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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: (i) Whether affixing stickers on imported finished cosmetics, showing only the marketing details, manufacturing licence number and MRP, amounted to labeling or relabeling so as to constitute manufacture under Chapter Note 4 of Chapter 33 of the Central Excise Tariff Act, 1985. (ii) Whether the applicants were entitled to immunity from prosecution and penalty in settlement proceedings.
Issue (i): Whether affixing stickers on imported finished cosmetics, showing only the marketing details, manufacturing licence number and MRP, amounted to labeling or relabeling so as to constitute manufacture under Chapter Note 4 of Chapter 33 of the Central Excise Tariff Act, 1985.
Analysis: The imported cosmetics were already fully finished and marketable. The stickers did not alter the product description, character, or manufacturer particulars, but were affixed only to comply with the requirements of other Indian laws. Chapter Note 4 deems labeling or relabeling to be manufacture only when it is undertaken in a manner that renders the product marketable to the consumer. Reading Chapter Note 4 with Chapter Note 2, the activity in question did not answer that description. The departmental trade notice and Board instructions on similar sticker affixing on imported medicines were treated as binding and as supporting the same interpretation.
Conclusion: The activity did not amount to manufacture, and the duty demand of Rs. 1,70,75,172 was held not legally sustainable, in favour of the assessee.
Issue (ii): Whether the applicants were entitled to immunity from prosecution and penalty in settlement proceedings.
Analysis: The applicants had accepted and paid the admitted duty liability, made full and true disclosure, and cooperated with the proceedings before the Commission. On that basis, the statutory conditions for grant of immunity were treated as satisfied.
Conclusion: Immunity from prosecution and penalty was granted to the applicants.
Final Conclusion: The settlement accepted the admitted duty liability, rejected the further excise demand arising from alleged labeling of imported cosmetics, and extended immunity from prosecution and penal liability to the applicants.
Ratio Decidendi: Sticker affixing on imported finished goods, done only to satisfy other statutory labeling requirements and without altering the product or rendering it marketable in a new sense, does not amount to manufacture under the deeming provision for labeling or relabeling.
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