2015 (1) TMI 983 - AT - Central Excise

Discharge of duty on the basis of MRP less abatement - Whether the activity of labelling/re-labelling or putting stickers on the imported goods amounts to manufacture or not - Held that - In the case of L Oreal India Pvt. Ltd. (2014 (8) TMI 132 - CESTAT MUMBAI) we find that this Tribunal has observed that as the activity of fixing MRP stickers took place in Customs bonded warehouse therefore, the same does not amount to manufacture but in this case the MRP stickers have been fixed after clearance of the goods from the Customs. Therefore, as per Chapter note and Section 2(f)(iii) of the Central Excise Act, 1944, the activity undertaken by the appellant amounts to manufacture. In these circumstances, we hold that the activity undertaken by the appellant is amounts to manufacture. MRP declared before the Customs or before the Central Excise is the same therefore, the duty payable on the said goods is equal to the CVD paid by the appellant. Therefore, the situation is of Revenue neutrality as held by this Tribunal in the cases of L Oreal (2014 (8) TMI 132 - CESTAT MUMBAI) and BASF India Ltd. (2009 (1) TMI 513 - CESTAT, AHMEDABAD). As the whole exercise in this case is of revenue neutrality, therefore, following the above cited decisions, we hold that although the activity undertaken by the appellant amounts to manufacture but the duty impact is nil being of Revenue neutrality situation therefore, we set aside the demand confirmed by the adjudicating authority in the impugned order and also set aside the imposition of redemption fine, interest and penalty. - Decided in favour of assessee.

Summary

Issues:
1. Whether the activity of fixing stickers on imported goods amounts to manufacture.
2. Whether the appellant is entitled to CENVAT Credit.
3. Whether the duty impact is nil due to revenue neutrality.

Analysis:
1. The appellant, engaged in importing and trading goods, faced a duty demand confirmed with penalties and a redemption fine for fixing stickers post-clearance. The Revenue claimed this activity amounted to manufacture, leading to the initiation of proceedings. The Commissioner upheld the duty demand, penalties, and redemption fine. The appellant contended that their activity did not constitute manufacture, citing a previous Tribunal decision. However, the Revenue argued that as per the Central Excise Act, the activity did amount to manufacture. The Tribunal found that since the stickers were affixed after customs clearance, it fell under manufacturing as per the Act, contrary to the previous case where stickers were affixed in a bonded warehouse.

2. The appellant sought CENVAT Credit for the Countervailing Duty (CVD) paid on imported goods based on Maximum Retail Price (MRP). The appellant argued for revenue neutrality, stating that if their activity was considered manufacturing, they should be allowed to claim CENVAT Credit equal to the CVD paid. The Tribunal agreed that the appellant could claim CENVAT Credit for the CVD paid during importation.

3. The Tribunal determined that despite the activity being classified as manufacture, the duty impact was nil due to revenue neutrality. The MRP declared before Customs matched the MRP declared before the Central Excise, resulting in duty payable being equivalent to the CVD paid. Citing previous decisions on revenue neutrality, the Tribunal set aside the duty demand, redemption fine, interest, and penalty imposed by the adjudicating authority. The appeal was allowed, and the stay application was disposed of accordingly.