2018 (1) TMI 1734 - AT - Central Excise

Process amounting to manufacture or not (deemed manufacture) - after receiving the bottles of the medicines in the packets, appellant just affix the hologram bar code to avoid duplicity and put in an outer cover box to ensure safe transportation - HELD THAT - The purpose of deeming processes such packing, re-packing, labeling, relabeling etc. to be processes amounting to manufacture is to capture the value addition. In the instant case, there is admittedly no value-addition . The goods are sold either at or below the MRP to the consumer. More importantly, the goods when received by the vendor are already in a pre-packed form, bear the necessary declarations including the MRP as prescribed by the provisions of the Legal Metrology Act and have already been subjected to excise duty on the basis of value determined under Section 4A i.e. the Retail Sale Price less abatement. The vendor neither re-labels nor alters the retail pack or the declarations affixed therein. Under these circumstances, the activity undertaken in the instant case merely consists of transferring pre-packed duty paid retail goods into another packing. Thus, it is clarified that in such cases excise duty would not be attracted on the operations or processes carried out by the vendor. There are no reason to sustain with the impugned order and the same is hereby set aside - the appeals filed by the assessee-Appellants are allowed.

Summary

Issues:
- Appellants challenging Order-in-Original No. 24/Commr/CEX/IND/08 dated 30.07.2008 passed by the Commissioner of Central Excise, Indore for the period December 2003 to July 2005.
- Whether the activity of the assessee-Appellants amounts to manufacture, attracting duty and penalty.

Analysis:
The Appellate Tribunal CESTAT New Delhi heard the appeals filed by the assessee-Appellants against the Commissioner's order. The assessee-Appellants were engaged in trading, tele-marketing, and selling medicines manufactured by specific laboratories. The Department contended that the activity of affixing hologram, bar code, and outer cover box to the received medicines amounts to manufacture, demanding duty and penalty. The Tribunal considered a relevant Board Circular dated December 8, 2011, which clarified that no excise duty is attracted when repacking pre-packed duty paid retail goods without value addition. The Tribunal noted that in the present case, the activity undertaken was merely transferring pre-packed duty paid retail goods into another packing, aligning with the Board Circular. Consequently, the Tribunal set aside the impugned order, allowing both appeals filed by the assessee-Appellants.

This judgment primarily addressed the issue of whether the activity of the assessee-Appellants, involving repacking pre-packed duty paid retail goods, amounts to manufacture attracting excise duty. The Tribunal relied on a Board Circular stating that no excise duty is attracted when there is no value addition in such repacking activities. The Tribunal found that the activity in question did not involve any value addition and was merely transferring goods into another packing. Therefore, the Tribunal concluded that excise duty was not applicable to the operations carried out by the assessee-Appellants, in line with the principles outlined in the Board Circular.

In conclusion, the Tribunal's decision was based on the interpretation of the relevant Board Circular, which clarified that excise duty is not attracted when repacking pre-packed duty paid retail goods does not involve value addition. By applying this clarification to the case at hand, the Tribunal found that the activity undertaken by the assessee-Appellants did not amount to manufacture for the purpose of levying excise duty. As a result, the Tribunal set aside the Commissioner's order and allowed both appeals filed by the assessee-Appellants, emphasizing the importance of aligning with the principles outlined in the Board Circular to determine the applicability of excise duty in similar cases.