2016 (6) TMI 232 - AT - Central Excise

Manufacturing of a product (powder) called Body Plus - Classifiable under CTH 2108.99 or 2108.91 - rate of duty - Held that - The goods covered under CTH 2108.91 are those not bearing a brand name and CTH 2108.99 covers other goods, which means goods bearing brand name. Thus, notwithstanding the statement of the Managing Director, it is clear from the foregoing analysis that as the impugned goods cleared from Maksi Road factory did not bear any brand name, the question of their classification under CTH 2108.99 would not arise as CTH 2108.99 covers goods other than those not bearing brand name. Needless to say that show cause notice classified the goods under 2108.99 which means that as per show cause notice, the impugned goods were falling under category other mentioned below CTH 2108.40 and the said other has two parts, 2108.91 covering goods not bearing brand name and 2108.99 covering goods other than those not bearing brand name, which means CTH 2108.99 covers only those goods which bear brand name. Consequently the impugned goods, even going by the implication of the show cause notice, would at best be covered under CTH 2108.91 which attracts nil duty. In these circumstances without going into any other aspect of case when the duty leviable on the impugned goods is nil the question of any evasion simply does not arise and consequently the question of any penalty on the appellants would also not arise. - Decided in favour of assessee.

Summary

Issues:
- Classification of goods under Central Excise Tariff
- Manufacturing process involving labelling and repacking
- Applicability of SSI exemption for clearances from a rural area
- Jurisdiction and classification of goods from different locations
- Interpretation of show cause notice for classification

Classification of Goods under Central Excise Tariff:
The case involved a dispute over the classification of goods under the Central Excise Tariff. The appellant argued that the goods cleared from the factory were unbranded and should be classified under CTH 2108.91 attracting nil duty. The Tribunal analyzed the description under Chapter 21.08 and concluded that CTH 2108.99 covers goods bearing a brand name, while CTH 2108.91 covers goods not bearing a brand name. Since the impugned goods were unbranded, the Tribunal held that they should be classified under CTH 2108.91, attracting nil duty. The show cause notice had erroneously classified the goods under CTH 2108.99, which led to the dismissal of the demand for duty and penalties.

Manufacturing Process Involving Labelling and Repacking:
The Tribunal considered the manufacturing process involving labelling and repacking of goods from bulk to retail packs. It noted that as per chapter notes, these processes amount to manufacturing for goods covered under specific chapters. The goods in question were labelled and repacked at a godown, and it was established that the brand name was added only at this stage. The Tribunal held that the operation at the godown constituted manufacturing of goods, and the goods were not branded when cleared from the factory, supporting the classification under CTH 2108.91 for nil duty.

Applicability of SSI Exemption for Clearances from a Rural Area:
The appellant contended that clearances from a godown located in a rural area were eligible for the Small Scale Industries (SSI) exemption. The Tribunal considered the certification from the Tehsildar confirming the rural location of the godown. However, since no show cause notice was issued for clearances from that specific location, the Tribunal did not delve further into this aspect. The focus remained on the classification and manufacturing process of the goods cleared from the main factory.

Jurisdiction and Classification of Goods from Different Locations:
There was a debate regarding the jurisdiction and classification of goods cleared from different locations, specifically the main factory and the godown. The Tribunal clarified that the goods cleared from the main factory were unbranded and not subject to duty under CTH 2108.99. It emphasized that the godown was not an extension of the factory, and the goods were not branded until processed at the godown. The absence of a show cause notice for clearances from the godown limited the scope of the case to goods cleared from the main factory.

Interpretation of Show Cause Notice for Classification:
The Tribunal scrutinized the interpretation of the show cause notice concerning the classification of goods under the Central Excise Tariff. It highlighted the discrepancy in the classification under CTH 2108.99 in the notice, which implied goods bearing a brand name. Given that the impugned goods were unbranded when cleared from the factory, the Tribunal concluded that they should be classified under CTH 2108.91, attracting nil duty. This interpretation led to the dismissal of the demand for duty and penalties, rendering the Revenue's appeal for penalty enhancement infructuous.