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2022 (1) TMI 496 - HC - Customs100% EOU - Process amounting to manufacture or not - labelling and repacking of the imported goods - inter-unit transfer - Chartered Accountants Certification is sufficient proof for co-relating to the transfer and receipt of goods or not - applicability of CBEC Circular No.314/30/97/CE dated 06.05.1997 - HELD THAT - There is considerable force in the arguments advanced by the learned counsel for the respondent inasmuch as the goods said to have been diverted from Bengaluru unit to Venkatapur unit, both being 100% EOUs. On this inter-unit transfer of the raw material, the issue is squarely covered by COMMISSIONER VERSUS SUNIL KUMAR JAIN 2015 (9) TMI 1687 - SC ORDER confirmed by the Hon'ble Apex Court. The finding of the Tribunal is based on this judgment and the same cannot be faulted with - Similarly, no exception can be found with the reasons assigned by the Tribunal in arriving at a decision regarding the eligibility of olives sold in the domestic market which is in conformity with the provisions of the Foreign Trade Policy 2004-2009 as explained by CBEC Circular No.7/2006-Cus, dated 13.01.2006. In the case of COMMISSIONER OF CENTRAL EXCISE, MUMBAI VERSUS JOHNSON JOHNSON LTD. 2005 (9) TMI 85 - SUPREME COURT , the Hon'ble Apex Court considering the meaning of manufacture in the context of Section 2(f) of the Central Excise Act, 1944, has held that the repacking would have to be from bulk packs to retail packs so as to render the product marketable directly to the consumer, wherein it was contended that there was repacking and labelling of the medicaments before sale to the dealer and stock transfer to other depots. It is significant to note all these judgments relates to Section 2(f) of the Central Excise Act, 1944. It is not in dispute that in the present case, we are dealing with 100% EOU, wherein Foreign Trade Policy is applicable, wherein Chapter - 9 provides for definition clause. In terms of the said definition clause - 9.37, manufacture means to make, produce, fabricate, assemble, process or bring into existence, by hand or by machine, a new product having a distinctive name, character or use and shall include processes such as refrigeration, re-packing, polishing, labelling, re-conditioning repair, remaking, refurbishing, testing, calibration, re-engineering. Manufacture, for the purpose of FTP, shall also include agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture, viticulture and mining - Circular No.314/30/97-CX, dated 06.05.1997 issued by the Government of India, Ministry of Finance (Department of Revenue) deals with the subject of scope of the term manufacture in Notification No.1/95 CE with respect to 100% EOU. The said Notification clarifies that a broader view is called for in respect of interpretation of the provisions of Notification No.1/95-C.E. and the exemption may not be restricted only to cases where manufacture under Section 2(f) of the Central Excise Act, 1944 is involved. It is clarified that the term manufacture for the purpose of export is wider in meaning than that used in Section 2(f) of the Central Excise Act, 1944. In the light of this Foreign Trade Policy and Circular, a wider meaning has to be given to the term manufacture . Repacking and labeling is construed to be manufacture in terms of the said Foreign Trade Policy which is applicable to the case on hand - there are no reason to interfere with the finding of the Tribunal on this point. The appeal stands dismissed.
Issues:
1. Labelling and repacking of imported goods amounting to manufacture. 2. Interpretation of CBEC Circular regarding similar goods. 3. Sufficiency of Chartered Accountants Certification for goods transfer proof. 4. Application of judgments by Nishith Impex Pvt. Ltd., Sunilkumar Jain, and CC VS. Western Electronics. 5. Application of CBEC Circular No.314/30/97/CE to the case. Analysis: Issue 1: Labelling and Repacking as Manufacture The appellant challenged the Tribunal's decision that labelling and repacking of imported goods constitute manufacturing. The Revenue argued that the inter-transfer of raw materials between units without permission violated conditions, but the respondent contended that such lapses did not affect duty exemptions. The Court upheld the Tribunal's decision, citing precedent judgments and the Foreign Trade Policy's definition of "manufacture." Issue 2: Interpretation of CBEC Circular The dispute involved whether the sale of goods to the Domestic Tariff Area (DTA) was similar to exports, as per the CBEC Circular. The respondent argued that olives sold domestically were eligible based on circular provisions. The Court agreed with the respondent, emphasizing the circular's definition of "similar goods" and the past export history of the goods. Issue 3: Proof of Goods Transfer The Tribunal's reliance on Chartered Accountants Certification for goods transfer proof was contested by the Revenue. However, the Court found no fault with this approach, as supported by relevant judgments and the Foreign Trade Policy's expansive definition of "manufacture." Issue 4: Application of Precedent Judgments The appellant challenged the Tribunal's reliance on judgments by Nishith Impex Pvt. Ltd., Sunilkumar Jain, and CC VS. Western Electronics. However, the Court found the Tribunal's decisions consistent with these judgments and applicable laws, leading to the dismissal of the appeal. Issue 5: Application of CBEC Circular No.314/30/97/CE The Revenue questioned the Tribunal's application of CBEC Circular No.314/30/97/CE. Still, the Court upheld the Tribunal's decision, emphasizing the circular's broader interpretation of "manufacture" for export purposes, aligning with the Foreign Trade Policy's definitions. In conclusion, the High Court dismissed the appeal, finding no faults in the Tribunal's rulings and upholding the respondent's arguments based on legal interpretations, circular provisions, and relevant judgments.
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