2018 (8) TMI 312 - AT - Central Excise

Valuation - Central Excise duty on the activated carbon imported by them and repacked from bulk packs to retail packs - It is the case of the department in the show cause notice that such activity would amount to manufacture as per chapter note no. 9 of chapter 38 and demanded approximately 1.34 Crores and interest thereon and also sought to impose penalties - Whether Central Excise duty needs to be paid on the quantity of the goods which were cleared by the appellant and whether they have to be considered as manufactured products as per chapter note no.9 of chapter 38? Held that - The adjudicating authority has specifically recorded that appellant had manipulated various purchase documents which were produced during personal hearing to show that they have received the goods in retail packs. No satisfactory explanation is put forth by the appellant before us on this point except to state that there is nothing on record to show that there was manipulation - if the appellant is undertaking manipulation of documents to prove his case before the adjudicating authority it has to be held that confirmation of demand so raised are correct. The adjudicating authority has recorded a factual finding that the appellant had received the activated carbons from the suppliers in retail packs only and he sold the same in the said retail packs only. This factual finding for dropping the demands other than the amount confirmed is not effectively controverted by the Revenue in their appeal - In the absence of any evidence to show that there was packing or repacking from bulk packs to retail packs the demands dropped by the adjudicating authority is correct. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Central Excise duty liability on repacking of activated carbon from bulk packs to retail packs.

Analysis:
The appeal involved a dispute regarding the Central Excise duty liability on the repacking of activated carbon from bulk packs to retail packs by the appellant. The department alleged that such activity amounted to manufacture under chapter note no. 9 of chapter 38 and demanded payment of approximately ?1.34 Crores along with interest and penalties. The adjudicating authority confirmed a demand of ?35,93,990/-, along with interest and penalties, while dropping other demands based on detailed submissions. The appellant contested the demand on the grounds that they did not convert the packs and that the extended period cannot be invoked. The appellant argued that the goods were received in bulk packs and not repacked into retail packs, relying on case law to support their position.

Upon reviewing the facts and submissions, the Tribunal considered whether the repacking of activated carbon from bulk to retail packs amounted to manufacture as per the relevant chapter note. The Tribunal noted that the goods were initially received in bulk packs and then repacked into smaller packs by the appellant. The adjudicating authority found that the appellant had manipulated purchase documents to show receipt in retail packs, a finding not effectively countered by the appellant. The Tribunal held that if manipulation of documents occurred, the demand confirmation was correct, and Supreme Court decisions cited by the appellant were not applicable in this case.

Regarding the appeal by the Revenue, the Tribunal found that the adjudicating authority had factual findings that the activated carbons were received and sold in retail packs without evidence of repacking from bulk packs. As the Revenue did not effectively challenge this finding, the demands dropped by the adjudicating authority were upheld. Consequently, the Tribunal rejected the appeal filed by the Revenue and also rejected the appeal by the appellant/assessee. The judgment was pronounced on 19.07.2018 by the Tribunal.