TMI Blog2014 (12) TMI 953X X X X Extracts X X X X X X X X Extracts X X X X ..... t in dispute that the appellant was situated in the specified area of Himachal Pradesh and entitled to the exemption benefit granted by the notification read with the Board circulars. However relying on the copy of agreement dated 01.09.1977 and Board Circulars, the appellant bona fide believed that it was a mere service provider and not a manufacturer for the reasons mentioned hereinbefore as urged by it and failed to file necessary declaration for consideration of its exemption status by the Authority. Registration of the appellant under Finance Act, 1994 and its existence in the specified area of Himachal Pradesh, as well as its activity carried out as job worker of HUL was well known to Record. Appellant bona fide believed that it was not manufacturer and not liable to excise duty and if held to be manufacturer, it is entitled to the exemption by Notification No. 50/2003 read with the Board circulars aforesaid. There is nothing on record to show that either appellant or HUL suppressed any fact to the authority. Record also reveals that appellant has not acted mala fide. It is primarily entitled to the benefit of exemption notification aforesaid. It only failed to file necess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnish relevant particulars for consideration of the claim before first clearance should deny area based exemption to the appellant. 1.3 Appellant's plea that they being job workers in the campus of Hindustan Unilever Ltd. (hereinafter referred to as the HUL ) and eligible to area based exemption following the circular No.908/2009 dated 23/12/2009 also did not get appreciation by the Authority below. Appellant's further plea that it did not bring out any change to the goods banding unit packed soap by a strip thereon to be called as manufacture also did not get appreciation by ld. adjudicating authority. 2.1 As a result of aforesaid denial, Central Excise duty of ₹ 37,46,69,391/- was levied on the appellant under Central Excise Act, 1944 (wherein after referred to as the Act ) followed by equal amount of penalty under section 11AC thereof and interest on the duty demanded also followed. 3 Against above consequence the appellant came in appeal. 4.1 Ld. Counsel appearing on behalf of the appellant assailed the demand on five counts. The first contention is that the activity of banding of the goods manufactured by HUL by a strip, using manpower of the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.50/2003-CE, dated 10.06.2003 was filed. There was no deliberate default made by the appellant to file the declaration as required by Notification No.50/2003, dated 10.06.2003. Having obtained service tax registration, the appellant also paid service tax on the labour charges received from HUL. The Department never disputed about the liability of the appellants under service tax law and they were collecting such tax without any objection from the appellant. Therefore, denial of exemption to the appellant under Notification NO.50/2003-CE, dated 10.06.2003 on the ground of no filing of declaration is unwarranted and shall be contrary to law. 4.4 It would be appreciated from page 58 of the appeal folder (page 27 of the adjudication order) that Id, adjudicating authority says that declaration was filed by the appellant although details of inputs were not mentioned. This finding grants area based exemption to the appellant undisputedly. Therefore, the adjudication does not sustain. Appellant's existence in notified area, registration as service tax assessee and its bona fide belief that it did not carry out manufacture are sufficient proof of its bona fide and denial of benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns above, appellant relied on the following decisions:- (i) Gillette India Ltd. Vs. Commissioner of Central Excise, Chandigarh [2011 (272) ELT 154 (Tri. - Del.)] (ii) CCE, Pune Vs. Sinar Mas Pulp Paper (I) Ltd. [2005 (191) ELT 619 (Tri. - Mumbai)]. (iii) Lakme Lever Ltd. Vs. CCE, Mumbai-III [2001 (127) ELT 790 (Tri. - Mum.)] (iv) CCE, New Delhi Vs. Panchsheel Soap Factory [2002 (145) ELT 527 (Tri. -Del.)] (v) Osnar Chemical Pvt. Ltd. Vs. CCE, Bangalore-II [2009 (240) ELT 115 (Tri. - Bang.)] (vi) Packaging India Pvt, Ltd. Vs. CCE, Meerut [2012-T1OL- 884-CESTAT-DEL] (vii) Tribunal Final Order No.A/55341/2013-EX[DB], dated 23.01.2013 in the case of Herbal Concepts Healthcare Pvt. Ltd. Vs. CCE, Meerut-I. (viii) Formica India Division Vs. Collector of Central excise [1995(77) ELT 511 (SC) Eagle Flask Industries Ltv. Vs. CCE, Pune [2004 (171) ELT) 296 (SC)] (ix) Share Medical Care Vs. Union of India [2007 (209) ELT 321 (SC)] (x) Anchor Pressings (P) Ltd. Vs. CIT, UP Others [1987 (27) ELT 590 (SC)] (xi) Mangalore Chemicals Fertilizers Vs. Dy Commissioner [1991 (55) ELT 437 (SC)] (xii) Union of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods belonged to tariff entry 34.11.09. The activity carried out by the appellant as has been explained at paras 44 45 of Order-in-Original at page 20 thereof was manufacture. This is also recorded in para 62 at page 59 of the said order. 