The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Principal Bench, New Delhi, has ruled that the processes involved in producing the “Gripple Hanger System” constitute manufacturing under the Central Excise Act, 1944, but set aside part of the duty demand after finding the extended period of limitation was wrongly invoked.
The bench of Ashok Jindal (Judicial Member) and P. Anjani Kumar (Technical Member) has observed that the appellant was manufacturing a new commodity a commodity different from its raw material and components; it is known in the market by a separate name “Gripple Hanger System”; the functions and use of Gripple HangerSystem is different from the raw material used; the new commodity “Gripple HangerSystem” is clearly marketable and is sold at higher value than the individual components put together; the commodity does not remain just steel wire rope with stud, it becomes a totally new commodity; manufacturing activity take place and a new product with new usage and marketability comes into existence. The galvanized wire and hanger made by the appellant are not the same goods.
The dispute arose after the Central GST Department alleged that a Delhi-based company exceeded the exemption limit for central excise during 2011–2013 but failed to obtain registration or pay duty on wire rope hangers and accessories. Following an audit in August 2015 and a subsequent investigation, three show cause notices (SCNs) were issued, demanding over ₹2.3 crore in duty, interest, and penalties for periods from April 2011 to June 2017.
The appellant argued that its activities—importing steel wire ropes, cutting and fusing them, crimping studs, and packing them with accessories—did not produce a “new” product and therefore did not amount to manufacture. They relied on multiple Supreme Court precedents holding that mere processing does not constitute manufacturing unless a distinct product with a new name, character, and use emerges.
The Tribunal rejected this argument, noting that the final product, marketed as the “Gripple Hanger System,” had a separate commercial identity, use, and higher market value than its individual components. It held that the transformation from raw wire rope and accessories into the hanger system resulted in a new, marketable commodity.
However, on the issue of limitation, the Bench found that the first SCN—covering April 2011 to April 2013—was issued based solely on an audit objection, without evidence of intent to evade duty. The Tribunal cited settled law that mere non-registration or non-payment of duty is insufficient to invoke the extended limitation period under Section 11A(4).
Consequently, the duty demand of Rs. 55.46 lakh and an equivalent penalty for that period were set aside. The remaining duty demands, relating to 2016 and 2017 and falling within the normal limitation period, were upheld.
Case Details
Case Title: Gripple Hanger & Joiner Systems India Pvt. Ltd. Versus Commissioner of CGST, Delhi South
Case No.: Excise Appeal No. 51170 of 2020
Date: 05.06.2025
Counsel For Appellant: S.C. Kamra, Advocate
Counsel For Respondent: Rakesh Agarwal, Authorized Representative
In its final order, the Tribunal partly allowed the appeal, confirming that the appellant’s processes amounted to manufacturing but striking down the extended period demand. The penalty corresponding to the quashed demand was also annulled.
