TaxTMI 
TaxTMI 
2024 (3) TMI 588
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....l Motors (P) Ltd. Versus The Commissioner of GST & Central Excise, Salem MS. SULEKHA BEEVI C.S. MEMBER (JUDICIAL) AND SHRI. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) For the Appellants - Shri Lakshmi Kumaran V., Advocate For the Respondent - Shri Anoop Singh, Addl. Commissioner / A.R. Shri M. Selvakumar, Asst. Commissioner / A.R. ORDER The issue involved in all these appeals being same and connected, these appeals were heard together and are disposed of by this common order. 1. Brief facts are that M/s Titan Industries Ltd., (appellant in E/42026/2014) are manufactures of Analog Wrist Watches classified under Chapter Heading 9101 and 9102 of Central Excise Tariff Act, 1985. The factories of TITAN are located in Hosur, Dehradun, Baddi and Rourkee. The watches manufactured at Hosur factory are cleared on payment of duty, whereas, watches manufactured at factories located in Dehradun, Baddi and Rourkee are cleared without payment of duty as per availment of Area Based Exemption under Notification No.50/2003 CE dated 10.06.2003. 1.1 The watches are either sold through TITAN owned showrooms or moved to the distributing locations situated across India for further ....
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.... notices issued to 33 CFAs and 22 Showrooms of TITAN as given in the appeal are as under: S. No Name of the Party MRP revision dates SCN date Duty amount 1 N.G.D.A. Watches (P) Ltd., Nagpur 01.04.2008 01.11.2008 01.12.2008 01.04.2009 06/2011 dtd 01.2012 20,88,104 2 A.C. & Co., Jaipur April 2008 Oct 2008 Nov 2008 Dec 2008 April 2009 Dec 2009 08/2011 dtd. 19.01.2012 51,37,855 3 Shambavi Enterprises, New Delhi 01.04.2008 01.10.2008 01.11.2008 01.12.2008 01.04.2009 15.12.2009 92/2011 dtd 30.12.2011 81,19,749 4 Wilson & Co., Chennai 01.04.2008 01.10.2008 01.11.2008 01.12.2008 01.04.2009 86/2011 dtd. 22.12.2011 78,82,779 5 Glacier Cold Storage & Ice Mills, Jammu April 2008 Nov. 2008 Dec. 2008 04/2012 dtd. 11.01.2013 17,06,419 6 Elkom Enterprises (P) Ltd., Kolkatta 01.04.2008 01.10.2008 01.11.2008 01.12.2008 01.04.2009 15.12.2009 06/2012 dtd 11.01.2013 1,15,42,789 7 Mehta Sons, Thane 01.04.2008 01.11.2008 01.12.2008 01.04.2009 15.12.2009 07/2012 dtd 19.01.2012 35,85,790 8 S.M. Enterprises, Indore 01.04.2008 01.10.2008 01.11.2008 01.12.2008 01.12.2009 15.12.2009 09/2012 dtd. 20.01.2012 47,65,986 9 Cotmac (P) ....
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....t 2008 Nov 2008 Dec 2008 159/2012 dtd 24.12.2012 6,57,530 29 Subash Udyog, Jamshedpur April 2008 Nov 2008 Dec 2008 April 2009 157/2012 dtd 24.12.2012 24,59,774 30 H.B. Enterprises, Ludhiana April 2008 Nov 2008 Dec 2008 160/2012 dtd 24.12.2012 34,05,359 31 Drive India Enterprises Solutions Ltd., Secunderabad Dec 2009 5/2013 dtd 11.01.2013 2,24,433 32 Sequel Logistics, Dehradun April 2008 Nov 2008 Dec 2008 April 2009 7/2013 dtd 11.01.2013 7,19,852 33 Dehgal Motors (P) Ltd., Hydrabad April 2008 Oct 2008 Nov 2008 Dec 2008 April 2009 8/2013 dtd 11.01.2013 48,57,413 TOTAL 14,61,69,868 Details of 22 SCNs issued to Showrooms of the Appellant 1 World of Titan, Hosur 01.04.2008 01.10.2008 01.11.2008 01.12.2008 01.04.2009 15.12.2009 95/2011 dtd 17.02.2012 6,79,674 2 World of Titan, Chennai 01.04.2008 01.10.2008 01.11.2008 01.12.2008 01.04.2009 15.12.2009 24/2012 dtd 27.02.2012 16,06,749 3 World of Titan, Bangalore 01.10.2008 01.11.2008 01.12.2008 01.04.2009 01.12.2009 26/2012 dtd 29.02.2012 4,68,679 4 World of Titan, Gurgaon 01.10.2008 01.11.2008 01.12.2008 15.12.2009 27/2012 dtd 29.02.20....
