TMI Blog2023 (12) TMI 374X X X X Extracts X X X X X X X X Extracts X X X X ..... elling of containers. (b) packing from bulk packs to retail packs. (c) adoption of any other treatment to render the product marketable to the consumer. The appellant s activity is not clearly covered by (a) or (b) above and it is not the case of the Department also. It is the contention of the Department that the process undertaken by the appellants falls under (c) and thus, amounts to manufacture - It is M/s CPIL that manufactures the toothpaste and purchases toothbrush on payment of duty and supplies the same to the appellant. The goods have already become marketable before they reach the premises of the appellants. It is the case of the Department that the process undertaken by the appellants makes them marketable as the combi pack contains a disclaimer that individual items are not for sale . The marketability of the goods and the manner in which they are marketed by an individual manufacturer are quite different. The manner in which the goods are marketed does not at all make them marketable. If that is the case, no toothpaste or toothbrush should have been marketed not only by M/s CPIL but also by others, in a standalone condition. However, it is everybody s knowledge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act on the part of the appellants to show intent to evade payment of duty. Further, the appellant has entertained a bona fide opinion that the said activity did not amount to manufacture but was exigible to service tax. At no point of time even though a couple of audit inspections were conducted, Department did not raise any objection as to the payment of service tax on the activity undertaken by the appellants. Therefore, Department has not made out any case for invocation of extended period. The impugned order set aside - appeal allowed. - HON BLE Mr. S. S. GARG , MEMBER ( JUDICIAL ) And HON BLE Mr. P. ANJANI KUMAR , MEMBER ( TECHNICAL ) Shri Jitendra Motwani, Advocate for the Appellant Shri Rajeev Gupta, Shri Siddharth Jaiswal, Shri Nikhil Kumar Singh and Shri Aneesh Dewan, Authorised Representatives for the Respondent ORDER Per: P. ANJANI KUMAR The appellants, M/s Pearl Enterprises, have undertaken the activity of inserting one 100gm toothpaste tube and one toothbrush into a promo pack containing one tube of 200mg toothpaste, one tube of 100mg toothpaste and toothbrush; the promo pack, wherein one tube of 200mg toothpaste is already packed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant merely inserted one 100gms toothpaste and toothbrush provided by M/s Colgate in the promo pack carton which already contained 200gms toothpaste; the same was returned to M/s Colgate; activity of just inserting toothpaste and toothbrush in the promo pack does not amount to manufacture as no activity of labelling or re-labelling; re-packing from bulk packs to retail packs and fixing of MRP is taking place. He relies on the following cases: Yamuna Gases and Chemicals Limited 2001 (130) ELT 854 (Tri. Del.) Adi Enterprises 2002 (144) ELT 379 (Tri. Mumbai) Lakme Lever Ltd. 2001 (127) ELT 790 Lupin Laboratories Ltd. 2002 (139) ELT 366 Hindustan Lever Ltd. 2005 (186) ELT 70 Buns Cones Pvt. Ltd. 2005 (187) ELT 462 3.1. Learned Counsel submits, further, that the Department s reliance on Prime Healthcare Products 2009 (245) ELT 550 (Tri. Ahmd.) affirmed by the Hon ble Gujarat High Court 2011 (272) ELT (Guj.) is incorrect as the issue therein was availability of CENVAT credit on bought out items and that the reliance on Colgate Palmolive (I) Ltd. 2009 (248) ELT 930 (Bang.) is not correct as the same is only an Interim Order. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adesh in the case of Gillette India Limited 2009 (235) ELT 5 (HP) held that the Condition shall not apply to units set up prior to 18.01.2008. 6. Learned Counsel for the appellants submits also that as the service tax stands paid, no Excise Duty can be demanded from the appellants as held in K.R. Packaging 2017 (51) STR 438 (Tri. Del.). He submits further that extended period cannot be invoked in the case as Department has always been aware of the exact nature of activity of the appellants; M/s Colgate vide their letters dated 11.10.2007, 01.11.2007 and 28.01.2008 have intimated the Department the activity of the appellant and that the same did not amount to manufacture; the appellant was under the bona fide belief that the activity performed by the appellants invited service tax rather than central excise duty; the appellants have not suppressed any material fact with intent to evade payment of duty and more so, in the absence of any positive act of suppression, extended period cannot be invoked. He relies on the following cases: Jai Maa Appliances (P) Ltd. 2015 (329) ELT 387 (Tri. Del.) Alumeco India Extrusion Ltd. 2010 (249) ELT 577 (Tri. Bang.) CCE Vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereas in the instant case, toothpaste and toothbrush are repacked and toothbrush is not manufactured in Himachal Pradesh. The job worker was present within the premises of M/s Hindustan Lever. The activity of repacking soap was held to be manufactured. Moreover, Hon ble Supreme Court has only endorsed the order of the Tribunal in remanding the case back to the Commissioner. 