2020 (3) TMI 831 - AT - Central Excise

Appellant's Activities Deemed Manufacture under Central Excise Act

The Tribunal held that the appellant's activities of repacking, inspection, labeling, and affixing trademarks constitute 'manufacture' under Section ... Cenvat Credit - Process amounting to manufacture or not - whether the activities of opening the imported stock, inspection of the same, quality checks and repacking with affixture of sticker amounts to ‘manufacture’ within the meaning of Section 2 (f) (iii) of the Central Excise Act, 1944? HELD THAT:- This Bench in the appellant’s own case M/S. HONDA MOTOR INDIA P. LTD., M. RAMAKRISHNA REDDY, MANAGER (PARTS) , ATUL GUPTA, DY. MANAGER (ACCOUNTS & FINANCE) VERSUS CCE, CHENNAI – I [2018 (6) TMI 909 - CESTAT CHENNAI] where it was held that The processes carried out on the impugned goods received by the appellants from the port / other warehouses will amount to manufacture within the meaning of section 2(f)(iii) of the Act. There is no change with regard to facts or law and therefore, the above ruling applies to the current appeals as well, on all fours. Appeal allowed - decided in favor of appellant. Issues Involved:1. Whether the activities of opening the imported stock, inspection, quality checks, and repacking with affixture of stickers amount to 'manufacture' under Section 2(f)(iii) of the Central Excise Act, 1944.Issue-wise Detailed Analysis:1. Definition of Manufacture under Section 2(f)(iii):The core issue revolves around the interpretation of 'manufacture' as defined under Section 2(f)(iii) of the Central Excise Act, 1944. This section includes processes such as packing or repacking of goods in a unit container, labeling or relabeling of containers, including the declaration or alteration of retail sale price, or the adoption of any other treatment on the goods to render them marketable to the consumer.2. Activities Undertaken by the Appellant:The appellant's activities include affixing MRP labels at the port, adopting valuation under Section 4A, bringing goods to warehouses, and performing packing/repacking, labeling, and affixing stickers such as 'marketed by' and 'HONDA.' The appellant contends these activities amount to manufacture under Section 2(f)(iii) and thus, they paid excise duty and availed CENVAT credit.3. Department's Standpoint:The department disagreed with the appellant's practice, arguing that these activities do not constitute manufacture and thus, the appellant is not eligible for CENVAT credit.4. Tribunal's Previous Ruling:The Tribunal had previously ruled in the appellant's favor for a different period, holding that the activities in question amounted to manufacture. This ruling was based on the interpretation that even standalone activities like packing or repacking, labeling or relabeling, and any other treatment to render the product marketable fall under the ambit of manufacture as per Section 2(f)(iii).5. Legal Interpretation and Precedents:The Tribunal reiterated that the definition in Section 2(f)(iii) deems activities such as packing, repacking, labeling, and relabeling as manufacture. The phrase 'any other treatment to render the product marketable to the consumer' was highlighted as a broad catch-all that includes enhancing the product's marketability, such as affixing a well-known trademark.6. Revenue's Argument:The Revenue argued that relabeling without price alteration does not amount to manufacture. However, the Tribunal clarified that Section 2(f)(iii) does not condition labeling or relabeling on price alteration. The Tribunal emphasized that activities enhancing marketability, like affixing the 'HONDA' trademark, fall within the scope of deemed manufacture.7. Supporting Case Laws:The Tribunal referenced several cases supporting the appellant's position, including:- Glovis India P. Ltd.: Affirmed that labeling and packing satisfy the criteria of deemed manufacture.- Jindal Drugs Ltd.: Held that labeling per se amounts to manufacture under Chapter Note 3 of Chapter 18.- Johnson & Johnson: Confirmed that labeling or relabeling, even without repacking, can constitute manufacture if it enhances marketability.8. Distinguishing Non-Applicable Cases:The Tribunal distinguished the present case from others cited by the Revenue, such as Commissioner of Central Excise, New Delhi Vs. Panchsheel Soap Factory and Beltek (India) Ltd., noting differences in the applicable legal provisions and the nature of activities involved.Conclusion:The Tribunal concluded that the appellant’s activities of repacking, inspection, labeling, and affixing trademarks indeed amount to manufacture under Section 2(f)(iii) of the Central Excise Act, 1944. Consequently, the impugned orders were set aside, and the appeals were allowed with consequential relief as per law.