TaxTMI 
TaxTMI 
2018 (6) TMI 909
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....d under 4A. In some cases, they were procuring spare parts from vendors in bulk quantity assessed under Section 4 of Central Excise Act and after availing credit was packing / repacking and affixing MRP label for which they discharged excise duty under Section 4A of Central Excise Act. In some instances, there was revision of MRP by affixing revised MRP for which the appellants discharged the differential duty. The present case does not involve these two instances. 2.1 The dispute is with regard to situation wherein, after import of items, the appellant affixes the MRP labels at port itself, adopted valuation under Section 4A and brought to warehouses or by stock transfer to their premises and then undertook activities of packing / repacking, affixing sticker / label such as "marketed by", "HONDA" etc. without revising the MRP mentioned in the label affixed at the port. They claimed that these activities amount to manufacture as under Section 2(f)(iii) of Central Excise Act, 1944 and paid excise duty thereon and availed CENVAT credit of the same. According to department, the appellants are not eligible for credit as these activities do not amount to manufacture. The practice ado....
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....te 5.6.2013 19.11.2013 23.9.2014 Order-in-Original 15/2013 dated 25.11.2013 r/w the Corrigendum C.No. V/15/08/2013-CX. Adj. dated 3.12.2013 17/2014 dated 30.4.2014 21/2015 dated 24.3.2015 Total Demand Rs.57,69,66,914/- (R.14 of CCR + S.11A(5) of Act) Rs.48,66,86,270/- (CVD/ED/ST) Rs.92,40,431/- (Education Cess) Rs.46,20,285/- (SHE Cess) Rs.7,64,19,928/- (SAD) Rs.30,14,22,320/- (R.14 of CCR + S.11A of Act) Rs.28,61,11,180/- (CVD/ED/ST) Rs.51,68,120/- (Education Cess) Rs.25,84,040/- (SHE Cess) Rs.75,58,980/- (SAD) Rs.30,83,47,354/- (R.14 of CCR + S.11A(5) of Act) Rs.29,26,62,179/- (CVD/ED/ST) Rs.53,13,635/- (Education Cess) Rs.26,56,814/- (SHE Cess) Rs.77,14,726/- (SAD) Penalty Honda Motors - Rs. 28,84,83,307/- (R. 15(2) of CCR) M. Ramakrishna Reddy - Rs. 5,000/- (R.15A) Atul Gupta - Rs. 5,000/- (R.15A) Honda Motors Rs. 8,00,00,000/- (R. 15 of CCR) No personal penalty Honda Motors Rs. 3,00,00,000/- (R. 15(1) of CCR) No personal penalty Interest Not quantified (R.14 CCR) Not quantified (R.14 CCR) r/w section 11AB/ 11AA of the Act Not quantified (R.14 CCR) r....
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....en on it are carried out at Chennai warehouse. Thus, when goods are imported at ports other than Chennai, a sticker "Imported and Packed by" is affixed at the respective ports and thereafter the goods are transferred to Chennai where "Marketed By" label is affixed with "HONDA" brand name tape. viii) The goods that are notified under Section 4A and in relation to which it is required under the Legal Metrology Act / Rules, to declare on the package thereof the retail sale price of goods, are assessable to value based on MRP. Serial No. 108 of the Notification No.49/2008-CE (NT) dated 24.12.2008 issued under Section 4A covers automobile parts falling under any chapter. A combined reading of Section 3, Section 2(f)(iii), Third Schedule, Section 4A and provisions of Legal Metrology Act and Rules, make it mandatory for the appellant to take registration and pay excise duty. Therefore, the impugned activities of inspection of goods, affixing label on the pack and affixing brand name by adhesive tape are activities deemed to be "manufacture" and thereby CENVAT credit taken on the impugned goods is legal and correct. ix) Section 2(f)(iii) does not contain any qualification as to the n....
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....the following judicial decisions: a. CCE v. Rane NSK Steering Systems Ltd., 2007(218) ELT (P&H) B. CCE & C., Surat-III v. Creative Enterprises, 2009 (235) ELT 354 (Guj.), [Maintained by the Hon'ble SC, 2009 (243) ELT A120 (SC)] xv) Without prejudice, even if the activity undertaken by the Appellant is held to be not amounting to manufacture, the duty paid at the time of clearance of goods is to be treated as reversal of credit. Thus, the entire exercise is revenue neutral. Reliance is placed on the following decisions a. CCE v. Narmada Chematur Pharmaceuticals Ltd., 2005 (179) ELT 276 (SC). b. CCE Vs. Narayan Polyplast - 2005 (179) ELT 20 (SC) c. Punjab Tractors Ltd. Vs. CCE [2005 (181) ELT 380 (SC)] d. CCE v. Indeos ABS Ltd [2010 (254) E.L.T. 628 (Guj.)] e. Bekaeret Solutions v. CCE, Pune [2012 (286) E.L.T. 420 (Tri. - Mumbai)] f. Minda Auto Gas v. CCE [2013 (287) E.L.T. 101 (Tri. - Del.)] g. Asian Color Coated Ispat v. CCE [2015 (317) E.L.T. 538 (Tri. - Del.)] xvi) Proceedings against another unit of the Appellant decided in their favour:- In a case involving the Mumbai Unit of the Appellant, similar activity of packing, re-packing, labelling,....
