TaxTMI 
TaxTMI 
2024 (4) TMI 30
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.... 8551762 of CETA,1985 on payment of appropriate duties of customs, CVD and additional duty, education cess, secondary and higher education cess. The modems are stored at the said trading premises; then the packing of modems are opened and after testing, accessories placed, repacked and labelling with their name, logo and address sold to their customers passing on the amount of CVD and other duties paid on the imported goods mentioning in the said dealer's invoice. The appellant's said premises was visited by the Excise Department in March 2010, and on completion of investigation, alleging that the activities carried out in the registered dealer's premises 29B/3, resulted into 'manufacture' in terms of Section 2(f)(iii) of Central Excise Act, 1944, show-cause notice was issued to the appellant on 17/02/2011 for recovery of duty amounting to Rs.4,66,90,550/-with interest and penalty. On adjudication the demand has been confirmed with interest and equivalent amount of penalty. Appeal No. E/246/2012 The appellants are having their factory at 29B/1, Electronic City, Hosur Road, Bangalore - 560 100 which is adjacent to their dealer's premises, also registered with Department for manufa....
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....remises, also registered with the Department. 3.2. Explaining the activities undertaken at the trading premises, the learned advocate has submitted that they import modem and other goods in fully manufactured condition which is functional and marketable and ready for sale in domestic market. After receiving the imported goods in their trading premises, undertake the following activities:- * The modems are unpacked from the boxes (in which they are imported) and subjected to (a) physical inspection to ascertain if there is any transit damage which would have occurred to the product and is visible from outside and (b) functionality test to ascertain that no damage is caused (during transit) to the internal components of the Modem and to ensure that the same is in working condition. * After completion of such testing process, a label containing the Company's logo is affixed on the top cover of the Modem and a logo containing the words 'Marketed by MRO-TEK Ltd. Bangalore' is affixed on the bottom cover of the Modem. * The serial number of the product as allotted by the Original Manufacturer, which is affixed by the manufacturer by way of a label and is found even at the time....
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....tract excise duty. Therefore, the meaning of 'manufacture' in such circumstances would have to be strictly interpreted. In support, she placed reliance on the following decisions:- (i) Union of India & Others v. Bombay Tyre International Limited [1983 (14) ELT 1896 (SC)] (ii) Commissioner of Customs (Import), Mumbai v. Dilip Kumar [2018 (361) ELT 577 (SC)] 3.5. She has further submitted that in the present case, the modems as imported are packed in unit containers. The appellant undertakes testing of the modems, affixes labels on the modems and thereafter packs the modems in the very same unit container in which it was imported. Mere packing of product after undertaking the activity of testing and inspection is not re-packing. Along with such modems, accessories are packed in carton boxes. The appellants do not undertake repacking of modems in unit containers nor labelling or re-labeling of the containers. Also they do not undertake any other treatment on the goods to render the same marketable. It is her contention that the impugned products at the time of import are complete and fully marketable condition and are ready to sale to the end customers. The testing activity under....
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.... revenue neutral inasmuch as the input credit availed has been used to pay duty on the final products. In support, she has referred the following judgments:- ➢ Nirlon Ltd. Vs. CCE, Mumbai [2015(320) ELT 22 (SC)] ➢ United Distributors vs. CCE, Thane [2014 (309) E.L.T. 571 (Tri. - Mumbai)] ➢ L'Oreal India Pvt. Ltd. v. CCE, Raigad [2014 (308) E.L.T. 746 (Tri. - Mumbai)] ➢ BASF India Ltd. Versus CCE, Vapi [2009 (245) E.L.T. 381 (Tri. - Ahmd.)] 3.9. It is further submitted that since the Department considered the activity undertaken by the appellants results into manufacturing, then the dealers premises be considered as manufacturing unit and automatically covered under the Central Excise registration obtained as manufacturer. In support, they have referred to the following judgments:- (i) CCE & ST, LTU, Bangalore vs. Biocon Ltd. - 2014 (309) E.L.T. 66 (Kar.) (ii) Munjal Shawa Ltd. vs. CCE, New Delhi - 2000 (116) E.L.T. 684 (Tribunal) (iii) Greenply Industries ltd. Vs. CCE, Kolkata-VII [2014(314) ELT 356 (Tri. Kolkata)] (iv) Maruti Udyog Ltd. Vs. CCE, New Delhi [2000(118) ELT 43 (Tri. LB)] (v) Lakshmi Gayatri Iron & Steel P. Ltd. Vs. CCE, H....
