AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2024 (4) TMI 30
X X X X Extracts X X X X
X X X X Extracts X X X X
....ppellants import 'modems' falling under Chapter 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 p....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... The said activity is carried out in their trading premises, 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 Manufact....
X X X X Extracts X X X X
X X X X Extracts X X X X
....which would not have otherwise come under the scope of the definition of manufacture in terms of Section 2(f)(iii) and thus would not attract 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 im....
X X X X Extracts X X X X
X X X X Extracts X X X X
....E, Raigad [2014 (308) E.L.T. 746 (Tri. - Mumbai)] (v) BASF India Ltd. Versus CCE, Vapi [2009 (245) E.L.T. 381 (Tri. - Ahmd)] 3.8. Further she has submitted that the entire exercise is 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Ltd. Vs. CCE. & S.T., Ghaziabad - 2022 (381) E.L.T. 795 (Tri. - All.) and ➢ STI Industries vs CCE, Daman - 2015 (327) E.L.T. 514 (Tri. - Ahmd.) 4. Learned AR for the Revenue reiterated the findings of the learned Commissioner. 5. Heard both sides and perused the records. 6. The 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Also, it is argued that these activities cannot fall under the scope of "adoption of any other treatment on goods to render the goods marketable" as the Modems are already in marketable condition at the time of its import. The Revenue's argument on the other hand is that the imported modems are not sold as such but subjected to the process 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 saleab....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nts to manufacture within the definition of Section 2(f)(iii) of the Central Excise Act, 1944. The said decision has been upheld by the Hon'ble Supreme Court as reported in 2018(12) GSTL J33(SC). More or less, similar view also has been expressed by the Tribunal in the case of Komatsu India Pvt. Ltd. Vs. CCE, Nagpur [2017(345) ELT 256 (Tri. Mum.)]. Following 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 tho....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ined that the activities would result into deemed 'manufacture'; hence duty is payable, therefore in all fairness, the dealer's Registration for the said premises belonging to the appellant ceases and the trading premises became manufacturing premises as there is no other items other than 'modems' which was traded from the said premises . In the normal course, they 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 importe....