Appeals Allowed: Combination Pack Assembly Not "Manufacture" under Central Excise Act

The Tribunal allowed the appeals, determining that assembling a combination pack of twin blade cartridges and Gillette shaving gel did not constitute "manufacture" under the Central Excise Act. The appellant correctly paid excise duty based on individual MRPs, not the combined pack MRP, resulting in the penalties and interest imposed being deemed unjustified and set aside.

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Issues Involved:
1. Whether the activity of assembling a combination pack of twin blade cartridges and Gillette shaving gel amounts to "manufacture" under Section 2(f) of the Central Excise Act, 1944.
2. Whether the appellant is liable to pay excise duty on the MRP of the combination pack as per Section 4A of the Central Excise Act, 1944.
3. Whether the penalties and interest imposed on the appellants are justified.

Issue-wise Detailed Analysis:

1. Whether the activity of assembling a combination pack of twin blade cartridges and Gillette shaving gel amounts to "manufacture" under Section 2(f) of the Central Excise Act, 1944:

The appellant argued that the activity of assembling a combination pack does not constitute "manufacture" as defined under Section 2(f) of the Central Excise Act, 1944. The Tribunal referred to several Supreme Court judgments, including D.C.M.'s case, South Bihar Sugar Mills Ltd. v. Union of India, Ujagar Prints v. Union of India, and Moti Laminates Private Ltd. v. Collector of Central Excise, Ahmedabad, which clarified that "manufacture" implies bringing into existence a new substance with a distinct name, character, or use. The Tribunal concluded that packing duty-paid shaving gel with twin blade cartridges did not transform the articles into a new product; hence, it did not amount to manufacture.

2. Whether the appellant is liable to pay excise duty on the MRP of the combination pack as per Section 4A of the Central Excise Act, 1944:

The department contended that the appellant should pay excise duty based on the MRP of the combination pack (Rs. 85/-), as per Section 4A of the Central Excise Act, 1944. The appellant had paid excise duty on the individual MRPs of the twin blade cartridges (Rs. 66/-) and the shaving gel (Rs. 49/-), totaling Rs. 115/-. The Tribunal noted that the combination pack was marketed at a discounted MRP of Rs. 85/-, and if the department's view was accepted, the appellant would be entitled to avail Cenvat credit for the excise duty paid on the shaving gel, resulting in a loss to the department. Therefore, the Tribunal found that the appellant had paid excise duty correctly, and there was no evasion of duty.

3. Whether the penalties and interest imposed on the appellants are justified:

Given the conclusion that the activity did not amount to manufacture and that the appellant had correctly paid excise duty, the Tribunal held that the penalties and interest imposed could not be sustained. The demand for excise duty, along with the interest and penalties, was set aside.

Conclusion:

The Tribunal allowed the appeals, concluding that the activity of packing twin blade cartridges and Gillette shaving gel in a combination pack did not amount to manufacture, and the appellant had correctly paid excise duty on the individual MRPs of the items. Consequently, the demand for excise duty, interest, and penalties imposed by the adjudicating authority and upheld by the Commissioner (Appeals) was set aside. The appeals were disposed of accordingly.

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