2024 (6) TMI 1452 - AT - Central Excise

Process amounting to manufacture - activity of printing of wedding cards and visiting cards - entitlement to the benefit of SSI Exemption N/N. 8/2003-CE dated 01.03.2003 - inclusion of value of blank cards supplied by the customers for printing in the value of finished wedding / visiting cards - invocation of extended period of limitation. The activity of printing of wedding cards and visiting cards amounts to manufacture or not - HELD THAT - The activity of printing on the cards supplied by the customers results into manufacture. Also the Tribunal in the case of Venus Albus Co. Pvt. Ltd. 2018 (11) TMI 754 - CESTAT CHANDIGARH held that the activity printing of cards video albums etc. amounts to manufacture Entitlement to the benefit of SSI Exemption Notification No.8/2003-CE dated 01.03.2003 - HELD THAT - In the present case the printed wedding cards and visiting cards had been affixed with the brand name Valavi which has been registered in the name of Valavi and Company as evident from the records referred in the order of the adjudicating authority bearing Certificate No.644263 dated 27.06.2007 (Trade Mark No.1239260 dated 24.09.2003) issued by the Registrar of Trade Marks Mumbai under the Trade Marks Act 1999; therefore affixing the trade mark attracts Clause (a) of the SSI Exemption Notification No.8/2003-CE dated 01.03.2003. Therefore appellants are not entitled to the benefit of the said Notification. Inclusion of value of blank cards supplied by the customers for printing in the value of finished wedding / visiting cards - HELD THAT - The learned Commissioner (A) in two appeals has rejected the appellant s contention on the ground that the appellant had failed to place documentary evidences to exclude the value of cards from the transaction value; whereas in Appeal No. E/20552/2022 the learned Commissioner remanded the matter for verification of the claim of the appellant on the basis of documentary evidences to be placed by the appellant for proper verification. Since the views of the learned Commissioner (A) are inconsistent on the issue of inclusion of the value of the cards supplied free by the customers to the appellant in the total cost of the printed wedding cards therefore the matter needs to be remanded to the adjudicating authority to examine the issue in the light of Rule 6 of Central Excise (Determination of Price of Excisable Goods) Rules 2000 and on the basis of documentary evidences on record or that would be produced by the appellant. Invocation of Extended period of limitation - HELD THAT - It is brought on record that the appellant had neither registered with the department nor intimated about the activity undertaken by them therefore the finding of the authorities below on the issue of suppression of fact does not warrant any interference as no contrary evidence has been placed by the appellant to the finding of the authorities below - the invocation of the extended period is justified. Conclusion - i) The activity of printing cards even if customized constitutes manufacture under the Central Excise Tariff Act 1985. ii) The use of another entity s brand name disqualifies a manufacturer from SSI exemption benefits. iii) The value of blank cards provided by customers may be included in the assessable value subject to verification of evidence. iv) The extended period of limitation is applicable where there is a lack of registration and disclosure by the manufacturer. The impugned orders are modified and the appeals are remanded to the adjudicating authority only for the purpose of calculation of duty afresh after computing the assessable value of the printed cards in accordance with provisions of Section 4 of Central Excise Act 1944 read with Central Excise Valuation Rules 2000; thereafter the penalty and interest be calculated accordingly - Appeal disposed off by way of remand.

Summary

ISSUES PRESENTED and CONSIDERED

The Tribunal considered the following core legal questions:

(i) Whether the activity of printing wedding cards and visiting cards amounts to manufacture under the Central Excise Tariff Act, 1985.

(ii) Whether the appellants are entitled to the benefit of the SSI Exemption Notification No. 8/2003-CE dated 01.03.2003.

(iii) Whether the value of blank cards supplied by customers should be included in the value of the finished wedding/visiting cards for excise duty calculation.

(iv) Whether the invocation of the extended period of limitation in the show-cause notice dated 06.05.2016 is justified.

ISSUE-WISE DETAILED ANALYSIS

(i) Manufacture of Wedding and Visiting Cards

Legal Framework and Precedents: The Tribunal referred to the Central Excise Tariff Act, 1985, which requires that for an activity to be considered manufacture, it must result in a new product with distinct name, character, or use. The Tribunal also considered precedents such as the Venus Albums Co. Pvt. Ltd. case.

Court's Interpretation and Reasoning: The Tribunal concluded that the printing of cards, even when done on a per-customer basis, constitutes manufacture as it transforms the blank cards into a product with a distinct character and use.

Key Evidence and Findings: The Tribunal found that the appellants were engaged in printing cards with the brand name 'VALAVI' without registration or duty payment.

Application of Law to Facts: The Tribunal applied the definition of manufacture to the appellants' activities, determining that the customization of cards for individual customers does not negate their marketability.

Conclusions: The Tribunal held that the activity of printing cards indeed amounts to manufacture.

(ii) Eligibility for SSI Exemption Notification

Legal Framework and Precedents: The SSI Exemption Notification No. 8/2003-CE provides exemptions for small-scale industries, except for goods bearing another person's brand name.

Court's Interpretation and Reasoning: The Tribunal noted that the brand name 'VALAVI' is owned by M/s. Valavi and Company, a separate entity, which disqualifies the appellants from the exemption.

Key Evidence and Findings: The Tribunal referred to the trademark registration of 'VALAVI' and the definition of brand name under the notification.

Application of Law to Facts: The Tribunal applied the exemption criteria, finding that the use of the brand name 'VALAVI' by the appellants disqualifies them from the exemption.

Conclusions: The Tribunal concluded that the appellants are not entitled to the benefit of the SSI Exemption Notification.

(iii) Inclusion of Value of Blank Cards

Legal Framework and Precedents: The valuation of goods for excise duty purposes is governed by Section 4 of the Central Excise Act, 1944, and the Central Excise Valuation Rules, 2000.

Court's Interpretation and Reasoning: The Tribunal noted inconsistencies in the Commissioner (Appeals) decisions regarding the inclusion of the value of blank cards.

Key Evidence and Findings: The Tribunal found that in some cases, the value of blank cards was included without sufficient evidence, while in others, the matter was remanded for verification.

Application of Law to Facts: The Tribunal determined that the matter should be remanded to ensure proper valuation based on documentary evidence.

Conclusions: The Tribunal ordered a remand for reevaluation of the inclusion of the value of blank cards in the assessable value.

(iv) Extended Period of Limitation

Legal Framework and Precedents: The extended period of limitation under the Central Excise Act is applicable in cases of suppression, willful misstatement, or fraud.

Court's Interpretation and Reasoning: The Tribunal found that the appellants had not registered with the department or disclosed their activities, justifying the extended period.

Key Evidence and Findings: The Tribunal noted the lack of registration and disclosure by the appellants as evidence of suppression.

Application of Law to Facts: The Tribunal upheld the use of the extended period due to the appellants' failure to inform the department.

Conclusions: The Tribunal held that the invocation of the extended period was justified.

SIGNIFICANT HOLDINGS

The Tribunal established the following core principles:

Manufacture: The activity of printing cards, even if customized, constitutes manufacture under the Central Excise Tariff Act, 1985.

SSI Exemption: The use of another entity's brand name disqualifies a manufacturer from SSI exemption benefits.

Valuation: The value of blank cards provided by customers may be included in the assessable value, subject to verification of evidence.

Extended Limitation: The extended period of limitation is applicable where there is a lack of registration and disclosure by the manufacturer.

Final Determinations: The Tribunal remanded the case for recalculation of duty, penalty, and interest based on proper valuation and evidence verification.