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....at the units in Rourkee , Baddi, and Dehradun. The demand is confirmed on the ground that the activity of relabeling and alteration of Maximum Retail Price ("MRP") amounts to 'manufacture' under Section 2(f)(iii) of the Central Excise Act, 1944 ("Excise Act") and therefore excise duty is liable to be paid on the revised MRP affixed on the watches at the Titan owned showrooms (collectively, "show rooms") and CFA premises though the watches were originally manufactured and cleared from the units availing area-based exemption under Notification no: 50/2003-C.E. dated 10.06.2003 ("ABE Notification"). 2.4 Appellant manufactures various models of watches, which are moved from the 3 units at Himachal Pradesh and Uttarakhand above to the Showrooms and to the CFA premises for onward sale to customers. The watches manufactured out of the 3 units at Rourkee, Baddi, and Dehradun ("ABE Factories") are cleared without payment of excise duty availing benefit of the ABE Notification. There is no dispute that Appellant is eligible for the exemption under the ABE Notification. At the time of movement of the watches from the 3 units to the showrooms and the CFA premises, the watches carry MRP in two....
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....No. E/42026/2014-DB may be referenced as the lead Appeal for the batch of 34 Appeals filed against the Impugned Order. 2.13 SUBMISSIONS A. The activity of affixing sticker to the container and tags to the watch straps does not amount to manufacture under Section 2 (f)(iii) of the Excise Act. Affixing stickers does not amount to labelling or relabelling A.1. Section 2(f)(iii) of the Excise Act provides that 'manufacture' includes any process: "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 goods to render the product marketable to the consumer". A.2. Admittedly, the only activity undertaken by the Appellants is affixing of MRP stickers on the containers and MRP Tags on the watches. As held in the judgments, noted below, affixation or alteration of MRP using stickers does not amount to labelling or relabelling so as to deem it to be manufacture: * C.C.E. vs Panchsheel Soap Factory [2002 (145) ELT 527 (Tri-Del) upheld in 2003 (156) ELT A382 (SC)] ....
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.... not on the CFAs and Show Rooms. C.3. In the present case, even the demand against the ABE factories cannot be sustained as they are situated within the area exempted under ABE Notification. The department cannot adopt two different methods of raising the demand just because the factory is exempt and attach a duty liability on the CFAs and Show Rooms which does not exist. D. Altered MRP is deemed to be the MRP of the watches manufactured under the ABE Notification and takes effect from the date and place of removal. D.1. Explanation 2 to Section 4A provides that where the retail sale price, declared on the package of any excisable goods at the time of its clearance from the place of manufacture, is altered to increase the retail sale price, such altered retail sale price shall be deemed to be the retail sale price. D.2. Thus, once certain goods are cleared from the factory after affixation of retail sale price and subsequently increased, the increased retail price shall be deemed to be the retail sale price and the assessee would be required to pay excise duty by taking into account the new price. D.3. A combined reading of the Sections 2(f), Explanation 2(b) to Section 4....
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....ppressed the facts of the case to invoke the extended period of limitation. E.4. Reliance is further places on Bio Veda Action Research Pvt. Ltd. vs CCE, Delhi [2017 (10) TMI 1030 - CESTAT New Delhi] where under identical circumstances involving products manufactured under ABE Notification, the Hon'ble CESTAT, New Delhi had held that the Appellant could not have gained anything by labelling the goods manufactured under ABE in their godown, thus holding that there could not have been any intention to evade duty. E.5. Further, the Appellant was under a bonafide belief that the watches manufactured in the ABE factories would not fall within the meaning of 'pre-packaged commodities' under the PC Rules, 1976. The said issue was subject to conflicting views in the a number of decisions and was subsequently referred to a larger bench in State of Maharashtra vs Subhash Arjundas Kataria [2012 (275) ELT 289 (SC)]. E.6. Consequently, the invocation of extended period of limitation is incorrect. It is prayed that the appeals may be allowed. 3. The Learned AR Shri Anoop Singh appeared and argued for the department. The definition of 'manufacture' was explained by the Ld.AR and argued tha....
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....o not indicate anything on the activities carried on at the premises of the Showrooms or CFAs. Hence, the appellant does not have any ground to dispute the invocation of extended period. Though the appellant contends to have informed the department by issuing letter, the said letter does not contain the details as to the activity carried out at Showrooms and CFA. It is submitted the decisions relied by the appellant are not applicable to the issue or facts of this case. The Ld.AR prayed that the appeals may be dismissed. 4. Heard both sides. 5. The issues that pose for consideration are (i) whether the activity of affixing revised MRP tags and labels on the watches amounts to manufacture as per Section 2 (f) (iii) of Central Excise Act, 1944. (ii) whether extended period is invokable or not. 5.1 For better appreciation Section 2 (f) is reproduced as under: (f) "manufacture" includes any process:- (i) incidental or ancillary to the completion of a manufactured product; (ii) which is specified in relation to any goods in the Section or Chapter notes of [the First Schedule] to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to [manufacture; or] (iii) which,....
