2024 (4) TMI 469 - AT - Central Excise

Process amounting to manufacture or not - re-packing of various excisable goods (herbal and cosmetic products), affixing the brand names owned by them in their premises - Illegality of duty liability under Section 4 of the Excise Act - HELD THAT - This Tribunal in M/S WWS SKY SHOP (P) LTD. VERSUS CCE, INDORE 2018 (1) TMI 1734 - CESTAT NEW DELHI , while relying upon Board s Circular No. 354/285/2011-TRU dated 08.12.2011 has already held that since there is no value addition made by the appellant after receiving the goods from the respective manufacturers till the time these are sold to the consumers that the activity done by the appellant does no amount to manufacture. The bare perusal makes it clear that as per Section 4, the duty of excise on excisable goods has to be assessed including the price actually paid to the manufacturer for the goods sold and the money value of additional consideration, if any, following directly or indirectly from the buyer to the assessee in connection with the sale of such goods. Thus, this section is applicable only qua the person who is the manufacturer of the goods and charges something extra for some additional activity done prior the sale of the goods manufactured by him. It is already confirmed on record that the activity done by the appellant does not amount to manufacture. It has also been held and confirmed that appellant is not the manufacturer of the goods sold by him - irrespective the method of how those products are manufactured by the manufacturer, the activity done by the appellant before putting those products to the actual consumers are not held to be the activity of manufacture. The question of the activity of the appellant to be excisable does not at all arise. Nothing additional is brought on record to have the different opinion. Hence, these findings are affirmed. Hence, even for sake of Section 4, the value for the appellant s activity cannot be included in the value of the excisable goods. Otherwise also, the duty liability on excisable goods is that of the manufacturer. It is an admitted fact on record that the manufacturer i.e. M/s. Davo Laboratories nor M/s. Balchem Laboratories are authorized have discharged their respective eligible liability. No question for sustaining the demand even under Section 4 at all arises. Though the department has relied upon the decision in M/s. Davo Laboratories own case in a departmental appeal titled as Commissioner of Central Excise, Bhopal Vs. Davo Laboratories 2016 (11) TMI 7 - CESTAT NEW DELHI , wherein the Ayurvedic Preparations Roop amrit and Complete Solutions are denied to be considered as Ayurvedic medicines on the ground that both the products are most commonly used for enhancing personal appearance and beauty i.e. cosmetic. The said decision is not applicable as far as duty liability on these products qua the appellant under Section 4 of Central Excise Act is concerned. The demand confirmed even under Section 4 of Central excise Act, 1944 set aside - appeal allowed.

Summary

Issues Involved:
The judgment addresses the issue of illegality of duty liability under Section 4 of the Excise Act and the applicability of Section 4A in relation to duty liability.

Issue 1: Illegality of Duty Liability under Section 4 of the Excise Act

The case involved the appellant being accused of engaging in activities that rendered products marketable without paying central excise duty. The department issued a Show Cause Notice proposing recovery of duty. The Tribunal, High Court, and Supreme Court examined whether the appellant's activities constituted manufacturing under Chapter notes of the Central Excise Tariff Act. The Tribunal held that the appellant's activities did not amount to manufacture, as confirmed by the High Court and Supreme Court. The Supreme Court remanded the case back to the Tribunal to address the duty liability under Section 4 of the Central Excise Act.

Issue 2: Applicability of Section 4 of the Central Excise Act

The appellant argued that their activities, such as repackaging products received from manufacturers, did not constitute manufacturing as per statutory requirements. The department contended that certain products fell under cosmetic preparations, making the appellant liable to pay excise duty under Chapter Note 5 of Chapter 33. However, the Tribunal, relying on Circulars and previous decisions, affirmed that the appellant's activities did not amount to manufacture. It was established that the appellant did not add value to the products received from manufacturers and was not altering essential product details. As the appellant was not the manufacturer and the manufacturers had already paid their duty liability, the demand under Section 4 was set aside, and the appeal was allowed.

This judgment clarifies the distinction between activities that constitute manufacturing under the Central Excise Act and emphasizes the importance of meeting statutory requirements for duty liability. The decision provides a detailed analysis of the appellant's actions, the legal framework under Section 4, and the application of relevant case law to determine the duty liability in the given context.