6.2 Revenue's further contention was that failure of the appellant to comply with the requirement of the Notification No.50/2003-CE, dated 10.06.2003 crippled it to get the benefit thereof, which is area based exemption. The senior level officers having been empowered to scrutinise such cases were deprived of doing so in absence of compliance to law by the appellant. Accordingly, it was bound to lose the benefit of the Notification. The word shall used at three places of the Notification obliged the appellant to file the required documents thereunder and exercise of option to avail the exemption was necessity of law. The option so exercised was not to be withdrawn during the remaining part of the financial year. Whether before its first clearance the appellant was eligible to the benefit of Notification not being known to record in absence of scrutiny and appellant having kept Revenue in dark in that regard, he lost exemption benefit. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 8. Undisputedly, the appellant was located in a specified area of Himachal Pradesh where HUL existed. It is also not in dispute that HUL was granted area based exemption under Notification NO.50/2003-CE, dated 10.06.2003. There is also no dispute that CBE C has clarified that when activity of manufacture of main product is undertaken in the specified area of the states of Himachal Pradesh and Uttarakhand and the peripheral activities are also carried out by a job worker thereat in respect of such goods, benefit of exemption Notification No.50/2003-CE, dated 10.06.2003 is permissible to the peripheral activities. 9.1 To examine the contention of the appellant that it was mere provider of service but was not a manufacturer, the activity carried out by it was examined from the fact recorded in Para 44 of adjudication order. The agreement dated 01.09.1977, entered into by the appellant with HUL, appearing in the paper book exhibits scope of the work intended to be carried out by the appellant as a co-packer of HUL as follows: 3. The Co-packer shall be responsible for the safe custody and quality in storage of all material supplied by HUL as per this Agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as done by them for the period October, 2007 to December, 2007. 9.4 By letter dated 06.10.2008, HUL informed to the Superintendent of Central Excise (Preventive) that auxiliary packing of its goods were done by labour contractors. Appellant issued bills to HUL showing that banding operation was carried out by it. This is verifiable from the copy of the challan at page 77 and 80 of the appeal folder. Similarly, page 81 discloses that packing activity was carried out by the appellant. Respective invoice at page 86 of appeal folder discloses the consideration claimed by appellant for packing charges of the soaps. 9.5 Appellant was registered with service tax authorities in terms of registration No.AABPT8736DST005. The communication dated 06.09.2007, issued by office of Asst. Commissioner, Central Excise Division, Shimla, discloses that appellant was registered as manpower recruitment agency . But ld. adjudicating authority in Para 77 held that there were no supply of manpower by the appellant. Labour remained with the appellant and appellant was carrying out packing activity on piece basis by its own labour for which the HUL was making payment. In Para 70, ld. authority recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to reproduce section 2(f) of Central Excise Act, 1944 as under:- 2(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 Section or Chapter Notes of the first Schedule to the Central Excise Tariff Act, 1985 (5of 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 labeling 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 hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his account; 10.3 Section 2(f) (iii) states that the goods mentioned in Schedule III to the Central Excise Act, 1944 involving packing or re-packing thereof in a unit container or labelling or r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulk pack to retail pack. Thus, independent activity of labelling or re-labelling of containers amounts to manufacture provided such act renders the goods marketable and re-packing from bulk pack to retail pack renders the product marketable to became manufacture. The case of the appellant partly falls in the pre-amendment and partly in the post-amendment period. 