2013 (4) TMI 617 - AT - Central Excise

Admissibility of exemption under notification No. 17/98-C.E. whereby tea put up in unit container of content not exceeding 100 grams per unit container was exempted from excise duty. whether the respondent was eligible for credit in considering available the exemption under Notification No. 17/98 on the Tea pack which were to be put in Bandha Pack by him. Held that - It can be seen from first appellate authority s findings that he has considered the evidences produced before him about actual facts as well as arguments put forth by the assessee. It can be seen that Revenue is unable to contradict the factual matrix in the grounds of appeals. In absence of any contrary evidences, the detailed findings recorded by the first appellate authority, remain unrebutted, we hold that Revenue has failed to make out a case. Period of limitation - held that - We find that the assessee has been discharging duty liability on the packages which were more than 100 gms. in weight, but they could be under a bona fide belief that they are not liable to pay central excise duty on the Bandha Pack, as the same had smaller pack, which contained Tea which is less than 100 gms. It is also to be noted that the appellant had indicated in the return, the clearance of Tea Packs are less than 100 gms. The findings recorded by the first appellate authority as regards limitation are correct and we concur with the same. Accordingly, we find the said impugned order is correct. - Decided against the revenue.

Issues Involved:
1. Classification and eligibility for exemption under Notification No. 17/98-C.E.
2. Definition and interpretation of "unit container."
3. Applicability of extended period of limitation under proviso to Section 11A of the Central Excise Act, 1944.
4. Determination of whether the process of packing small tea packs into larger "Bandha Packs" constitutes manufacture.

Issue-wise Detailed Analysis:

1. Classification and Eligibility for Exemption under Notification No. 17/98-C.E.:
The crux of the dispute is whether the tea packed in small unit containers and subsequently packed into larger "Bandha Packs" is eligible for exemption under Notification No. 17/98-C.E. The Revenue contended that the combined weight of tea in the Bandha Packs exceeded 100 grams, thus disqualifying it from the exemption. The appellate authority, however, found that the exemption applies to individual small packs, each containing less than 100 grams of tea, and not to the aggregated weight of the Bandha Pack. The appellate authority emphasized that the exemption's purpose is to benefit small consumers, and denying it based on the larger pack's total weight would defeat this purpose.

2. Definition and Interpretation of "Unit Container":
The Revenue argued that the Bandha Pack should be considered a unit container as per the Standards of Weights and Measures (Packaged Commodities) Rules, 1977, and Section 11 of the Central Excise Tariff Act, 1985. The appellate authority, however, interpreted "unit container" to mean a container designed to hold a predetermined quantity or number, and found that the small packs within the Bandha Pack met this definition. The authority noted that the small packs were labeled with weight, MRP, and manufacturer's name, and were intended for retail sale, thereby qualifying for the exemption.

3. Applicability of Extended Period of Limitation under Proviso to Section 11A of the Central Excise Act, 1944:
The Revenue sought to invoke the extended period of limitation, alleging suppression of facts by the assessee. The appellate authority found no suppression or mis-declaration, as the assessee had disclosed the clearance of tea packs weighing less than 100 grams in their returns. The authority also acknowledged the assessee's bona fide belief that they were not liable to pay duty on the Bandha Packs, given that the individual small packs were exempt. Consequently, the extended period of limitation was deemed inapplicable.

4. Determination of Whether the Process of Packing Small Tea Packs into Larger "Bandha Packs" Constitutes Manufacture:
The Revenue contended that the process of packing small tea packs into Bandha Packs constituted manufacture under Chapter 9 of the Central Excise Tariff Act, 1985. The appellate authority disagreed, stating that the process did not involve blending, sorting, or repacking from bulk to retail packs. Instead, it was a reverse process of packing retail packs into bulk, which did not render the product more marketable. The authority cited relevant case law to support the view that the process did not meet the criteria for deemed manufacture.

Conclusion:
The appellate authority's detailed findings, supported by evidence and legal precedents, led to the conclusion that the tea packed in small unit containers and subsequently packed into Bandha Packs was eligible for exemption under Notification No. 17/98-C.E. The authority also found no grounds for invoking the extended period of limitation and determined that the process of packing small tea packs into Bandha Packs did not constitute manufacture. Consequently, the appeal filed by the Revenue was rejected, and the order of the first appellate authority was upheld as correct, legal, and without infirmity.

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