2015 (10) TMI 369 - AT - Central Excise

Deemed manufacturing - SSI Exemption - assessee put their brand name The Heels and also MRP - trading in shoes - purchasing of footwears in unit containers bearing brand name like Ben Sharman Hitz etc.. The shoes are received in unit containers with brand name declared on the containers but without any MRP. According to the department in respect of these footwear the respondent put their MRP sticker on the containers themselves - Held that - The Commissioner (appeals) has held that the MRP stickers were being put on the footwear and not on the containers and therefore this activity would not amount to manufacture under section 2F (iii). However even if it is accepted that the MRP stickers were being put on the containers and not on the footwear and the activity amounts to manufacture in our view since the brand name owners of the brand names affixed on the containers had not been identified in the sense that the statutory certificate of the ownership of the brand name of the person who had been alleged to be the owner of the brand names have not been produced by the Revenue in view of the judgment of the Tribunal in the case of CCE-Cochin Vs. Geo Engineering Works 2003 (9) TMI 237 - CESTAT BANGALORE benefit of SSI exemption cannot be denied. There is no dispute that the sales turn over of the third category of footwear along with the sales turn over of the footwear bearing the respondent s own brand name was within the SSI exemption limit during each of the three financial year. In view of this without going into the question as to whether the activity of the respondent amounted to manufacture or not we hold that the even if it is treated as manufacture they would be eligible for SSI exemption there would be no duty demand. - Decided against the revenue.

Summary

Issues:
1. Whether the activity of putting MRP stickers on footwear amounts to manufacture under section 2f (iii) of the Central Excise Act.
2. Whether the SSI exemption is applicable when brand name owners have not been identified.

Analysis:
1. The appellant engaged in three types of trading activities involving branded shoes, unbranded shoes with their brand name, and shoes with other brand names. The dispute centered on the third type of trading activity where the appellant put their MRP stickers on shoes received in unit containers with other brand names. The Revenue contended that this constituted manufacture and demanded duty. The Additional Commissioner upheld the duty demand and imposed penalties. However, the Commissioner (appeals) reversed this decision, stating that putting MRP stickers on footwear, not containers, did not amount to manufacture under section 2f (iii). The Revenue appealed this decision. The Tribunal held that even if the activity was considered manufacture, the SSI exemption applied as the brand name owners were not identified by the Revenue, following precedent. As the sales turnover fell within the SSI exemption limit, no duty demand was warranted. Thus, the Revenue's appeals were dismissed.

2. The Commissioner (appeals) and the Tribunal also addressed the issue of SSI exemption eligibility when brand name owners were not identified. The Tribunal relied on precedent to determine that without proof of brand ownership, the SSI exemption could not be denied. As the appellant's sales turnover fell within the SSI exemption limit, the Tribunal concluded that even if the activity was classified as manufacture, the appellant would still be eligible for the SSI exemption. This further supported the dismissal of the Revenue's appeals.