TaxTMI 
TaxTMI 
2024 (3) TMI 588
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..... Saravnaa Associates, M/s. Sehgal 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 distributin....
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....argued for the appellants. The details of the show cause 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 15.12.200....
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....9 Dec 2009 154/2012 dtd 24.12.2012 1,13,87,494 25 T.I.W.A. Bangalore April 2008 Oct 2008 Nov 2008 Dec 2008 April 2009 Dec 2009 155/2012 dtd 24.12.2012 90,00,423 26 Lal & Lal Services (P) Ltd., Patna April 2008 Nov 2008 Dec 2008 April 2009 Dec 2009 156/2012 dtd 26.12.2012 33,70,825 27 Gajalakshmi Enterprises, Kodaikanal 01.04.2008 01.10.2008 01.11.2008 01.12.2008 01.04.2009 15.12.2009 158/2012 dtd 24.12.2012 29,58,575 28 Pharma Combines, Calicut April 2008 Oct 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 D....
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....17 World of Titan, Delhi Dec 2009 98/2012 dtd 05.09.2012 71,292 18 World of Titan, Hyderabad Dec 2009 99/2012 dtd 05.09.2012 1,34,106 19 World of Titan, Bangalore Dec 2009 100/2012 dt 05.09.2012 1,32,837 20 World of Titan, Gurgaon Dec 2009 101/2012 dt 05.09.2012 30,628 21 World of Titan, Kolkatta April 2008 Oct 2008 Nov 2008 Dec 2008 Dec 2009 102/2012 dt 05.09.2012 8,31,061 22 World of Titan, Hosur Dec 2009 103/2012 dt 05.09.2012 14,305 TOTAL 1,28,78,100 2.1 The Learned Counsel explained the facts as under : 2.2 The Appellant is a renowned manufacturer of watches, jewellery, and eyewear. The Appellant manufactures watches out of 4 locations in India, namely, • Hosur (Tamil Nadu), • Rourkee (Uttarakhand), • Baddi (Himachal Pradesh), • Dehradun (Uttarakhand). 2.3 The present Appeal is confined to a dispute over excise duty liability in respect of watches manufactured at the units in Rourkee , Baddi, and Dehradun. The demand is confirmed on the ground that the activity of relabeling and alter....
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....r Section 4A of the Excise Act. 2.9 The above mode of increasing the MRP was stopped since December 2009. These facts are not in dispute. 2.10 Pursuant to audit investigations carried out in 2005 and 2009, the Revenue initiated proceedings under 22 Show Cause Notices against the Showrooms and under 33 Show Cause Notices against the CFA premises, alleging that excise duty ought to have been remitted by the showrooms and the CFAs on the activity of affixing revised MRP tags and labels. 2.11 The case of the Department is that the activity of attaching revised MRP Tags to the watch straps and affixing labels to the watch cases amount to 'deemed manufacture' within Section 2(f)(iii) of the Excise Act. The Department has also alleged wilful suppression with intent to evade payment of duty against the showrooms and CFA premises. 2.12 The 22 SCNs issued to the Showrooms and the 33 SCNs issued to the CFA premises contained identical allegations and were adjudicated under the Impugned Order. The Impugned Order recorded common findings against all 55 Show Cause Notices. Hence, the Appeal No. E/42026/2014-DB may be referenced as the lead Appeal for the batch of 34 Appeals filed aga....
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....t arise in the present case because even if the goods were subject to a higher MRP in the ABE factory, no duty would have been payable. Consequently, there is no question of duty evasion in the present case. Section 2(f)(iii) becomes relevant only when the goods were otherwise dutiable when cleared from the factory with the altered MRP. B.3. If the exempted goods are subject to the rigors of Section 2(f)(iii), then the exemption availed would become a nullity and the goods just because they are marked with revised M.R.P. would become liable to duty on the entire new M.R.P. including the M.R.P. at which the goods originally left the factory under exemption. B.4. Even if the goods were brought back to the ABE Factory pursuant to Rule 16 of the Central Excise Rules, 2002 for the purpose of altering the MRP by affixing stickers, there would be no duty payable on account of the ABE Notification. C. Duty Demanded on CFAs and Show Rooms are incorrect. C.1. It is submitted that any demand of duty ought to have been made on the ABE factories and not on the CFAs or Show Rooms. C.2. Even in Titans own case, on an identical issue relating to the fac....