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....try were assessed under MRP value under section 4A of Central Excise Act, 1944. The manufacturing activity was completed at the port itself and spare parts were ready to be dispatched to customers. ii) He adverted to Notification No. 44 (RE-2000)/1997 - 2002 dated 24.11.2000 and submitted that on import of goods, the appellants have to ensure that the goods comply with the mandatory Indian Quality Standards including the provisions of Legal Metrology law. These compliances have been completed at the port itself merely by putting stickers /labels, the appellant cannot content that they are undertaking manufacturing activity. (iii) Ld. AR drew our attention to the findings of the adjudicating authority that the goods as received by the assessee would be in unit containers and in no case the original retail packing is tampered with. iv) As far as affixing of stickers is concerned, the fixing of stickers (referred to as stickering) is entirely from an inventory management and logistical perspective and does not convey any information to customer or consumer. They make no alteration in the labels already affixed on the packages of goods; and thus, cannot be equated with process....
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....f Act and hence were not applicable to the facts of this case. 6. Heard both sides and have gone through the case records. 7.1 We find that the issue in dispute is in a very narrow compass. Whether repacking, inspection, labeling, affixation of MRP without price revision, affixation of "marketed by" label, affixing "HONDA" tape/sticker would be activities that could be brought within the ambit of manufacture as defined under section 2(f)(iii) of Central Excise Act, 1944. 7.2 The issue in dispute in the present matter is concerned with the definition of manufacture under section 2(f)(iii) of the Central Excise Act, 1944 which lists out certain processes deemed as manufacture by legal fiction namely:- "Section 2(f) "manufacture" includes any process, - xxxx xxxx xxxx (iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer" 7.3 The definition in Section 2(f)(iii) ibid thus deems the ....
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....d Packed By", we note that at the premises of the appellant one more labeling with the tagline "Marketed By HONDA Motor Pvt. Ltd." is affixed as follows:- In addition, sticker with the "HONDA" trademark is further affixed as under:- 7.6 In our view, affixation of the "Marketed By" label and especially the "HONDA" trademark label, enhances the marketability of these products. Trademarks are efficient commercial communication to capture customer attention. It speaks about the company, its reputation and products and services. An internationally known trademark like 'HONDA' will serve to allay any doubts on basic quality of the goods and make the goods more marketable. 7.7 There can be then no doubt that these operations carried on the packages not only come within the mischief of deemed manufacture on account of the "labeling or relabeling" process included under section 2(f)(iii) ibid but also will become "any other treatment to render the product marketable to the consumer". 7.8 Viewed in this light, we are convinced that the processes carried out on the impugned goods received by the appellants from the port / other warehouses will amount to manufacture within the mean....
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....ast part of note 3 that provides for adoption of any other treatment to render the product marketable. The note 3 is deeming provisions. It deems three of the specified activities as deemed manufacture. 6.10 In view of admitted position both in the show cause notice and in the impugned order that the Appellant have undertaken the activity of labelling, I agree with Member (Judicial) that that the activity of the appellant is covered by note 3 to Chapter 18 and the activity of the Appellant of labelling the goods received from Jammu factory amounts to manufacture. xxxx xxxx xxxx xxxx 6.19 In pursuance of a remand order passed by the Hon'ble Supreme Court of India, this Tribunal in its order reported in 2009 (235) ELT 577 held as under: "70. While applying the law laid down by the Apex Court in relation to legal fiction created by the statutory provision under Note 11 of Chapter 29 quoted above, we will have to primarily ascertain the purpose behind introducing the said Note 11. The Note certainly relates to connotation of the term "manufacture" and it seeks to widen the scope thereof by including the activities which would otherwise fall outside the scope of the defi....
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....o render the goods marketable. The decision of the Tribunal in the case of Beltek (India) Ltd. (supra), also relied upon by ld. AR, will not apply to this case since in that case the only activity involved therein was putting warranty stickers and pasting chassis number; whereas in the present case, we have found the activity involved is not merely labeling or relabeling but also adoption of branding process which renders the product more marketable to the customer and thereby falling within the mischief of 'deemed manufacture' for the purpose of Section 2(f)(iii) ibid and on both these counts. The decision in Dhampur Alco-Chem Ltd. Vs. Commissioner of Central Excise, Ghaziabad - 2017 (357) ELT 627 (Tri. All.), the issue involved was primarily whether the activity amounted to manufacture on account of alleged repacking of chemical from bulk pack to retail packs, hence this case law will not be applicable to the facts of the present case. In any case, the period of dispute was before the amendment brought about in sub-clause (iii) of Section 2(f) of the Act. 8. In the event, we are of the considered view that the impugned orders cannot sustain and will require to be set aside, wh....