2015 (10) TMI 2400 - AT - Central Excise

Manufacturing activity or not - preparation of cutlery pack for airlines - they put a card showing their name on the cutlery pack so that it is known to the passengers that the catering is by them - items like dal, rice, curry, etc. which are separately packed. - In addition to these items, appellants also bought other items like butter, jam, pickles, etc. manufactured by other manufacturers which are excise duty-paid, if applicable. They put such items on the tray, along with bread, etc. and these are handed over to the airlines in the aircraft. In the aircraft, the heated items are also put in such trays and served to the passengers. - Invocation of extended period of limitation. Held that - just because particular goods are classifiable under a particular heading, it will not automatically mean that the activities carried out by an appellant amounts to manufacture. It is for the Revenue to prove that the activity carried out by the appellant amount to manufacture and it satisfies the criteria prescribed by the hon ble Supreme Court, viz. new name, character and use. In our view, adjudicating authority has not given any findings on this issue. Extended period of limitation - Held that - the appellants were registered with the department either for payment of excise duty or for payment of service tax. Some of the appellants were manufacturing cake pastries, chocolates and were regularly paying excise duty. Further, it is very well known that the appellants are engaged in providing catering services to the various airlines. In fact, catering to the airline is their main business. Moreover, no such caterer was paying excise duty on meals. In these facts, it is difficult to say that there was suppression of facts or willful misstatement of facts or intention to evade duty. Whether goods are branded goods - Held that - Passengers understand that the catering is being done by the appellants. Thus, the meals get connected with the appellants and, therefore, in our considered view, the goods being supplied are branded goods and we find that, almost identical situation existed in the case of Australian Food India (P) Ltd. (2013 (1) TMI 330 - SUPREME COURT) decided by the hon ble Supreme Court - For the first issue whether the activity amounts to manufacture or not, we would have normally remanded the matter to the Commissioner for examining the same and give his finding. In the facts and circumstances of the case, in our view, the extended period of limitation is not invokable, we therefore do not consider it necessary to remand the matter to the Commissioner on the issue of manufacture. - demands are beyond the normal period of limitation - Decided in favour of assessee.

Summary

Issues Involved:
- Whether the activity of assembling food items in trays by flight caterers amounts to manufacture.
- Whether the goods supplied can be considered as branded goods.
- Whether the extended period of limitation is applicable in this case.

Analysis:

Manufacture Issue:
The appellants argued that assembling food items in trays does not amount to manufacture. They cited various case laws to support their contention. They emphasized that the meal comes into existence after clearance from their premises and any manufacturing activity occurs during the flight by cabin crew. The appellants also disputed the classification of the trays as edible preparations with a brand name under a specific tariff heading. The Tribunal noted that the adjudicating authority did not provide findings on whether the activity constituted manufacture. It held that mere classification under a heading does not automatically imply manufacturing. The Revenue needed to prove that the activity met the criteria set by the Supreme Court for manufacturing, which was not done in this case.

Branding Issue:
The dispute also revolved around whether the goods supplied were branded. The Revenue argued that even though individual items were not labeled, the presence of a card with the caterer's name on the cutlery pack implied branding. The Tribunal agreed, stating that passengers associated the meals with the caterer, making them branded goods. It referenced a Supreme Court judgment to support this conclusion.

Extended Limitation Issue:
Regarding the extended period of limitation, the appellants contended that there was no suppression of facts or intention to evade duty as they were registered with the department and engaged in catering services openly. The Tribunal found it hard to establish willful misstatement or fraud, given the appellants' regular payment of excise duty on other items and their known business of catering to airlines. Consequently, it ruled that the extended limitation period was not applicable in this case.

Conclusion:
The Tribunal allowed the appeals as all demands were beyond the normal limitation period. It kept the issue of whether the activity amounted to manufacture open, as the adjudicating authority had not provided a clear decision on this matter. The judgment was pronounced on 10/08/2015.