TMI Blog2014 (6) TMI 856X X X X Extracts X X X X X X X X Extracts X X X X ..... ture of final products be dutiable, thus necessitating the test of the product's marketability. The judgment of Flex Engg's case [2012 (1) TMI 17 - Supreme Court of India] is also not relevant to the facts in hand as in the said case the issue was whether CENVAT Credit would be admissible in the premises of the assessee on the machines, as the process of testing carried out in the said premises be called as a process of manufacture. Besides, applicant had discharged the service tax on the said process with effect from July, 2010, and they exercised their option under Voluntary Compliance Encouragement Scheme, 2013 (VCES) for the period from October, 2007 to June, 2010. In these premises, we are of the view that the Applicant could able to make out a prima facie case for total waiver of pre deposit of dues adjudged, accordingly, all dues adjudged is waived and its recovery stayed during the pendency of the appeal - Stay granted. - E /A/396/2012 - SO/75601/2014 - Dated:- 11-6-2014 - D M Misra And I P Lal, JJ. For the Appellant : Shri R Raghavan , Adv . For the Respondent : Shri A K Raha , Special Counsel PER : D M Misra This is an Application seeking waiver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etable final product at the Applicant's premises, that is, branding of unbranded battery chargers, performing quality control tests/operations and packaging these chargers along with rechargeable batteries to make a complete marketable set, have resulted into 'manufacture' being incidental or ancillary to the completion of a manufactured product, as prescribed under Sec.2(f)(i) of CEA,1944. Advancing reasons, he observed that the resultant goods, without the aforesaid process is not marketable as such. In support, he has referred to the judgment of the Hon'ble Supreme Court in the case of Grasim Industries Ltd. vs. UOI, 2011 (273) ELT 10 (SC). 3. In assailing the impugned Order, the ld. Advocate for the Applicant submits that the finding of the ld. Commissioner Order is beyond the scope of the demand notice and hence, bad in law. He submits that the processes/activities undertaken by the Applicant was alleged to be a manufacture in the impugned SCN under Section 2(f )( ii) of CEA read with Note 6 of Section XVI of CETA,1985, whereas while confirming the demand, the ld. Commissioner had observed that the activities/processes carried out by the Applicant fall withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of the Hon'ble Supreme Court in the case of Flex Engineering Ltd., 2012 (276) ELT 153 (SC), he submitted that process of testing itself, would amount to 'manufacture', is misplaced. Distinguishing the said judgment, he has submitted that in the said case, packing machines were manufactured by the assessee and installed at the site of the customer and thereafter, tested. In the context of considering the eligibility to MODVAT Credit, the Hon'ble Apex Court held that the process of testing of such machines are connected with the manufacturing process; accordingly, MODVAT Credit is held to be admissible. Further, he has submitted that the demand is barred by limitation, as all the facts were within the knowledge of the Department. The ld. Advocate in concluding the argument, submitted that the Applicant had commenced payment of service tax with effect from July, 2010, by registering with the Service Tax Department, as the activity carried out by them, does not result into manufacture. For the period, October, 2007 to July, 2010, the Applicant had approached the Department under Voluntary Compliance Encouragement Scheme (VCES) announced by the Government of India. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of Eveready Ultima Rechargeable Batteries, it is mentioned as - 'for best performance in safety charge Eveready Ultima ............only with Eveready Ultima Chargers'. It is his submission that Eveready Rechargeable Batteries were specifically declared on blister cards to be suited for use in Eveready Ultima Chargers only. Further, he has submitted that it would be logical to infer that any rechargeable battery cannot fit into any battery charger, going by the strict safety instruction of EIIL on each blister pack. The ld. Special Counsel also submits that the rule of strict interpretation has to be adopted in extending the benefit of an exemption notification or while considering the claim of non- excisability of a product, and the burden of proof rests on the assessee himself. Further, he has submitted that the finished product described as 'Eveready Recharge/ Ultima ' comprising two or more rechargeable batteries with a battery charger, is a product with distinctive name, character and use; it is neither the rechargeable batteries nor the battery charger that lend the distinctive name by which the product is marketed. But the product is known in the market by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rming the demand, the ld. Commissioner has concluded that the processes undertaken by the Applicant, would fall under the definition of 'manufacture', as laid down at Section 2(f )( I) of CEA, 1944. It is relevant and necessary to produce the provisions of Section 2(f) of CEA, as was prevalent at the relevant time: SECTION 2. - In this Act, unless there is anything repugnant in the subject or context, - [(f) manufacture includes any process, - (i) incidental or ancillary to the completion of a manufactured product; (ii) which is specified in relation to any goods in the Sectionor Chapter notes of [the First Schedule] to the Central Excise Tariff Act 1985 (5 of 1986) as amounting to [manufacture; or] [(iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re- labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer, and the word manufacturer shall be construed accordingly and shall include not only a person who employs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their argument that the products viz. rechargeable battery and the battery charger itself are marketable, then placing both these products together, would not in any manner, alter the position of marketability. They have relied on the following decisions:- (i) CST vs. Trinity Products [1975] 3 STC 502( Bom ); (ii) Sony Music Entertainrnent (India) Pvt. Ltd. Vs. CCE, Mumbai 2003 (156) ELT 593 (Tri-Mum.) affirmed in 2010 (249) ELT 341( Bom ); (iii) T.I.Diamond Chain Ltd. Vs. Commissioner 2000 (126) ELT 790 (T-Mad.) ; where the principle laid down is that packing of two or more products together would not result into manufacture, as defined in Section 2(f) of CEA,1944. Hence, the processes undertaken by them cannot be considered as an activity of manufacture. 8. Prima facie , we find that the product 'Eveready Rechargable / Ultima ' emerges after packing the rechargeable battery with battery chargers in blister packs, and it is marketed in the same condition. The revenue claims that this product is manufactured, whereas, the claim of the applicant is that no 'manufacture' has occurred. A delve into the past would remind us the volume of litigation on the issue of wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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