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....d of limitation was one year from the date of filing of return. The earliest of the Show Cause Notices were: • SCN No. 86/2011 dated 22.12.2011 issued to CFA Wilson & Company; • SCN No. 92/2011 dated 30.12.2011 issued to CFA Shambavi Enterprises; • SCN No. 95/2012 dated 17.02.2012 issued to Showroom. E.2. There is no suppression on part of the Appellants since Titan had intimated the details of its operation to the jurisdictional commissioner vide Letter dated 20.05.2005. Further, the units were subjected to Internal Audit Wing of the Central Excise Department and by CERA on multiple dates. When the factory has already been audited by the Audit Officers the impugned Order holding suppression with intent to evade payment of central excise duty is incorrect and is not maintainable. E.3. It is pertinent to note that the Department had initiated proceedings against the Appellant's Hosur unit on similar grounds commencing with the SCN No. 48/2003 dated 29.08.2003 which eventually culminated into the order Titan Industries vs. CCE [2007 (217) ELT 423 (Tri-Chennai)] which records the operations of the Appellants in detail. The Respo....
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....ses for storage and safety. Any damage due to loading and unloading has to be shouldered by CFA. It is stipulated in that the agreement shall not create a partnership or the relationship of employer and employee between TITAN and CFA. Thus, the CFAs have done the activity independently. The activity of labelling and relabeling and affixing revised higher MRP has been done at the premises of the CFA and the place of manufacture would be the place of CFA. 3.2 Thus the activity of deemed manufacture having taken place at the Showrooms and CFAs, the demand of excise duty is legal proper. Further in the appellants' own case, for clearances made from Hosur factory, on the very same issue, TITAN INDUSTRIES Vs CCE 2007 (217) ELT 423 (Tri- Chennai) the appellant had admitted their liability and the finding of the Commissioner that the activity amounts to manufacture was upheld by the Tribunal. The present argument by the appellant that the activity does not amount to manufacture therefore cannot be accepted. 3.3 The arguments on the issue of limitation was countered by the Ld. AR by submitting that the non-payment of duty would not have come to light, if the officer of DGCEI had not c....
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....declaration or alteration of retail sale price on it, OR (d) adoption of any other treatment on goods (e) these activities should be to render the product marketable to the consumers (i.e. ultimate consumer). 5.3 In the present case, there is no dispute that watches fall under third schedule. The department alleges that the Showrooms and CFAs have done activity of labelling or relabeling of containers 'including the declaration or alteration of retail sale price on it'. According to the appellant there is no activity of labelling or re-labelling and the activity undertaken is affixing of MRP stickers on the Containers (watch boxes) and MRP tags on the watches. The samples of the stickers affixed are as below:- 5.4 The department does not have a case that appellant has for the first-time mentioned brand name Titan, or any such new details while affixing the fresh MRP stickers. The appellant has merely changed the MRP in fresh stickers. The distinction between a label and an MRP sticker was analysed in the case of CCE New Delhi Vs Panchsheel Soap Factory (supra). A sticker merely containing the name of importer and MRP was held to be not a 'label'. In common p....
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....ted in Commissioner Vs. Panchsheel Soap Factory 2003 (156) ELT A382. 5.6 Again, the allegation is that the activity of affixing altered MRP amounts to deemed manufacture. There is no allegation that such activity has rendered the product marketable to the ultimate consumer. In the case of Lakme Lever Ltd., Vs CCE 2000 (10) TMI 96 CEGAT, Mumbai, the Tribunal observed that the process/activity should attribute marketability to the product which was otherwise not marketable. The relevant paras read as under:- The goods manufactured by the appellant or obtained by it, all fall under chapter 33 of the tariff. Note 4 to this chapter at the relevant time (1996-97) reads as follows: "In relation to products of heading nos. 33.03, 33.04 and 33.05, conversion of powder into tablets, labelling or relabeling of containers intended for consumers or repacking from bulk packs to retail packs or the adoption of any other treatment to render the products marketable to the consumer, shall be construed as 'manufacture'. The notice issued to the appellant alleged, and the Commissioner agrees that the repacking done in the depot of the appellant falls within the scope of "....
