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TMI Blog2023 (11) TMI 255X X X X Extracts X X X X X X X X Extracts X X X X ..... which has to be affixed on a particular plate. This registration number gets issued to the vehicle owner by the RTO in State of Rajasthan. While data entry at ESO in Rajasthan this registration number is entered against the specific alpha numeric PIN embossed on the HSRP blank at the manufacturing unit in Kala Amb, Himachal Pradesh. Finally, the said registration number gets embossed on said HSRP in the ESO of appellant established in Rajasthan. Hence what is cleared from Rajasthan is high security registration plate only except with the specific number embossed on it - It is observed from the record that SPV (RMRPL) is duly registered with the Service Tax Department and they are discharging their liability considering embossing to be a service. In addition, they are discharging their VAT liability while selling the individual HSRP to a particular vehicle owner. What is the meaning of manufacture to understand (as to whether the activity done at ESO in State of Rajasthan can be called as the part of manufacturing process which is otherwise done in State of Himachal Pradesh)? - HELD THAT:- The product manufactured by the appellant is high security registration plate prior as we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-requisite of the impugned notification. There is no suppression of facts. Appellant had already intimated the concerned Commissionerate about his option to exercise the said area based exemption with all requisite particular in the said application dated 22.07.2009. In the state of Rajasthan the appellant is discharging the service tax liability qua his activity of embossing registration No. on the HSRP manufactured in Himachal Pradesh. VAT liability is also being discharged by the appellant. Thus the Department has wrongly invoked the extended period. The confirmation of demand is liable to be set aside on this score also. There appears no evasion of tax liability and that the product of appellant gets manufactured in Himachal Pradesh to which area based exemption is available. Above all the Commissionerate in Himachal Pradesh has no jurisdiction to confirm any duty liability in case the manufacturing of HSRP would have completed in State of Rajasthan - the order by Himachal Pradesh Commissionerate confirming the demand of excise duty is hereby set aside. Appeal allowed. - DR. RACHNA GUPTA, MEMBER (JUDICIAL) AND MR. P.V. SUBBA RAO, MEMBER (TECHNICAL) Mr. A.K. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts against the payment being received from the owners of the said vehicles. 3. The Department also observed that for execution of the work allotted under the agreements, in the State of Rajasthan, the appellants have established a consortium of Real Mazon Rajasthan Pvt. Ltd. [RMRPL] (hereinafter called as RMRPL) for feeding the security data in the Online Management Information System, so as to share the information regarding the vehicle registration details etc. between Regional Offices of Transport Commissioner [RTO]. The price for said activity was also charged from the owner of the vehicle. The activity of embossing of registration number on HSRP blank and printing multi layer labeled stickers and fixing them subsequently on the vehicles was being done in the Rajasthan States ESO. From these facts, the Department formed an opinion that the appellants are manufacturing HSRP Blank and multi layer labels stickers in their unit in Himachal Pradesh, however, are transferring the same to the ESOs installed by the appellants in the States / UTs under challan without payment of Central Excise Duty. 4. The Department alleged that a new and different marketable article is emerging ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to a hydraulic press where punching and rim embossing takes place with the use of cutting dyes and tools for different plate designs and sizes. These blank plates are then sent to the hologram hot stamping station to hot stamp a 20x20 chromium based hologram. Thereafter the plates are sent to the laser engraving station where every plate has a unique laser code number engraved on it. 7. The HSRP blanks manufactured in the above referred process at the Kala Amb unit are mentioned to have the following mandatory security features as per Rule 50 of the Central Motor Vehicle Rules (CMVR), 1989. (a) IND inscript embedded or hot-stamped in retro reflective sheeting on every HSRP plate. (b) 20x20 chromium hologram hot-stamped at pre-defined place of each and every HSRP. (c) Unique Laser code number by using Laser engraving process on retro reflective sheeting on each and every HSRP. 8. It is submitted that at this stage the High Security Registration Plates (HSRP) are fully manufactured except that at this point the Appellants are not aware of the registration number of the vehicle which has to be allotted by the State RTO to the vehicle owner only. Post allotment sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bout all requisite particulars as mentioned in the Notification and the intimation about exercising the option of seeking exemption, in writing. This condition was duly complied with vide the letter dated 22.07.2009. No objection was ever been raised by the concerned department. The restriction on sale of HSRP directly from Kala Amb was purely because of amendment in rule 50 of Central Motor Vehicle Rules, 1989 by the Ministry of Road Transport and Highways Notification No.1749 dated 16.09.2011 according to which the approved manufacturer or supplier shall not be authorized to sell plates without registration numbers with security features. Because of this statutory mandate that the manufactured HSRP Plates are being cleared as a stock transfer to the ESO in the concerned State/ Union Territory. Also the ESO need not be the appellant only. It could be any other successful bidder of the tender issued by the State Transport Authority. 12. Ld. Counsel submitted that from all these facts, it is clear that the manufacture of HSRP gets completed at Kala Amb, Himachal Pradesh which entitles the appellant to avail the Area Based Exemption. It is also clear that embossing at ESO in State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by Rajasthan State Road Transport Authority, being the successful Bidder, inter alia to assemble, establish, procure technology, design, develop, produce, emboss, affect, distribute and create complete infrastructure for the implementation of HSRP Scheme in the State of Rajasthan. Seen from this angle also any exemption available to the units existing in Himachal Pradesh cannot be availed by the appellant. 15. Ld. Departmental Representative has further drawn our attention to one of the invoices showing that appellants were clearing HSRP with the accessories from Himachal Pradesh to themselves in Jaipur. Since the product cleared from Himachal Pradesh was not actually saleable at that point of clearance, the benefit of the impugned Notification was not available at that point. It is the embossing on these plates in the State of Rajasthan which makes these plates a marketable commodity. Hence the place of embossing that is the ESO of the State Transport Authority shall be the place of manufacture and removal for these HSRPs. Since in the present case, the place of removal is the ESO in Rajasthan, the duty liability of the appellant there arises in the State of Rajasthan where t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tra An Alfa Numerical PIN. 19. The HSRP made out of aluminium foil with the above said 3 unique security features is manufactured by the appellant at Kala Amb. The process involved for Manufacturing the same starts with loading of Aluminium Sheets in coils of respective sizes. After cleaning the surface and making it free of dust and dirt, the coil is fed into the straightening station where Aluminium is straightened between different Rubber Rollers to remove minor dents and bends. Thereafter, the coil is transferred to the laminating station where Aluminium and Retro Reflective Sheeting are stretch laminated under pressure using very high degree of Automation and Sensor Monitoring Process Controls so as to obtain strong bonding. This laminated Aluminium coil is transferred to Hydraulic Press where punching and Rim Embossing takes place with the use of cutting dies and tools for different plate designs and sizes. These blank plates are then sent to the Hologram Hot Stamping Station to Hot Stamp the 20 x 20 Chromium based Hologram, after which the Blanks are sent to the Laser Engraving Station where every plate has unique Laser Code Number engraved. 20. We observe it to be an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the vehicle owners to whom the vehicle registration number has to be issued/ allotted by the concerned RTO. Such vehicle owner then approaches the appellant at it ESO where the data entry and due authentication and authorization from RTO is done by said special purpose vehicle. The HSRP (Blanks) are then embossed with the said allotted registration number. Thereafter these blanks are fed into a pot stamping machine where a bank foil with India in script is hot stamped at 45 degrees angle on the embossed Alphanumerical characters. The HSRP, now becomes HSRP Complete for fitment on the respective motor vehicles. At this stage it is sold to the owner of the said vehicle. 