TaxTMI 
TaxTMI 
2025 (5) TMI 1223
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....e activities of packing, repacking, labelling, relabelling, etc., the parts and therefore, the Revenue was of the view that the activity of trading of parts amounts to manufacture. Accordingly, it was alleged that the respondent is liable to pay duty on clearance of the said parts for the period from July, 2010 to June, 2015, by way of issuance of a Show Cause Notice dated 04th August, 2015. 3. The ld. adjudicating authority examined the issue and vide the impugned order, dropped the charges against the respondent. 4. Aggrieved from the said order, the Revenue is before us, on the ground that the said parts are deemed to have been manufactured as per Section 2(f)(iii) of the Central Excise Act, 1944 by way of packing/re-packing, labelling/re-labelling, undertaking activity to improve the marketability and alteration of retail sale price of the goods covered under the Third Schedule, without getting central excise registration. 5. The ld. adjudicating authority has dropped the charges against the respondent as the respondent have admitted that they had carried out the said activities. The Revenue prays that the impugned order be set aside. 6. On the other hand, the Ld. Counsel a....
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....ement of Director of M/s. Dhanbad Electricals Pvt. Ltd., Kolkata Shri Subhas Kumar Agarwal, a vendor of the said noticee no. 1, I find that in his statement recorded on 28.05.2015, Shri Subhas Kumar Agarwal stated that the company is dealing with reputed brands like GE, Cooper Bussman etc. and most of the products (spare parts) are having MRP printed on the packets. M/s. Dhanbad Electricals Pvt. Ltd. sells those products to the clients after giving them some discount. Sri Agarwal has also stated that all goods sold by M/s. Dhanbad Electricals Pvt. Ltd. 10 M/s. Mine Line carry MRP. Further, Shri Subhas Kumar Agarwal also stated that the materials as received by M/s. Dhanbad Electricals Pvt. Ltd. from the manufacturer have MRP on each box. These boxes are packed in a carton and sent to M/s. Mine Line Pvt. Ltd. From a challan of M/s. Dhanbad Electricals Pvt. Ltd. having number 1484 dated 01.06.2013 it is seen that the MRP/Unit Rate of HRC HT PT Fuse is Rs. 802/-and the Director of M/s. Dhanbad Electricals Pvt. Ltd. also stated in statement that they allow 20% to 30% discount on the MRP. On scrutiny of the documents in relation to Purchase Price and Sale Price submitted by the noticee ....
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....se notice by relying upon the above referred invoice has alleged that selling the Overload relay Type MN2 at a price much higher than that of the MRP is a clear alteration of MRP and the notice No. 1 has rendered the spare part Overload relay Type MN2 to be deemed manufactured as per Section 2f(iii) of Central Excise Act 1944. But, I find, in this case also no evidence has been cited which proves declaration or alteration of retail sale price on the container of the spares effected by the noticee no. 1. 8.7 The photographs of the IRC Fuse Links, MNX9 Contactor carrying MRP were reproduced in the show cause notice and relied upon as proof of alteration of MRP by the notice. But I find that the photographs reproduced at page 7 and 8 of the show cause notice shows that there has been no alteration of MRP. In both the photos the MRP is being clearly depicted and I could see that the MRP is of the original manufacturer of the spare. As per the provisions of the Section 2f (iii) of Central Excise Act. 1944 any process of alteration of retail sale price on the unit container would be treated as deemed manufacture. I could find no evidences of physical alteration of the MRP/RSP on the u....
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....arts, only, I could not find any evidence which proves that such crates wre used for unit packing of inchistrial spare parts, instead I find that a variety of spare parts were put together in the wooden crates, either in bare form or in their original packing and this was done mainly for safety of the spares during transit. Thus, the wooden packing done by the notice is for logistical reasons only In CESTAT's order in the case of Johnson and Johnson Vs CCE (2003(156) ELT 134 (Tri.)] which was later upheld by SC [2005 (188) ELT 467 (SC)] it was held that mere repacking was not enough and it had to be repacking from bulk to retail packs. (emphasis added) 8.11 The wooden crates and the bigger cartons inside which the spares are packed for despatch to the buyers are affixed with the stickers on which the text "Supplied by Mine Line" and the office address of the noticee no. 1 is mentioned. It has been alleged in the show cause notice that stickers contains brand name of the company and affixing of these sticker means labelling or relabeling of containers. 8.12 Generally speaking, a label is a written illustration of the goods, upon which it is affixed, as to its characteris....
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....rials in a carton box" and also that "we received the rejected materials both from factory and office of Mis. Mine Line (P) Ltd. Then I change the materials and sent either to their factory or to office as received from them". It is alleged from the above statement that to reject the supplied goods, the Noticee No. 1 must have tested the goods and hence, increased it marketability. However, the show cause notice does not provide any evidence that whether the products that are rejected are unpacked and tested in either at the factory or at the office of the Noticee No. 1. (emphasis added) 8.14 The letter M13/SCCL/84 dated 31.01.2013 of the Noticee No. 1 was relied upon in the show cause notice wherein in response to "Supply of Spares for mine line make equipment under rate contract for a period of 2 years" to the Chief General Manager, (Purchase), The Singareni Collieries Company Ltd., they have affirmed that "we do test all components before these are delivered". It is thereby alleged that the Noticee No. 1 does testing for individual spare products. However, the subject paragraph-4 of the said letter in whole reads as "4. It is not practical to give Test Certificate for....
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....in the statement dated 21.07.2015 Smt. Nandini Chakravarty, (Noticee No. 2) the MD of Noticee No. I have categorically stated that the NIT document relied upon is an open tender for "Spare parts of Mine line equipment". In the tender Noticee have declared themselves as manufacturer as they do manufacture the equipment for which they are registered with the Department. The spares of the equipment are trading items and such items do not enter the declared Excise premises where goods are manufactured. As a matter of fact, no company manufactures all the components required for their finished product. Inputs and raw materials are bought from other companies. Like as an example, for an automobile segment, the axles, shockers. T rods etc are manufactured by other ancillary units known as the OEMs i.e. other equipment manufactures. In the case of the present noticee, it is seen that they are manufacturing flame proof equipments used in the mining segment. These equipments also contains number of electronics components like resistence, cut outs, fuses etc. These specialized components are inturn manufactured by other units like Siemens. L&T etc. The original Equipment manufacturer in th....
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.... added) 8.20 The fact that the noticee had claimed in the NIT that they are manufacturer and the fact that the noticee are responsible for the warranty of the spares in case these gets rejected by the buyers cannot be a reason to conclude that the notice would be covered by the definition of manufacturer under the Central Excise Act, 1944 in view of the fact that the original manufacturer of these spares clears these goods on payment of the Central Excise duty In this regard reference may be drawn to the observation of Hon'ble CESTAT in the case of ASKA EQUIPMENT PVT. LTD. vs. CCE/2006(202) ELT 795] (Tri. Mum)] where it was held that - Fact that appellant/trader had claimed before Government companies, who are buyers of lower that they manufacture the same or that they give warranty, cannot be a reason to hold them manufacturer under section 2(f) of the Central Excise Act, 1944-Placing a sticker on tower showing brand name of appellants will not render appellants as a manufacturer of tower. This decision was affirmed by the Apex Court in [2010 (254) ELT A37 (S.C.)] and departmental appeal dismissed by the Apex Court" 10. We also find that in this case, the respondent is....