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.... to the Chapter 34 which is similarly worded as 2 f (iii). It was held by Tribunal that simply putting a MRP sticker does not amount to manufacture. It was also observed that the products were already marketable and the activity of affixing the MRP sticker did not enhance its marketability. The relevant para of the decision of the Tribunal reads as under: We have considered the submissions of both the sides. Note 6 to Chapter 34 reads as under: "in relation to products of this Chapter, labelling or re-labelling of containers and repacking from bulk packs to retail packs or the addition of any other treatment to render the product marketable to the consumer, shall amount to manufacture". The respondents in the present case, admittedly are only pasting the sticker on the packing of the imported soap to indicate the name of the importer and the MRP which is the requirement under the Standards of weights and Measures Act. Simply putting a sticker, in our view, will neither amount to labelling or re-labelling, the processes which have been deemed to be a process of manufacture by Note 6. It is not the case of Revenue that the label has been replaced by a new label or any label has b....
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....d English Dictionary). From this meaning and indeed by common usage of this word, it is only the treatment which makes a product marketable to the consumer which was so rendered. That is to say, the process to fall within the scope of the "any other treatment" it must be one which confers upon a product the attributes of marketability which it did not possess earlier. We must note here the significance of the word 'consumer' in the note. Thus the product must be referred to must be rendered marketable to the consumer. Although this word is not defined it evidently refers to one who purchase the product for consumption by him, as distinct from a purchaser who trades in it. Therefore for any treatment to fall within the scope of the note to the chapter it must be one that confers upon a product a quality as a result of which the product, which was otherwise not marketable is now rendered marketable. If the product were already marketable any amount of treatment to enhance its marketability would not amount to manufacture within the meaning of this note. That treatment does not render it marketable when it earlier was not. That is the object of the note is also clear from the ....
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....ity that they did not possess earlier. This was obviously a method by which inception to the raising of the CSD to advertise its virtue. 8. The appeal is accordingly allowed and the impugned order set aside. Consequential relief. 5.7 In the case of CCE Vs. Rafique Malik 2018 (360) ELT 454 (Bom) similar issue was considered. It was held that affixing brand name on finished footwear received in labelled boxes affixed with MRP did not amount to manufacture. The relevant para reads a under: When this Appeal is called out for hearing, the submissions of the Learned Counsel for the parties have been heard. 2. The challenge in this Appeal by the appellant revenue is to the judgment and order dated 29th June, 2005 passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Mumbai (for short "the Appellate Tribunal"). The dispute involved in this Appeal is considerably narrow. A show cause notice was issued by the Assistant Commissioner of Central Excise to the respondent-assessee, a copy of which is annexed as Exhibit A to the memorandum of appeal. The paragraph 10 of the show cause notice is material for our consideration which reads thus:- "As per the a....
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....Appeal was partly allowed only in relation to the said activity referred in clause (iii) paragraph 10 of the show cause notice. As held by us, on admitted facts even by giving liberal meaning sub-clause (iii) of Section 2(f), the case of the appellant-revenue cannot be accepted for the simple reason that the activity admittedly carried out by the respondent-assessee by itself did not render the goods marketable to the consumers inasmuch as the same were already marketable as the goods in question were footwear in finished form manufactured by artisans. 5.8 The Tribunal in the case of CCE, Mumbai Vs L'Oreal India Ltd., 2004 (167) ELT 417 (Tri Mum) held that pasting of stickers on the imported goods for compliance of Standard Weights and Measures (Packaged Commodity) Rules, 1977 did not amount to manufacture. The Tribunal followed the decision in the case of Panchsheel Soap Factory (supra). The decision in the case of Panchsheel Soap Factory was followed by Tribunal in the case of Lal International Pvt. Ltd., Vs CCE Noida 2003 (154) ELT 520 (Tri-Del). 5.9 The meaning of marketability is that the goods must be capable of being bought and sold as such. In order to fall within defin....
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....y, from such retail sale price as the Central Government may allow by notification in the Official Gazette. (3) The Central Government may, for the purpose of allowing any abatement under sub-section (2), take into account the amount of duty of excise, sales tax and other taxes, if any, payable on such goods. (4) Where any goods specified under sub-section (1) are excisable goods and the manufacturer-- (a) removes such goods from the place of manufacture, without declaring the retail sale price of such goods on the packages or declares a retail sale price which is not the retail sale price as required to be declared under the provisions of the Act, rules or other law as referred to in sub-section (1); or (b) tampers with, obliterates or alters the retail sale price declared on the package of such goods after their removal from the place of manufacture, then, such goods shall be liable to confiscation and the retail sale price of such goods shall be ascertained in the prescribed manner and such price shall be deemed to be the retail sale price for the purposes of this section. Explanation 1.--For the purposes of this section, "retail sale price" means the maximum price at ....