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2024 (1) TMI 134 - AT - Central ExciseProcess amounting to manufacture or not - repacking of the spares from the bulk to small packets and labelling - demand of Excise Duty alongwith interest and penalties - invocation of Extended Period of Limitation. The whole case of the department is founded on the allegation that the concrete mixers and concrete pumps cannot be sold as such and that these have to be fitted on chassis which makes these products SPVs and therefore the spares sold by appellant are nothing but spares of SPVs. HELD THAT - There is no commonality, except for the logo. The label on each packet mentions different numbers of the spares. On perusal of Invoice no.85157799 dated 31.12.2023 issued to M/s. Axon Constructions (P) Ltd, there are 4 items of spares supplied. These are valve cartridge press relief valve 2 nos., O Ring 14 x 2 5 nos., Ring D14 x 2.5 x 2.3 5 numbers, spring cover 2 nos. These are packed and consigned to the customer. The order is not placed unit wise or packet wise . The learned counsel for appellant has stressed on the word unit container used in Section 2 f (iii). It is argued by the counsel that unit container means container with predetermined quantity. The polythene bags used by appellant to repack are not designed to carry predetermined quantity. After goods are sold, it is packed in polythene bags and a label is fixed for identification. In the case of Lakme Lever Limited Vs CCE, Mumbai 2000 (10) TMI 96 - CEGAT, MUMBAI it was held that if the product is marketable any amount of treatment to enhance its marketability would not amount to manufacture as per the definition - The Tribunal in the case of Lupin Laboratories Ltd. Vs. CC, and CE, Aurangabad 2001 (10) TMI 136 - CEGAT, MUMBAI has taken similar view wherein the Tribunal held that since each product was marketable on its own, putting them all together did not confer them any attribute of marketability that the goods did not possess earlier. Thus, given by the facts of this case, the activity undertaken by the appellant of repacking from bulk into small packets in polythene bags and putting labels does not amount to manufacture as under Section 2 f (iii) of Central Excise Act, 1944 - the department has failed to establish the allegations raised in the Show Cause Notice that the appellant has to discharge excise duty on the spares sold by the appellant. The issue on merits is answered in favour of appellant and against the department. Time Limitation - HELD THAT - The entire issue is interpretational in nature. Further the appellant has filed ER 1 returns clearly stating the description of goods manufactured by them. There is no positive act of suppression established against the appellant indicating intent to evade payment of excise duty - thus, there are no grounds for invocation of extended period - the issue on limitation is answered in favour of the appellant. The demand of duty interest and penalties imposed cannot sustain - the impugned orders are set aside - appeal allowed.
Issues Involved:
1. Whether the activity undertaken by the appellant of repacking of the spares from the bulk to small packets and labelling amounts to manufacture as under Section 2(f)(iii) of the Central Excise Act 1944? 2. Whether the extended period is invokable or not? 3. Whether the confirmation of demand of duty, interest, and penalties are sustainable or not? Summary: Issue 1: Activity of Repacking and Labelling as Manufacture The department argued that the appellant's activity of repacking spares into smaller packets and labelling them constitutes "manufacture" under Section 2(f)(iii) of the Central Excise Act, 1944. The appellant countered that they manufacture concrete pumps and mixers, which are cleared as such and only occasionally mounted on chassis supplied by customers. The Tribunal found that the appellant's products can be used without being mounted on chassis, thus they are not Special Purpose Vehicles (SPVs). The Tribunal also noted that the spares are not repacked in "unit containers" as defined by law and that the activity does not render the spares more marketable than they already are. Therefore, the activity does not amount to manufacture under Section 2(f)(iii). Issue 2: Invocation of Extended Period The Tribunal held that the issue is interpretational in nature, and the appellant had filed ER-1 returns clearly stating the description of goods manufactured. There was no positive act of suppression by the appellant indicating an intent to evade payment of excise duty. Thus, the invocation of the extended period was not justified. Issue 3: Confirmation of Demand, Interest, and Penalties Given the findings on the first two issues, the Tribunal concluded that the demand for duty, interest, and penalties imposed on the appellant could not be sustained. The impugned orders were set aside, and the appeals were allowed with consequential reliefs. Conclusion: The Tribunal ruled in favor of the appellant, holding that the repacking and labelling activities did not constitute manufacture, the extended period for demand was not invokable, and the confirmation of duty, interest, and penalties was unsustainable. The appeals were allowed with consequential reliefs.
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