2018 (6) TMI 1144 - AT - Central Excise

Manufacture - process of mixing base paint with the colourants to obtain the pain of a desired shade known as Tinting - Held that - The appellant at the depot are carrying out the activities of tinting, i.e., mixing of base paints with colourants. Therefore, the said product is packed and sold to the dealer. The said activity is amount the manufacture by the fiction of the law as per section 2(f) (iii) of Central Excise Act, 1944. All the activities such as packing, repacking, labelling, relabeling, declaration or alteration of retail sale price or adoption of any other treatment of product to render the product marketable will independently amount to manufacture - In the facts of the present case, the appellant have carried out activities of mixing base paint with colourants. Thereafter it is packed in unit containers and sold in the market. Even if it is accepted that the activities is that which render the product marketable to the consumers is manufactured only when the goods are sold to the ultimate consumer, all other activities such as packing or repacking or labelling or relabeling individually amount to manufacture. Therefore, under any circumstances, the activity carried out by the appellant is indeed manufacture. Time Limitation - Held that - the provision of section 2 (f) (iii) is very clear and there is no ambiguity therein - It cannot be said that the issue is of interpretational nature - Therefore the demand for the entire period along with the penalty is sustainable. Penalty on Sh. P.S. Choudhary, who is the Regional Manager, marketing - Held that - It cannot be said that Sh. P.S. Choudhary, as individual has any role in evasion of duty. Accordingly, considering the overall facts and circumstance, we set aside penalty imposed on Sh. P.S. Choudhary. Appeal allowed in part.

Summary

Issues:
1. Whether the activity of tinting and selling goods by the appellant constitutes manufacture under the Central Excise Act, 1944?
2. Whether the demand raised for the extended period is sustainable?
3. Whether the penalty imposed on the appellant is justified?
4. Whether the penalty imposed on the Regional Manager is valid?

Analysis:

Issue 1:
The appellant was involved in tinting base paints with colorants at their depot, which was then packed and sold to dealers. The question was whether this activity amounted to manufacture under Section 2(f)(iii) of the Central Excise Act, 1944. The Tribunal held that the activities of packing, repacking, labeling, or any other treatment to render the product marketable independently constituted manufacture. Even if the goods were not sold directly to consumers, each activity performed by the appellant individually amounted to manufacture. The Tribunal referred to a previous judgment involving the same issue and concluded that the appellant's activities fell under the definition of manufacture.

Issue 2:
Regarding the demand raised for the extended period, the appellant argued that there was no malafide intention and that the issue was interpretational in nature. However, the Tribunal found that the provision of Section 2(f)(iii) was clear, and the appellant chose to litigate the matter. Therefore, the demand for the entire period was deemed sustainable.

Issue 3:
The penalty imposed on the appellant was challenged on the grounds that it should not be imposed for an interpretational issue. The Tribunal disagreed, stating that the appellant had chosen to contest the matter despite the clarity of the law. Consequently, the penalty was upheld as justified.

Issue 4:
Regarding the penalty imposed on the Regional Manager, the Tribunal considered that marketing personnel like the Regional Manager may not be expected to have technical knowledge of Central Excise provisions. As a result, the penalty on the Regional Manager was set aside, considering the circumstances. The Tribunal dismissed the appeals of Berger Paints India Ltd. and allowed the appeal of the Regional Manager.

In conclusion, the Tribunal upheld that the tinting activity by the appellant constituted manufacture under the Central Excise Act. The demand for the extended period and the penalty imposed on the appellant were deemed sustainable, except for the penalty on the Regional Manager, which was set aside.