2012 (10) TMI 73 - AT - Central Excise

Whether activity is amount to manufacture - making combo-pack of two toothpastes of different weight and one tooth brush. Tooth pastes were provided by Colgate Palmolive (India) Ltd. and brush was supplied by manufacturer at Daman Held that - Appellant was claiming to be no manufacturer under Central Excise Law and claiming to be a service provider, now it claims to be a manufacturer to get area based exemption benefit - when benefit of area based exemption is claimed the conditions of exemption prescribed by the Notification need to be fulfilled - when the appellant raises invoices on Colgate-Palmolive as a provider of service of packing, he is able to pass on the credit of duty and taxes paid on input and input services used by him, which would not be the case if he is considered as a manufacturer whose products are exempt - appellant when failed to claim the exemption fulfill conditions of the exemption notification, that was deniable - appellant appears to have not come out with clean hands - adjudication is not barred by limitation - While on one hand there is claim of no manufacturer, on the other there is claim of manufacture - appellant directed to make pre-deposit

Summary

Issues:
1. Execution of Vakalatnama as per legal requirements.
2. Repeated adjournments causing prejudice to Revenue's interest.
3. Whether the activity of making combo-packs amounts to manufacture.
4. Claim for area-based exemption benefit.
5. Denial of being a manufacturer by the appellant.
6. Eligibility for area-based exemption benefit.
7. Bar of limitation for adjudication.
8. Pre-deposit requirement for appeal.

Issue 1 - Execution of Vakalatnama:
The counsel appearing for the appellant requested adjournments multiple times without engaging another counsel, leading to a delay in the case. The Vakalatnama filed was found not executed correctly as per legal precedents. The Tribunal directed the counsel to resubmit a properly executed Vakalatnama within a week, emphasizing compliance with the law laid down by the Apex Court and the High Court of Delhi.

Issue 2 - Prejudice due to Adjournments:
The repeated adjournments in a case involving a significant duty demand were deemed prejudicial to the Revenue's interest. The Tribunal highlighted that adjournments cannot be claimed as a matter of right, citing legal precedents that emphasize the need for a just cause and legislative intent to avoid abuse of the legal process. The Tribunal proceeded with the hearing due to the aging and pendency of the case, causing prejudice to public Revenue.

Issue 3 - Combo-pack Manufacturing:
The appellant argued that combining toothpaste and a toothbrush did not amount to manufacture under the Central Excise Act. The appellant contended that the activity did not fall under the definition of manufacture as per the Tariff schedule, and mere packing did not constitute manufacturing. The appellant also claimed area-based exemption benefit and relied on relevant circulars and decisions to support their position.

Issue 4 - Area-based Exemption Benefit:
The appellant sought area-based exemption benefit, arguing that they were not a manufacturer and thus should not be required to pre-deposit duty. The appellant referenced previous Tribunal decisions and circulars to support their claim for duty exemption under the area-based scheme.

Issue 5 - Denial of Manufacturer Status:
The appellant denied being a manufacturer and registered as a service provider under the Business Auxiliary Service. The Tribunal noted discrepancies in the appellant's claims and actions regarding manufacturing status and exemption benefits, raising questions about the appellant's conduct and eligibility for exemptions.

Issue 6 - Eligibility for Exemption Benefit:
The Tribunal examined whether the appellant fulfilled the conditions for area-based exemption benefit. The adjudication order highlighted that the appellant's failure to claim the exemption properly could result in denial of the benefit, indicating a need for compliance with exemption notification requirements.

Issue 7 - Bar of Limitation for Adjudication:
The appellant's varied claims and actions regarding manufacturing status and exemptions raised concerns about the conduct and transparency of the appellant. The Tribunal, guided by legal precedents, determined that the adjudication was not barred by limitation, questioning the appellant's approach and consistency in their pleas before different authorities.

Issue 8 - Pre-deposit Requirement:
Considering the appellant's financial hardship claim, the Tribunal directed the appellant to make a substantial pre-deposit of Rs. 8 crores, nearly 50% of the duty demand, within a specified timeframe. Compliance with the pre-deposit requirement would result in the stay of the realization of the balance demand during the appeal's pendency.