23. From the above discussion it is clear that the product is the high security registration plate, but blank, when it gets cleared from the factory in Kala Amb, Himachal Pradesh. It is blank for the reason that at that time the appellant is not aware about the registration number of the vehicle which has to be affixed on a particular plate. This registration number gets issued to the vehicle owner by the RTO in State of Rajasthan. While data entry at ESO in Rajasthan this registration number is entered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egorizes few processes to be included in the term manufacture . Section 2 (29BA) of Income Tax Act 1961 defines manufacture to mean a change in a non-living physical object / article resulting in transformation into new and distinct object having a different name, character and use. As per dictionary meaning of manufacture, it is the process of building or assembling something specially in a factory. However, Legal Jurisprudence defines manufacture to mean the production preparation, propagation, compounding, conversion or processing of a controlled substance either directly or indirectly by extraction from substance of natural origin or independently by means of chemical synthesis or by a combination of extraction and chemical synthesis. 26. The product in question as discussed under issue No.1 when is glanced through the prism of above definitions, we observe that while transferring from HSRP (Blank) (as cleared from Kala Amb, Himachal Pradesh) to HSRP complete (as sold to the individual vehicle owner in State of Rajasthan) there is no change either in chemical composition of the plate nor in the physical appearance of the plate. There is no transformation of HSRP manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat HSRP is not sold at the time when it got cleared from Kala Amb is also held in sufficient to hold that the product manufactured and cleared at Kala Amb had no marketability. 30. The above observed clause of the agreement when read in the light of discussion about meaning of manufacture it is clear from previous para that these findings are sufficient to falsify the findings of the adjudicating authority that the manufacture of HSRP gets complete at ESO in the state of Rajasthan. In the light of above discussion we hold that manufacture of HSRP was complete at Kala Amb, Himachal Pradesh only. 31. We further observe that the activities done by appellant at ESO first is the data entry correlating the PIN of HSRP (Blank) to the allotted registration number and then to emboss the said specific number on the said blank plate before selling it to the individual owner. These activities done in Rajasthan don t give a different identity to the product which appellant cleared from factory in Himachal Pradesh. We draw our support from the decision in the case of Deputy Commissioner of Sales Tax (Law) Board of Revenue (Taxes), Ernakulam v. M/s. Pio Food Packers - 1980 (6) E.L.T. 343 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he commodity does not change. They continue to be bottles. It cannot be said that but for the process of printing, the bottles will serve no purposes or are of no commercial use. 34. Applying the said test to the facts of the present cases, we observe that the product manufactured by the appellant is high security registration plate prior as well as post embossing / printing of the registration No. of the vehicle on it. Since no change in the commodity/product happens post performing the activity of embossing, this activity done at ESO in Rajasthan cannot be called as the part of manufacture. Otherwise also the burden of proving the fact of manufacture lies on the Revenue if it claims the same. The adjudicating authority while denying the area based exemption to the appellant though has relied upon several case laws but we observe that none is squarely covering the fact of the present case about statutory restriction to sell the product herein to anyone else except the Government Transport Department. Hence, the entire case laws as relied upon, by the department is held not applicable to the facts of the present case. 35. The above said discussion is equally applicable to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nai or Surat. Therefore, the entire show cause notice issued to the appellant s Himachal Pradesh falls flat if the Revenue s argument that it is not manufacturing is accepted. 38. Finally coming to the plea of invoking the extended period of limitation, we observe that the demand for the period from January, 2014 to June, 2017 has been proposed vide the Show Cause Notice dated 08.02.2019, we observe that the adjudicating authority has held that the appellant have neither declared the full manufacturing process of their product nor ever specified details of the activity being carried out by them. Department had no opportunity to detect the non-payment of Central Excise duty from their monthly Service Tax Returns. No ER 1 Return reflecting the sale of HSRP plates has been filed is held as suppression of facts and reasons to invoke the extended period of limitation. However, we do not agree with those findings. We observe that the liability of paying excise duty arises at the time when manufacturer clears the product manufactured by him which is known to the market and has a saleability. In the present case the product manufacturer is known to market as HSRP and it has saleability ..... X X X X Extracts X X X X X X X X Extracts X X X X
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