2013 (10) TMI 447 - AT - Central Excise

Activity Manufacture OR Not fixing of brand names / labels on bathroom fittings / accessories - deemed manufacture - SSI Exemption - Redemption Fine Waiver of Pre-deposit Held that - None of the goods seized are covered by Third Schedule to the Central Excise Act, 1944 and as such the appellants activity does not amount to manufacture, and that even if items which were accepted by the appellant as bath room accessories are treated as falling under Heading 73.24 and 74.18 the total value of the goods covered by Third Schedule to the Central Excise Act would be about Rs.1,30,000/- for which the penalty of Rs. 2,00,000/- is too high - the redemption fine imposed for release of the goods is sufficient and as such the requirement of pre-deposit of penalty is waived for hearing of the appeal and recovery thereof is stayed till the disposal of the appeal the redemption fine imposed for release of the goods is sufficient and as such the requirement of pre-deposit of penalty is waived for hearing of the appeal - Stay granted.

Summary

Issues:
1. Whether the appellant's activity amounts to manufacture under the Central Excise Act, 1944?
2. Validity of the confiscation of seized goods and imposition of penalty.
3. Justification for waiver of pre-deposit of penalty for hearing of the appeal.

Analysis:

Issue 1:
The appellant, a trader dealing in bathroom accessories, was accused of engaging in packing/repacking and labelling/relabeling activities, which the Department considered as manufacturing goods under the Central Excise Act, 1944. The appellant contested this allegation, stating that their activities did not fall under the provisions of the Act. The Tribunal found that only goods falling under specific headings would be considered as manufactured goods under the Act, with a value of about Rs. 1,30,000. Consequently, the requirement of pre-deposit of penalty was waived for the appeal hearing, and recovery stayed until the appeal's disposal.

Issue 2:
The Department had seized goods from the appellant's premises, including bathroom fittings, brand labels, and packing material, valuing Rs. 18,11,064. The Deputy Commissioner ordered the confiscation of these goods and imposed a penalty of Rs. 2,00,000 on the appellant. The Commissioner (Appeals) upheld this decision, albeit reducing the redemption fine. The appellant challenged this order, leading to the current appeal. The Tribunal, however, determined that only specific goods fell under the manufacturing category, justifying a lower penalty amount and waiver of pre-deposit for the appeal.

Issue 3:
During the hearing, the appellant's advocate argued for the waiver of the pre-deposit of the penalty, emphasizing the lack of goods covered by the Act and the excessive penalty amount. The Department's representative opposed this, supporting the findings of the Commissioner (Appeals). The Tribunal, after considering both sides' submissions and reviewing the records, concluded that the appellant's case had a strong prima facie basis. As a result, the Tribunal waived the pre-deposit requirement for the penalty and stayed the recovery until the appeal's final decision.

This judgment highlights the importance of correctly categorizing goods under the Central Excise Act, ensuring that penalties and confiscations are justified based on the specific provisions applicable to the goods in question.