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2014 (12) TMI 167 - AT - Central ExciseActivity of repacking and change of MRP of toothpaste tubes - manufacturing activity or service activity - Area Based Exemption - department was of the view that the appellant’s activity amounted to manufacture, not service and the same attracted central excise duty and since the required declaration for Notification No. 50/2003-C.E. has not been given, and since one of the item in combo pack/promo pack is toothbrush manufactured outside the state, the benefit of this exemption would not be available to the appellant. - Held that:- Toothpaste and toothbrushes are mentioned in Third Schedule to the Central Excise Act, 1944. The process undertaken by the appellant involves making promo packs/combo packs of toothpaste and toothbrush (to be given free) so that each combo pack contains one 200 gm. toothpaste tube, one 100 gm. toothpaste tube and one toothbrush. The 100 gm. toothpaste tube, 200 gm. toothpaste tube, toothbrush and combo pack carton with contents and MRP printed, are received from CPIL. Since this process involves repacking and change of MRP of toothpaste tubes, we are prima facie view that the same would be covered by the definition of manufacture. Thus the activity of the appellant, prima facie, is manufacture of toothpaste. There is no dispute that the Khasra No. in which the unit is situated is specified in the Notification No. 50/2003-C.E. and the goods alleged to be manufactured are also covered by this notification - The purpose of the declaration required to be filed in terms of the conditions (i) and (ii) of the Notification No. 50/2003-C.E. is to enable the jurisdictional central excise authorities to ascertain whether the manufacturer is eligible for the exemption after ascertaining as to whether the unit is located in the Khasra No. specified in the notification and whether the goods manufactured are covered by the exemption. We find that all the information as mentioned in the condition (ii) of the notification, Khasra No. and address of the appellant, nature of their activity, etc., was contained in the letter dated 11-10-2007 and 1-11-2007 submitted by CPIL. Beside this, the appellant under impression that their activity is Business Auxiliary Service, had taken service tax registration and were paying service tax on the job charges. When the Department at a later date took a view that the appellant’s activity amounted to manufacture, the benefit of duty exemption under Notification No. 50/2003-C.E. could not be denied just on the ground that before effecting clearances they did not file the required declaration. In the circumstances of the case, what the Department seeks is an impossibility - more so when from the facts of the case, it appears that the Department from very beginning had all the information about the location of the appellant’s factory and nature of their activity and could have told the appellant that the activity is excisable. - Appellant have a prima facie case in their favour and compliance with the requirement of pre-deposit would cause undue hardship to them. The requirement of pre-deposit of duty demand, interest and penalty is, therefore, waived for hearing of the appeal and recovery thereof is stayed till the disposal of the appeal. - Following decision of Formica India Division v. CCE reported in [1995 (3) TMI 98 - SUPREME COURT OF INDIA] - Decided in favour of assessee.
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