TaxTMI 
TaxTMI 
2017 (7) TMI 754
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.... of manufacture. A show-cause notice was thereafter issued alleging that the activity undertaken by the appellants do not amount to manufacture in terms of Section 2(f)(iii) of Central Excise Act, 1944 and proposed to recover the CENVAT credit of Rs. 9,24,74,806/- availed along with interest and also proposing to impose penalty under Rule 15(2) of CENVAT Credit Rules, 2004 r/w Section 11 AC of the Central Excise Act, 1944. After clue process of law, the adjudicating Commissioner confirmed the recovery of CENVAT credit along with interest and imposed equal amount of penalty. Being aggrieved, the appellants are before this forum. 2. On behalf of the appellant, learned Senior Advocate Shri N. Venkataraman opened his arguments by adverting to the various provisions of law. He explained that the activity of manufacture takes place not only in case where there is technical / technological process on the raw materials to bring into existence a new product but also when activities like "packing" or "repacking of goods" or "labeling" or "re-labelling which would amount to deemed manufacturing activity in respect of certain goods specified in the Third Schedule to the Central Excise Tariff ....
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....d up with Nylon packing belt which is the process called "Strapping", and each sleeve is labeled with Component Part Number, Part Name & Quantity with Bar Code number, according to Export Packing slip and is labeled with destination details. The activities / processes stated above are summarized as under:- * Procurement of parts from Vendors and quality checking * Unpacking and removing labels from the parts sourced from Vendors * Applying of anti-rust material on the parts * Packing and labeling of parts * Grouping of spare parts as required by customers, in sequential arrangement * Repacking of grouped materials / spares by placing them together in Wooden Pallets, for exports * Putting 'Glovis' name on the Carton box 3. Thus, the learned Senior Advocate argued that the activity would come within the ambit of Section of the Central Excise Act, 1944 amounting to deemed manufacture and therefore the appellants have rightly availed CENVAT credit. 4. It was also put forward as an alternate plea that as the goods are being exported, the appellants would be eligible to claim rebate of the duty paid on the inputs / input services and therefore the demand raised for recove....
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....nt to an activity of manufacture. 6.1 With regard to the extended period of limitation, the learned AR submitted that the appellant ought not to have taken credit at all and the fact of availment of credit has come to light only when their rebate claim came to be rejected. Thus, they are guilty of suppression of facts and the show cause notice issued invoking extended period of limitation is right and proper. 7. We have heard the submissions of both sides and have gone through the case records carefully. 8. The issue revolves around the question whether the activity undertaken by the appellants tantamount to deemed manufacture as per Section 2(f)(iii) of the Central Excise Act, 1944. For better appreciation, the relevant section is reproduced: - "Section 2 (f) "manufacture" includes any process - (i) ......... (ii) ......... (iii) which, in relation to the goods specified in the Third Schedule involves packing on repacking of such goods in a unit container or labeling on re-labelling of containers including the declaration on alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to eth consumer and the wo....
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....of predetermined carton sleeve with partition is then ready for packing. The metal pallet with goods received from vendors are kept near to the carton sleeve box for starting the packing process. The goods received from vendors are taken out from the metal pallets and stuffed inside the carton sleeve. Vinyl sheets are used to cover over the partition sheets with goods inside the carton sleeve. Top cover is provided on the carton sleeve and the goods supplied by vendors become packed in carton. The goods then packed inside the carton sleeve is ensured with the picking ticket before closing the packing box. The picking ticket will be scanned for generating the shipping mark sheet. After ensuring the details, the picking ticket will be affixed on the packed box. Thus, after packing, the shipping mark lable is affixed on the box. This shipping mark label contains customer name, customer destination, customer order description, customer order number, case number, case dimensions, date of packing, manufacturer name. The packing list is also provided at the time of export which contains customer's order number, case number, part number, party name and quantity. 13. Three types of pac....