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.... appellant also did not involve any treatment of the goods, or of an individual retail pack. It merely consists of transferring them from one kind of retail pack to another. 6. The Commissioner, before whom these arguments were advanced has said that it is the value addition resulting from the repacking that it attempted to be taxed. A mere addition to value of goods does not by itself amount to manufacture. For that purpose it must fall within the legal definition of manufacture. Apart from that there was no value addition in fact. The appellant sell the goods to the CSD at a price lower than the price at which it sells the goods to the other customers, for two reasons, that CSD was a large and continuing customer, and that sales to it were exempted from sales tax. It is therefore not correct to say that there is any value addition as a result of this process, if at all, there is a value reduction, both on account of lower prices and on account of expenses incurred in the process. The demand on this ground is therefore clearly not sustainable. 7. The demand has also been raised on another ground. It is that during the period June to September 1997 the appellant a....
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.... 3. In this Appeal, we are concerned with the activity covered by clause (iii). As regards this activity, the material allegation is contained in paragraph 12 of the show cause notice which reads thus :- "It further appears that, in the cases where the assessee has received footwear from the karigars, as per para (10)(iii) above, the activity undertaken by the assessee is nothing but "opening to container - affixing the label of brand on the footwear for marketing the product - repacking it." However in this case the goods are actually removed for inspection and for sticking of labels on the footwear and thereafter they are repacked in the boxes. This brings out the fact that the processes carried out amounts to manufacture within the amended definition of manufacture under Section 2(f) of Central Excise Act, 1944 and hence liable to duty." 4. The show cause notice was replied by the respondent-assessee. The contention of the respondent-assessee was that the activity of taking out footwear in finished form from the boxes bearing M.R.P. and labelling the same with their brand names "Metro" and "Mochi" and of putting them into the same boxes is not "manufacture" as ....
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....ng that there is no estoppel in taxation matters and relied on the decision of Hon'ble Apex Court in the case of Dunlop India Ltd., Madras Rubber Factory Ltd., Vs Union of India 1983 (13) ELT 1566 (S.C). We have to agree that even though the appellant might not have contested the issue in an earlier case, they are not prevented from disputing the dutiability in subsequent show cause notices. Further, in this case, the issue is with regard to watches cleared from factories which availed ABE notification. 7. We have already held that the activity of affixing the revised MRP stickers does not amount to manufacture. The department has raised the demand of duty on the Showrooms and CFAs alleging that their activity of affixing fresh MRP stickers amounts to manufacture. The Ld. AR has drawn our attention to Clause (b) of Explanation 2 of Section 4A which is reproduced below: 4A. Valuation of excisable goods with reference to retail sale price.-- (1) The Central Government may, by notification in the Official Gazette, specify any goods, in relation to which it is required, under the provisions of the 2[Legal Metrology Act, 2009 (1 of 2010) or the rules made thereunder or under....
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....ere on the package of any excisable goods more than one retail sale price is declared, the maximum of such retail sale price shall be deemed to be the retail sale price; (b) where the retail sale price, declared on packages 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; (c) where different retail sale prices are declared on different packages for the sale of any excisable goods in packaged form in different areas, each such retail sale price shall be the retail sale price for the purposes of valuation of the excisable goods intended to be sold in the area to which the retail sale price relates. 7.1 As per Clause (b) if the Retail Sale Price is altered after clearance from the factory, such altered Retail Sale Price shall be deemed to be the Retail Sale Price. In other words, the manufacturer has to discharge duty on the altered Retail Sale Price. In the present case, the manufacturer of watches is the factory at Baddi, Rourkee and Dehradun. The factory at these places have not discharged duty as they have ....
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....ies Limited Hosur 981339 196162 Qty:01 22000 953DL05 MRP R 20 000 G486 Inci of all taxes Marketed by Titan Industries Limited Ho 19.00 Document 2 TITAN INDUSTRIES LIMITED The Commissioner of Customs & Central Excise Mangal Pandey Nagar Meerut-1-250 005. ANNEXURES ok May 20, 2005 Ama-594 Sub: Request for permission to change the price label at stock points 1. We, Titan Industries Limited are manufacturing quartz analog watches, in our manufacturing facility at Mohebwala Industrial Area, Dehradun, having registration no. AAACTS131AXM003. We are availing Central Excise Exemption benefit in terms of CE Notification No.50/2003 dt 10th June, 03, as applicable to units which have completed substantial expansion programme. 2. During the year, 2004-05 we have produced 31.77 lakhs of watches and availed the Excise duty benefit and cleared the watches through Clearing and Forwarding Agent (CFA) for sale to wholesale trade. 3. After dispatching from the Factory, there will be few instances of price revision either upward or downward which are part of business activity and based o....