9911796707
TMI Blog2005 (2) TMI 713X X X X Extracts X X X X X X X X Extracts X X X X ..... ground that the imported RMG were subjected to refinishing work which would amount to manufacture as per Chapter Note. Since they were not cleared on payment of Central Excise duty, demands were confirmed by invoking the larger period of limitation. 2.Brief facts of the case, relevant for determining the issues herein are, - (i) the appellants are manufacturers of RMG falling under Chapter 6201.00 of the CETA 1985 and have taken Central Excise Registration and are complying with the provisions under the same. Apart from the activity of manufacturing RMG, they are also engaged in the activity of importing RMG from different countries like Bangladesh, Indonesia etc. and after the import, they sell the same in India. The dispute herein is with reference to RMG imported and sold. (ii) For this imported RMG, they place purchase orders on foreign suppliers to manufacture and supply different brands such as Louis Phillippe, Van Heusen and Peter England. They ensure that the fabric is sourced/supplied and used by the exporter, as per the orders and all raw material namely fabric, trims etc. are as per the specifications and approval for fabrication of RMG is conducted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 of the Central Excise Rules. 3. Note 4 (i) to Chapter 62 of the Central Excise Tariff Act, 1985 reads as under : 4. In relation to products of this Chapter, affixing a brand name on the product, labelling or relabelling of its containers and repacking from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer, shall amount to manufacture . This Note is an artificial definition, relating to levy of duty and therefore it has to be construed strictly. This is more so when such artificial definition is in the nature of a charging provision relating to imposition of tax. Therefore, the submission that the artificial definition of manufacture as per Chapter Note is to be strictly incorporated and following case laws has been relied upon : (a) Commissioner of Income Tax v. Manilal Dhanji - (1962) 44 ITR 876 (S.C.) (b) Commissioner of Income tax v. Keshavlal Lallubhai Patel - (1965) 55 ITR 637 (S.C.) (c) Commissioner of Income Tax v. Prem Bhai Parekh - (1970) 77 ITR 27B (S.C.) (d) Commissioner of Income Tax v. Sarathy Mudaliar - (CP) (1972) 83 ITR 170W (S.C.) has force and is to be upheld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecifying any particular process as amounting to manufacture. Thus, what is left for consideration is the 1.6 definition of manufacture as defined in Section 2(f)(i) and (ii) only. Thus, in order to treat a process as amounting to 1.7 manufacture, it should be incidental or ancillary to the completion of a manufactured product and it should be specified in relation to any goods in Section or Chapter Note of the Schedule to Central Excise Tariff Act as amounting to manufacture. 1.8 In other words, it is not enough that the process should be specified in relation to a product in the Chapter Note of Central Excise Tariff Act, but it must also be a process incidental or ancillary to the completion of a manufactured product. The word and appearing in between clause (i) and clause (ii) of Section 2(f) would only mean that the process referred to in this section, should satisfy both the criteria specified in clauses (i) and (ii). The provisions of Section 2(f) as it stood prior to 1.9 28-2-1986 makes the aforesaid position very clear. The relevant portion of Section 2(f) as it stood prior to 28-2-1986 reads as under : f) manufacture includes any process incidental or ancill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inition of manufacture , clause (i) and clause (ii) are joined by the word and and, therefore, the process which is included within the term manufacture should satisfy both clause (i) and clause (ii). This submission is fortified by the amendment made 1.15 by Section 126 of the Finance Act, 2002 by which the word manufacture appearing at the end clause (i) of Section 2(f) was substituted by the words manufacture or and by Section 127 of the Finance Act, 2002 by which clause (iii) was inserted in the Section 2(f) of the Central Excise Act, 1944. The Commissioner has observed in para 42 of the 1.16 impugned order that Chapter Note 4 under Chapter 62 has been incorporated in terms of the definition of manufacture under Section 2(f) and therefore the said Note is attracted and the activities undertaken by the appellants amount to manufacture. It is submitted that only if the processes are 1.17 incidental or ancillary. To the completion of a manufactured product, they can be covered by the definition of the term manufacture . The activity undertaken by the Appellants cannot be 1.18 treated as incidental or ancillary to the completion of the manufacture of a product. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or and held in paras 9 and 10, as under : 9.....The Assistant Collector has not understood the meaning of the section and what it refers to. The section speaks of any process incidental or ancillary to the completion of a manufactured product. It does not give independent status and character to any process which might appear to be incidental or ancillary. Indeed, the Assistant Collector does not say what these processes are incidental or ancillary to - if they are ancillary or incidental to the manufacturing of a product, he does not tell us what is the product he has in mind. It is not the intention of the section to turn every incidental and ancillary process into a manufacturing process in its own right, and it does not allow the Assistant Collector to collect duty, because he discovers an Incidental and ancillary process. This sub-section enables the assessing officer to include the incidental or ancillary processes for the purpose of assessment of the manufactured product, the product being known as a subject of assessment. Anything that is done to the subject of assessment to complete it whether by polishing it or grinding it, or cutting it or coating it or in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o give their findings, on these submissions which go to the root of the levy by interpreting Chapter Note 4. Therefore, the matter is required to be remitted back to the Commissioner to arrive at a finding on these submissions, as recorded hereinabove in the de novo proceedings which we propose to order after setting aside the order impugned. We find that it is an admitted position that in (iii) majority of the cases the alleged processes amounting to manufacture as per Chapter Note 4 have been conducted at the job workers premises, a job worker in fact in his statement stated so the same has been relied upon. This would go to indicate that the place where the swig tag is put/not put and the position in that is not clear. There are other factual aspects on the actual processes being undertaken in the assessee s premises, which are also required to be redetermined. It is hite law that that job worker would be a manufacturer and has to discharge the duty. The position has been well settled by the catena of decisions. The present issues of duty demand after establishing manufacture is therefore to be determined. Raw material supplier and trader in this case of ready-made garments ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
