M/S. TECUMSEH PRODUCTS INDIA LTD. versus COMMISSIONER OF CENTRAL EXCISE, HYDERABAD

Citation: [2004] SUPP. 2 S.C.R. 202 · Decided: 05-05-2004 · Supreme Court of India · Bench: S. RAJENDRA BABU · Disposal: Case Partly allowed

Judgment (excerpt)

A 
MIS. TECUMSEH PRODUCTS INDIA LTD. 
v. 
COMMISSIONER OF CENTRAL EXCISE, HYDERABAD 
MAY 5, 2004 
B 
[RAJENDRA BABU, CJ. AND G.P. MATHUR, J.] 
Central Excise Act, 1944-Levy of excise duty-Invocation of 
extended period of limitation-Replacement of stators while repairing 
defective compressors--Company receiving stators from job workers and 
C shaping, varnishing and baking stators to fit it into compressor housing-
Collector initiating proceedings for levy of tax holding the activity to be 
manufacture-Company pleading that stators received from job workers 
being in complete technically functional state, job workers are manufacturers 
of stators-On appeal, held : Separate activities carried out by the 
D company in respect of stators for making ready for the purpose of using 
in repairing of compressors were identical to the ones carried out in 
respect of new stator, thus, results in manufacturing activity and proceedings 
for adjudication of tax justified-Further, invocation of extended period of 
limitation not justified as it is not clear if stators made ready to be used 
E for the purpose of repairing compressors would amount to manufacture-
Section JJA. 
Initially the appellants used to manufacture stators in their 
factory for repairing the defective compressors. Thereafter, the Service 
F Centre started taking materials required for replacing the stators on 
payment of duty from the appellant and gave it to job workers for 
making the stators. On receipt of the stator from job worker, appellant 
undertook the shaping, varnishing and baking of such stator into the 
compressor housing. Collector of Central Excise held that the activity 
carried on by the appellant resulted in manufacture and initiated 
G proceedings for adjudication of tax. Appellant contended that as the 
stators are received from the job work1:rs in complete technically 
functional state, the job workers are manufacturers of stators and also 
challenged the invocation of the longer period oflimitation. Adjudicating 
Authority held that the job workers are the manufacturers of the stator 
H and the extended period of limitation cannot be invoked. On appeal, 
202 
TECUMSEH PRODUCTS INDIA LTD. v. C.C.E. 
203 
the Appellate Tribunal held that the appellants are manufacturers of A 
the stators because they undertook the· process of shaping, varnishing 
the baking and then only the marketable goods came into existence; 
that these activities were identical to the ones carried out for new 
stators; and that the extended period of limitation was invokable. 
Hence the present appeals. 
Partly allol\'.ing the appeals, the Court 
HELD : I. Jn the instant case, several steps were taken in respect 
B 
of the stator, and the Tribunal rightly held that separate activities were C 
carried on by the appellants which were identical to the ones that was 
carried out in respect of new stator and, therefore, the activity of the 
stator being made ready for the purpose of using in the repairing of 
compressor is an activity of manufacture and the Tribunal has 
confirmed the demand only in respect of "Stators." (206-A-B) 
Shriram Refrigeration Industries Ltd. v. Collector of Central Excise. 
Hyderabad, (1986) 26 E.L.T. 353 and CCE, New Delhi v. Karna 
Industries, (1992) 42 ECR 522, distinguished. 
D 
2. The Tribunal was not justified in invoking extended period of E 
limitation provided under Section llA of the Central Excise Act 
because it was not clear whether stators made ready to be used for the 
purpose of repairing compressors would amount to manufacturing 
activity or not. In fact, the Tribunal on a detailed analysis and lifter 
going into several processes carried out by the appellant, concluded F 
that the stators used in the repairing of the compressors involved 
manufacturing activity. Therefore, to the extent the authorities invoked 
Section llA and imposed penal interests and other penalties is set aside 
and the order of the Tribunal is modified to that extent. [206-C-E) 
CIVIL.APPELLATE JURISDICTION : Civil Appeal No. 1477 of G 
1998. 
From the Judgment and Order dated 24.11.97 of the Central Excise, 
Customs and Gold (Control) Appellate Tribunal, South Zonal Branch at 
Madras in F.O. No. 3003/97 in A. No. E.257/93. 
1-1 
204 
SUPREME COURT REPORTS (2004] SUPP. 2 S.C.R. 
A 
WITH 
C.A. No. 1513 of 1998. 
V. Lakshmikumaran, Alok Yadav and V. Balachandran for the 
B Appellant. 
c 
Raju Ramachandran, Additional Solicitor General, Sanjiv Sen and 
Ms. V

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