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.... issues involved in the present appeals for determination are whether: (i) the activities carried out by the appellant on the imported Modem at their Registered trading premises at 29B/3 resulted into 'manufacture' as per Section 2(f)(iii) of Central Excise Act, 1944; (ii) duty paid after availing cenvat credit of the CVD paid on imported modems from the manufacturing unit at 29B/1 is permissible; and (iii) the Appellant contravened Rule 8(3A) of the Central Excise Rules, 2002 in discharging the duty by utilising the credit from their manufacturing unit situated at 29B/1. 7. The admitted facts are that there are two units operated by the appellant situated adjacent to each other at 29B/1 and 29B/3, Hosur Road, Electronic City, Bangalore; the former one is registered as a manufacturing unit and the second one Registered as trading Unit. The appellant are manufacturing and trading the same items viz. modems, converters, etc. falling under Chapter heading 851762 of Central Excise Tariff Act. After import of the modems on payment of applicable CVD and SAD,etc. the same are received at their premises at 29B/3 and subjected to certain activities/processes before sale of the same to cust....
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....ess of testing, affixation of the logo of the appellant and selling and clearing the same along with other accessories by repacking in cartoons so as to make the modems usable and functional by the end consumers; hence definitely fall under the definition of deemed 'manufacture' and in particular under the scope of the expression "adoption of any other treatment on the goods to render the product marketable to the consumer". 10. A careful analysis of the activities undertaken by the appellant from the dealers premises, it reveals that the imported modems were not simply cleared 'as such' but it has been opened, tested (for whatsoever reason); the purpose is not only visual inspection as a formality, but tested by qualified engineers which necessarily includes, if damaged or any manufacturing deficiency, to repair/remove the same, to put in saleable condition; the tested modems then repacked in the boxes and placed in bigger cartons along with other modems, accessories which would make the modems marketable, procured and supplied along with the modems after affixing the logo and labelling the modems with appellant's name and address. These activities definitely relevant and necessa....
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....g the above precedents, we are of also of the view that the activities carried by the appellant in the premises at 29B/3 on imported modems would result into 'manufacture' within the meaning of Section 2(f)(iii) of Central Excise Act, 1944. Consequently, the appellant are required to discharge duty on the imported modems for the aforesaid activities in their trading premises, which amounts to manufacture.. 13. The next issue to be addressed relates to discharge of duty liability by the Trading unit on the imported modems, debiting through the CENVAT credit account maintained in Manufacturing Unit. 14. We find that on visit of the officers of the HQ. Preventive to the premises of the appellant and during the course of recording the statement of Shri R. Ramaswamy, Company Secretary of the appellant on 29.3.2010, initially though he has not accepted the activities carried out by them would result into manufacture; however made a statement that they would discharge the duty and accordingly stated that the appellant be permitted to take credit in their RG23A Part-II register at their manufacturing premises situated adjacent to dealers premises. On the next day i.e. on 30/03/20210, the....
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.... would have been asked to change their registration and discharge duty after availing admissible cenvat credit on the inputs used in the manufacture of final product. Since in the present case, the same products are manufactured and cleared by them on payment of duty from their registered premises as manufacturing unit, therefore, merging both dealer's registration with manufacturing registration of the adjacent premises is only a procedural issue which cannot come on the way of allowing credit to discharge duty on the imported modems, once it is considered that the activities undertaken on the said modems amounts to manufacture. Therefore, we do not find any irregularity in availing the cenvat credit even though the input-modems had already sold/cleared by the appellant. Further, when there is no dispute that the imported modems earlier received and cleared from trading premises; the credit subsequently availed only for the purpose of discharging duty leviable on the 'modems', when the activities found to be 'manufacture' under Section 2(f)(iii) of Central Excise Act, 1944. However, the excess credit that remained in balance after debiting the credit equal to the duty payable on t....