the finished goods came into existence only after machining and other processing and therefore, the said processes amounted to manufacture. In the issue before us, the facts are completely different and distinct and therefore, the ratio of the said decision cannot be applied to the facts of the present case.
9. In the case of Daksha Cable Industries (supra), this Tribunal was considering a case where the lower appellate authority set aside the revocation of registration without following the principles of natural justice. In an appeal filed by the Revenue, this Tribunal upheld the order of the lower appellate authority. In the case before us, there is no finding either by the adjudicating authority or the appellate authority that the principles of natural justice has not been followed and hence the ratio of the said order of this Tribunal has no bearing, whatsoever, to the facts of the present case.
10. In view of what has been discussed above, we do not find any infirmity in the order passed by the lower authorities and accordingly, we dismiss the appeal as devoid of merits.