11. In view of the above factual and legal position as well as controversy, the question that arises for decision is whether the appellant was a mere service provider to HUL or a manufacturer under section 2(f) (ii) of the Act read with in terms of chapter Note 6 of Chapter 34 of Central Excise Tariff Act 1985. If it is manufacturer whether it is entitled to benefit of Exemption Notification No. 50/2003-CE, dated 10.06.2003 without filing necessary declaration before the appropriate authority. Further, whether the appellant was entitled to the benefit of Notification No.2l4/86-CE, dated 15.03.1986. 12.1 Reading of agreement between the parties and the scope of activity carried out clearly demonstrates that the appellant carried out the activity of Works Contract. It had engaged its labour to carry out the activity o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivity carried out by appellant to be manufacture with the scope and ambit of section 2(f) (ii) of the Act read with Chapter Note 6 to Chapter 34 of Central Excise Tariff Act, 1985. It has thus become a manufacture. 12.3 Once the activity carried out by the appellant brought it to the scope of manufacture as above, it cannot claim to be a mere service provider since service connected to the principal activity of banding became secondary. It was a job worker of HUL. But for the reason that the main product was exempted from duty under Notification No.50/2003-CE, dated 10.06.2003 it was not entitled to the benefit of Notification No.214/86-CE, dated 25.03.1986. 12.4 Para 4 of Notification No.50/2003-CE, dated 10.06.2003 having been inserted w. e. f. 18.01.2008, that is not applicable to the case of the appellant prior to that date. 12.5 Primary object of the Notification No. 50/2003-CE, dated 10.06.2003 is to grant duty exemption to manufacturing units situated in the area specified therein subject to fulfillment of conditions prescribed therein read with the Board Circular No.908-CX, dated 23.12.2009 as well as Circular No.757/73/2003-CX, dated 22.10.2003 [F.No.201/54/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion notification should be construed liberally. [See CTT v. DSM Group of Industries (S.C.C. para 26); TISCO v. State of Jharkhand (SCC paras 42 to 45); State Level Committee v, Morgardshammar India Ltd.; Novopan India Ltd, v. C.C.E. Customs; A.P. Steel Re-Rolling Mill Ltd. v. State of Kerala and Reiz Electrocontrols (P) Ltd. v. C.C.E.] [Emphasis supplied] 15. Apex Court in Commissioner of Customs (Preventive) Mumbai v. M. Ambalal and Company, (2011) 2 SCC 74 =2010 (260) E.L.T. 487 (S.C) (in which one of us was the party) has observed that the beneficial notification providing the levy of duty at a concessional rate should be given a liberal interpretation: 16. It is settled law that the notification has to be read as a whole. If any of the conditions laid down in the notification is not fulfilled, the party is not entitled to the benefit of that notification. The rule regarding exemptions is that exemptions should generally be strictly interpreted but beneficial exemptions having their purpose as encouragement or promotion of certain activities should be liberally interpreted. This composite rule is not stated in any particular judgment in so many words. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50/2003-CE date 10.6.2003. They have filed a declaration also. It was for them to see to it that all the conditions are fulfilled. The declaration has to be filed by giving all particulars as required in the notification which they failed to do so. It was incumbent on their part to ensure that they have fulfilled all conditions before availing benefit under the notification. The declaration was incomplete in as much as details were not given. This information is relevant for knowing and verifying whether the finished good can be made out of such inputs. It thus appears that the noticee is not entitled to the benefit of notification no. 50/2003-CE dated 10.6.2003. Such recording leads to the conclusion that the appellant was entitled to cure the defect providing necessary particulars for consideration of its claim of exemption under the notification above since it was primarily entitled to the area based exemption being situated in the specified area of the State of Himachal Pradesh. 19. Registration of the appellant under Finance Act, 1994 and its existence in the specified area of Himachal Pradesh, as well as its activity carried out as job worker of HUL was well known to Rec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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