2011 (9) TMI 929 - AT - Central Excise

Summary

Issues: Application of Section Note No. 4 of Chapter 62 to determine if certain activities amount to "manufacture"; Confirmation of demands for duty, interest, and penalty; Extending Cenvat credit of CVD paid at the time of import; Interpretation of chapter note regarding repacking and labeling activities; Justification for invoking the extended period of limitation.

Analysis:
1. Application of Section Note No. 4 of Chapter 62: The case involved the import of readymade garments which were further processed by the applicants through activities like checking, ironing, and repacking into product boxes. The original authority considered these activities as manufacturing under Section Note No. 4 of Chapter 62, which includes affixing a brand name, labeling containers, and repacking to make the product marketable to consumers.

2. Confirmation of Demands: The original authority confirmed demands totaling significant amounts along with interest and penalties, citing the activities undertaken by the applicants as falling within the definition of manufacture under the relevant section note. The demands were made after extending Cenvat credit of CVD paid during import.

3. Interpretation of Chapter Note and Precedent: The advocate for the appellant argued that the activities of labeling containers and repacking did not amount to manufacturing. He relied on a Tribunal decision to support his interpretation, emphasizing the need for a fine interpretation of the chapter note to determine whether the activities constituted manufacture.

4. Adjudication and Submissions: The Joint CDR reiterated the findings of the adjudicating authority, asserting that the repacking and labeling activities undertaken by the applicants on the imported garments clearly fell within the purview of the chapter note, justifying the demands made.

5. Tribunal's Decision: The Tribunal, after considering both sides' submissions, acknowledged that the activities undertaken by the applicants, such as repacking and labeling, aimed to make the products marketable, indicating prima facie sustainability of the demands. However, the Tribunal agreed with the appellant's argument regarding the extended period of limitation, finding it unjustified in this case.

6. Final Order: The Tribunal directed the applicants to deposit a specified sum towards the demands within a set period, while waiving the pre-deposit of the remaining amounts pending the appeal's disposal. This decision balanced the prima facie sustainability of the demands with the consideration of the extended period of limitation.

In conclusion, the judgment addressed the application of Section Note No. 4 of Chapter 62 to determine manufacturing activities, confirmed demands based on the activities undertaken by the applicants, considered the interpretation of the chapter note and relevant precedent, and balanced the need for deposit against the extended period of limitation in the final order.