9.1. Learned Authorized Representative also distinguishes the case of M/s Gillette India (supra) stating that the Tribunal has only rejected the stand of the Department that the declaration needs to be filed by the main manufacturer and not by job worker; therefore, the appellant in the instant case cannot rely upon the declarations given by M/s Colgate as there is not master and servant relationship. 10. He further submits that the appellant is not entitled to exemption even after filing declaration on 20.02.2009, in view of the amendment dated 18.01.2008, as the toothbrush is not manufactured in the State of Himachal Pradesh and Uttrakhand; the clarification vide Circular No.908/28/2009-CX dated 23.12.2009 is not applicable to the facts of the case; the Hon ble Apex Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of the manufacture of Colgate+ dental cream in combi pack to the appellants; the said letters, inter alia, informed the Department the nature of the processing undertaken by the appellant; the opinion that such process does not amount to manufacture and that they are availing the benefit under Notification No.50/2003. Further, M/s CPIL vide letter dated 28.01.2008 requested the authorities to intimate the reasons as to why their job-worker i.e. the appellant was asked to pay central excise duty so that they can effectively reply. The appellants vide letter dated 20.02.2009 have filed a formal declaration in terms of Notification No.50/2003, without prejudice to the stand taken by them earlier that the process undertaken by them does not amount to manufacture. 13. It is seen that the appellants are receiving combi packs containing 200mg of toothpaste in final retail packing along with 100gm toothpaste and a toothbrush from M/s CPIL; the appellants insert the 100gm toothpaste and the toothbrush provided by M/s CPIL in the slots available for them and close the packing; 36 such combi packs are packed in a box for shipping. The appellants claim that they are only inserting the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the appellants falls under (c) and thus, amounts to manufacture. We find that other than this averment neither the show-cause notice nor the OIO elaborate on how the activity undertaken by the appellant renders the goods marketable. It is M/s CPIL that manufactures the toothpaste and purchases toothbrush on payment of duty and supplies the same to the appellant. The goods have already become marketable before they reach the premises of the appellants. It is the case of the Department that the process undertaken by the appellants makes them marketable as the combi pack contains a disclaimer that individual items are not for sale . 16. We find that the marketability of the goods and the manner in which they are marketed by an individual manufacturer are quite different. The manner in which the goods are marketed does not at all make them marketable. If that is the case, no toothpaste or toothbrush should have been marketed not only by M/s CPIL but also by others, in a standalone condition. However, it is everybody s knowledge that toothbrush and toothpaste are also sold as individual pieces. The scheme of offering them in a combi pack does not make them marketable only as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2003 as the declaration was filed late. We find that in terms of the Notification No.50/2003, a manufacturer who intends to avail of the exemption under the notification shall exercise his options in writing before affecting the first clearance and such option shall be effective from the date of exercise of the option and shall not be withdrawn during the remaining part of the financial year. Further, the manufacturer shall while exercising the option under Condition as above inform in writing to the jurisdictional Deputy Commissioner or Assistant Commissioner of Central Excise, as the case may be, with a copy to the Superintendent of Central Excise giving the following particulars viz. (a) Name and address of the manufacturer, (b) Location/ locations of factory/ factories; (c) description of inputs used in manufacturer of specified goods; (d) description of the specified goods produced; (e) date on which option under this Notification has been exercised. 