1999 (4) TMI 158 - AT - Central Excise

Summary

Issues:
1. Waiver of deposit of duty, penalty, and redemption fine.
2. Whether repacking of goods and pasting labels render the goods marketable.
3. Interpretation of the deeming provision in Note (4) to Chapter 33.
4. Prima facie case of the applicant.

Analysis:

Issue 1: Waiver of deposit of duty, penalty, and redemption fine
The appellant sought waiver of deposit of duty, penalty, and redemption fine totaling Rs. 1.43 crores, Rs. 1.40 crores, and Rs. 50.00 lacs respectively. The duty, penalty, and confiscation were imposed based on the Commissioner's finding that certain activities undertaken by the appellant regarding cosmetics and similar products amounted to manufacture. The Tribunal, after considering the arguments, found that the appellant had a prima facie case and decided to waive the deposit of duty, penalty, and redemption fine, staying their recovery.

Issue 2: Repacking of goods and pasting labels
The appellant argued that the repacking of goods and pasting of labels did not render the goods marketable, as they were already marketable in their original form when cleared from the factory. The departmental representative contended that these processes made the goods marketable to a specific buyer, the Canteen Stores Department (CSD). However, the Tribunal disagreed, emphasizing that the test of marketability is whether goods can be sold in the market in general, not just to a specific customer. The Tribunal found that the goods were marketable except for the CSD, and therefore, the repacking and labeling did not significantly alter their marketability.

Issue 3: Interpretation of deeming provision in Note (4) to Chapter 33
The Tribunal considered the deeming provision in Note (4) to Chapter 33, which includes processes that render goods capable of being sold for consumption by individual customers. It noted that most cosmetics and medicaments have a higher value due to packaging and brand names. The Tribunal interpreted the provision in light of its objective to tax value addition. It found that in this case, there was no significant value addition as the prices charged to the CSD did not include additional charges for the repacking and labeling activities.

Issue 4: Prima facie case of the applicant
After evaluating the arguments and evidence presented, the Tribunal concluded that the applicant had a strong prima facie case. Therefore, it decided to waive the deposit of duty, penalty, and redemption fine, and also stayed their recovery. Additionally, the Tribunal directed that the jurisdictional Superintendent's instruction to the applicant not to deal with the factory's property should not be enforced.

This detailed analysis of the judgment highlights the key issues addressed by the Appellate Tribunal CEGAT, Mumbai, in the case, providing a comprehensive overview of the decision and the reasoning behind it.