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2024 (5) TMI 67 - SC - Central ExciseProcess amounting to manufacture - activity of labelling - Availing the cenvat credit of the duty paid by its Jammu unit - whether the labelling/re-labelling or putting additional labels on the containers in the Taloja unit amounted to manufacture in terms of Note 3 to Chapter 18 of the Central Excise Tariff Act? - suppression of facts or not - Extended period of Limitation. While contention of the appellant is that the same does not amount to manufacture, on the other hand according to the respondent, as per Note 3 to Chapter 18 of the Central Excise Tariff Act, the above activity amounts to manufacture. HELD THAT - The word manufacture includes any process which is incidental or ancillary to the completion of a manufacture product; any process which is specified in relation to any goods in the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act as amounting to manufacture; or any process which in relation to the goods specified in the Third Schedule involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer. By way of the amendment, the word and has been replaced by the word or between the expressions labelling or re-labelling of containers and repacking from bulk packs to retail packs . Prior to 01.03.2008, the legislative intent was quite clear. The process to constitute manufacture should either be labelling or re-labelling of containers and repacking from bulk packs to retail packs. This process was construed to be one whole. In other words, the activity should not only include labelling or relabelling of containers but the same should relate to repacking from bulk packs to retail packs. This was one activity. The other activity was adoption of any other treatment to render the product marketable to the consumer. Therefore, the legislature was quite clear that if either of the two processes were followed, the same would amount to manufacture. It is already noticed the definition of manufacture in the Central Excise Act. Any one of the processes indicated in Note 3 to Chapter 18 of the Central Excise Tariff Act would come within the ambit of the definition of manufacture under Section 2(f)(ii) of the Central Excise Act - There is no factual dispute as to the activity carried out by the respondent at its Taloja unit. Whether the goods are brought from the Jammu unit or are imported, those are relabelled on both sides of the packs containing the goods at the Taloja unit of the respondent and thereafter, introduced in the market or sent for export. In terms of Note 3 to Chapter 18, this process of re-labelling amounts to manufacture . Appeal dismissed.
Issues Involved:
1. Whether the activity of labelling carried out by the respondent amounts to manufacture under Note 3 to Chapter 18 of the Central Excise Tariff Act. 2. Whether the respondent was entitled to avail cenvat credit and rebate. 3. Whether there was suppression or misrepresentation of facts by the respondent to avail irregular credit. 4. Whether the extended period of limitation was available to the revenue for issuing the show cause cum demand notice. Issue-wise Detailed Analysis: 1. Whether the activity of labelling carried out by the respondent amounts to manufacture under Note 3 to Chapter 18 of the Central Excise Tariff Act: The core issue is whether the activity of labelling carried out by the respondent at its Taloja unit amounts to manufacture. The Central Excise Act defines "manufacture" to include processes specified in the Chapter notes of the Central Excise Tariff Act as amounting to manufacture. Note 3 to Chapter 18, post-amendment (effective from 01.03.2008), states that "labelling or re-labelling of containers or repacking from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer" shall amount to manufacture. The amendment replaced the word "and" with "or," thus splitting the composite activity into three independent processes. The Court concluded that the activity of labelling carried out by the respondent falls within the ambit of "manufacture" as per Note 3 to Chapter 18. 2. Whether the respondent was entitled to avail cenvat credit and rebate: The respondent's Jammu unit manufactured cocoa butter and cocoa powder, which were sent to the Taloja unit for labelling and subsequent export. The respondent claimed cenvat credit for the duty paid by the Jammu unit and rebate on the duty paid for exported goods. The Judicial Member and the third member of CESTAT held that the labelling activity amounted to manufacture, thus entitling the respondent to avail cenvat credit and rebate. The Court affirmed this view, stating that the respondent was entitled to the credit of the duty paid on goods received from the Jammu unit and the countervailing duty paid on imported goods. 3. Whether there was suppression or misrepresentation of facts by the respondent to avail irregular credit: The appellant alleged that the respondent had suppressed the fact that it was only undertaking labelling at its Taloja unit, which did not amount to manufacture, with the intent to avail irregular credit. The Judicial Member and the third member of CESTAT found no suppression or misrepresentation of material facts by the respondent. The Court agreed, stating that since the issue was related to the interpretation of a statutory provision, the question of suppression or misrepresentation did not arise. 4. Whether the extended period of limitation was available to the revenue for issuing the show cause cum demand notice: The appellant issued a show cause cum demand notice to the respondent, alleging irregular availing of cenvat credit and erroneous rebate claims, and sought to recover the amounts along with interest and penalties. The Judicial Member and the third member of CESTAT held that the extended period of limitation was not available to the revenue as there was no suppression or misrepresentation of facts by the respondent. The Court concurred, stating that the extended period of limitation was not applicable in this case. Conclusion: The Supreme Court upheld the CESTAT's majority decision, affirming that the activity of labelling carried out by the respondent amounted to manufacture under Note 3 to Chapter 18 of the Central Excise Tariff Act. Consequently, the respondent was entitled to avail cenvat credit and rebate, and there was no suppression or misrepresentation of facts. The extended period of limitation was not available to the revenue. The appeal by the revenue was dismissed, and the impugned order of CESTAT dated 16.04.2015 was affirmed.
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