19. We find that M/s Colgate Palmolive India Ltd vide their letters dated 11.10.2007 and 01.11.2007 and 28.01.2008 have intimated the Department their intention to outsource part of their work to the appellants; they have also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed strictly either because of legislative intention or on economic justification of inequitable burden of progressive approach of fiscal provisions intended to augment State revenue. But once exception or exemption becomes applicable no rule or principle requires it to be construed strictly. Truly speaking, liberal and strict construction of an exemption provision is to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in the nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction. (See Union of India v. Wood Papers Ltd. and Mangalore Chemicals and Fertilisers Ltd. v. Dy. Commr. of Commercial Taxes to which reference has been made earlier.) [Emphasis supplied] 14. In G.P. Ceramics Private Limited v. Commissioner, Trade Tax, Uttar Pradesh, (2009) 2 SCC 90, Apex Court has held : 29. It is now a well-established principle of law that whereas eligibility criteria laid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and it is not open to the Court to ignore the conditions prescribed in the Industrial Policy and the exemption Notifications. [Emphasis supplied] 26. Whenever the statute prescribes that a particular act is to be done in a particular manner and also lays down that failure to comply with the said requirement leads to severe consequences, such requirement would be mandatory. It is the cardinal rule of the interpretation that where a statute provides that a particular thing should be done, it should be done in the manner prescribed and not in any other way. It is also settled rule of interpretation that where a statute is penal in character, it must be strictly construed and followed. Since the requirement, in the instant case, of obtaining prior permission is mandatory, therefore, non-compliance of the same must result in cancelling the concession made in favour of the grantee - the respondent herein. [Emphasis supplied] 17. In view of settled position of law relating to compliance, it is considered that dealing with various citations made by both sides shall be only burdening this order and academic. 18. Learned adjudicating authority in Para 60 of his adjudicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. Ltd. this Court held that in taxing statutes, provision for concessional rate of tax should be liberally construed. So also in Bajaj Tempo Ltd. v. CIT it was held that provision granting incentive for promoting economic growth and development in taxing statutes should be liberally construed and restriction placed on it by way of exception should be construed in a reasonable and purposive manner so as to advance the objective of the provision. [Emphasis supplied] 20. On the aforesaid factual background and law, remanding the matter for filling of necessary declaration by the appellant for scrutiny of the adjudicating authority to grant area-based exemption shall serve interest of justice. The Authority granting reasonable opportunity of hearing to the appellant shall pass appropriate order. It is, ordered accordingly. 21. Learned adjudicating authority recorded that the appellant did not provided manpower supply service. In such case, realisation of Service Tax from the appellant is unwarranted under law. Therefore, that should be refunded to the appellant against appropriate application filed. 20. We find that the Adjudicating Authority pursuant to the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en if the department s allegation is accepted and M/s. M.J. is treated as an agent of M/s. Gillete, since any action of an agent is to be treated as the action of the principal and since in this case, it is not disputed that the required declaration had been filed by M/s. M.J., the same will have to be treated as the declaration filed by M/s. Gillete. In view of this, even if the department s allegation that the relationship between M/s. Gillete and M/s. MJ is that of master and servant, is accepted, the exemption under Notification No. 50/03 cannot be denied. There is, therefore, no merit in the department s case. The impugned orders, therefore, not being sustainable, are set aside. The appeals are allowed. 22. Thus, we find that either on the strength of the declaration filed by the principal manufacturer i.e. M/s CPIL or on the strength the declaration filed by the appellants themselves though belatedly, the appellants are eligible to avail the exemption contained in the Notification No.50/2003. Further, we find that in the case of Gillette India Ltd (supra) Hon ble High Court of Himachal Pradesh held that, the amended condition to the effect that articles manufactured in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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