9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2012 (8) TMI 790 - AAR - Central ExciseOnline platform to facilitate the sale of goods by various merchants - Whether activities proposes to undertake warehouse amount to manufacture ? - Held that - None of the assessee s activities alter the primary packing or the original labeling affixed by the merchant under applicable regulations. Also no change is made in the MRP/RSP of any item received in the warehouse. All the labeling requirements are required to be fulfilled by merchants themselves and the goods as received in the applicant s warehouse would have the MRP/RSP already pre-affixed or pre-printed - As the applicant carries all their activities to protect the merchant s goods, facilitate inventory management and the logistics of storage, retrieval, shipment and transportation of goods, thus, the different types of stickering done by them cannot come within the meaning of the expression labeling or relabeling for the purposes of the Act and would not amount to manufacture As the goods as received would be in retail packages with all required labeling and marking has not been disputed. As that the applicant s facility is only one of the channels for distribution available to the merchants who use it. The products that they list on the applicant‟s website would also, in the vast majority of cases, get distributed and sold through other conventional channels of retail trade and in the very form in which they are received in the applicant‟s warehouse. Hence the conclusion that inexorably follows is that they are already marketable. Thus, as the applicant is providing an online retail distribution channel and the associated logistical services His role therefore does come across clearly as one of service provider as the activities described in the application do not amount to manufacture within the meaning of S. 2(f) of the Central Excise Act, 1944.
Issues Involved:
1. Whether the activities proposed to be undertaken by the applicant in its warehouse amount to "manufacture" under Section 2(f) of the Central Excise Act, 1944, and thus liable to Central Excise duty. Issue-wise Detailed Analysis: 1. Definition and Scope of "Manufacture": The applicant, a subsidiary of Amazon Asia Pacific Resources Pvt. Limited, sought a ruling on whether its warehouse activities constitute "manufacture" under the Central Excise Act, 1944. The relevant activities include assortment, packing, and stickering of goods for merchants using its online platform. 2. Sequential Activities in the Warehouse: The activities performed in the warehouse are: - Receipt of Goods: From merchants or their suppliers. - Debundling: Fragmentation of wholesale packages into individual retail packages. - Sorting: Rearrangement of similar products from wholesale packs. - Sold as Set Stickering: Affixing stickers for products sold as sets. - Bagging: Protecting products from dust and facilitating stickering. - Bundling: Combining individual products into a single pack. - Blank Stickering: Affixing blank stickers to avoid barcode confusion and using proprietary ASIN/FNSKU stickering for internal tracking. 3. Legal Framework: Section 2(f) of the Central Excise Act defines "manufacture" and includes: - Clause (i): Processes incidental or ancillary to the completion of a manufactured product. - Clause (ii): Processes specified in the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act, 1985. - Clause (iii): Processes involving packing, repacking, labeling, or relabeling of goods in the Third Schedule to render them marketable. 4. Arguments by Revenue: - Packing and Labeling: Revenue argued that the applicant's activities fall under "packing or repacking" and "labeling or relabeling" as defined in the Act. - Case Law References: Cited cases like Nitin Patki vs. CCE and Cipla vs. CCE to support that affixing MRP stickers and repacking amounts to manufacture. - Deeming Fiction: Emphasized that the definition of manufacture includes processes deemed to be manufacture, even if they are not traditionally considered as such. 5. Arguments by Applicant: - Non-Interference with Retail Packing: The applicant contended that their activities do not alter the retail packing or labeling done by merchants. - No Value Addition: Claimed that their activities do not add value to the product itself and are intended for inventory management and logistical purposes. - Case Law References: Cited cases like Johnson and Johnson vs. CCE and Shreeleathers vs. CCE, arguing that mere stickering for internal purposes does not amount to manufacture. 6. Analysis and Conclusion: - Legal Fiction and Value Addition: The court noted that the deeming fiction in Section 2(f) aims to capture value addition in making goods marketable. However, the applicant's activities do not result in value addition as the goods are already marketable when received. - Distinction from Cited Cases: The court distinguished the applicant's case from those cited by Revenue, noting that the activities in those cases involved more significant alterations to the goods. - Marketability: The court concluded that the goods received by the applicant are already marketable, and the activities performed do not render them more marketable. Final Ruling: The court ruled that the activities described by the applicant do not amount to "manufacture" under Section 2(f) of the Central Excise Act, 1944. The applicant's activities are primarily logistical and do not involve any value addition or alteration of the goods' marketability. The applicant is considered a service provider liable to pay service tax on the activities performed.
|
