TMI Blog2001 (2) TMI 1049X X X X Extracts X X X X X X X X Extracts X X X X ..... t the time of clearance of the goods from the factory of manufacture. 2. M/s. Oriflame India Pvt. Ltd. (hereinafter referred to as Oriflame) was started as a joint venture between Oriflame International Ltd. and Rollscon (India) Private Ltd. with equity ratio of 85% and 15% respectively. In order to manufacture Oriflame brand products in India, Oriflame found a manufacturer in the name and style of Silver Oak Laboratories Pvt. Ltd. (hereinafter referred to as Silver Oak) for the manufacture of cosmetic items. Agreement was entered into between Oriflame and Silver Oak for the manufacture of Oriflame brand products by Silver Oak and for the sale of the products from Silver Oak to Oriflame. The factory initially set up by Oriflame for the manufacturing activity was transferred to Silver Oak and thereafter Silver Oak started the manufacturing activity and the sale of finished goods to Oriflame. Silver Oak are a registered assessee with the Central Excise Department. 3. The Show Cause Notice dated 7.8.1998 issued to the applicants in this case demanded differential duty of ₹ 2,03,46,462 on the ground that the goods manufactured and sold by Silver Oak to Oriflame should be as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or omission with regard to alleged evasion of duty against each of the Director/employee of Oriflame and Silver Oak to whom the Show Cause Notice has been issued. 7. The matter was heard by the bench on 16.1.2001 for final disposal. During the hearing, the applicants submitted a detailed Paper Book containing all the material that they wish to rely upon in support of their submissions. The applicants have contested the duty liability of ₹ 1,70,75,172 in respect of the finished goods imported by Oriflame during the period from 1.12.1995 to 31.12.1996. It was submitted that till the time the Oriflame brand products are manufactured in India, Oriflame wanted to create the market network for the Oriflame brand products in India, Oriflame wanted to create the market network for the Oriflame brand products in India. In order to achieve this objective, Oriflame imported the finished Oriflame brand products from the foreign company under Special Import Licences granted by the Directorate General of Foreign Trade. These branded products were imported in fully finished and ready to market condition. Nothing was required to be done on these products including the containers containin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licant submitted inter-alia that chapter note 4 to chapter 33 creates a legal fiction and it is settled legal position that where a legal fiction is created and the tax is sought to be levied based on the legal fiction so created, the same has to receive strict construction. It is also settled legal position that the legal fiction so created cannot be extended beyond the purpose for which it was created for. In support of this proposition, the learned advocate referred to the following citations: (a) Commissioner of Income_tax Vs. Manilal Dhanki 1962 (44) ITR 876 (SC) (pages 107 to 118 of the paperbook) Particularly at page 112- Then we come to sub-section(3). This sub-section aims at foiling an individual's attempt to avoid or reduce the incidence of tax by transferring his assets to his wife or minor child or admitting his wife as a partner or admitting his minor child to the benefits of a partnership in a firm in which such individual is a partner. The sub-section creates an artificial liability to tax and must be strictly construed..... (b) CIT Vs. Keshavlal Lallubhai Patel 1965 (55) ITR 637 (pages 101 to 106 particularly at 104 of the paperbook) (c) C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and name its usage etc. 14. The learned advocate drew the attention of the Bench to a Trade Notice bearing No.47/96 dated 21.8.1996 issued by the Mumbai-I Commissionerate based on a Board's circular clarifying that the process of pasting of stickers on imported finished medicine including life saving drugs marketed by the assessees may not be covered by note 5 of chapter 30 of the CETA 85 . It was contended that chapter note 5 of chapter 30 and chapter note 4 of chapter 33 are of identical wording and, therefore, the clarification by the Board in the circular was binding on the Department in terms of the following judgements of the Hon'ble Supreme Court: (1) 1996 (16) RLT 501 (S.C.)=1996 (87) ELT (S.C.) Ranadey Micronutrients Vs. CCE (2) 1997 (22) RLT 281 (S.C.)=1997 (94) ELT 460 (S.C.) CCE Vs. Usha Martin Industries (3) Poulose and Mathen Vs. CCE 1997 (18) RLT 663 (S.C.)=1997 (90) ELT 264 (S.C.) (4) British Machinery Supplies Vs. Union of India 1996 (86) ELT 449 (S.C.) 15. The learned advocate also referred to the Judgement of the Apex Court in Steel Authority of India Vs. CC 2000 (36) RLT 369 (SC)=2000 (115) ELT 42 (SC) wherein it is held that the Tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here it was issued. The Revenue former pointed out that no circular has been issued by the Board or any Trade Notice by any Commissionerate upholding the Counsel's submissions. The Government or the Board have with an intent not waived of the operation of chapter note 4 to chapter 33, in order to generate revenue from this activity. This intent, according to them, buttressed by the issuance of a Circular bearing No. 17/2000 dated 28.6.2000 by the Directorate General of Anti-Evasion, New Delhi addressed to all Commissionerates of Central Excise and explaining the modus-operandi of how importers were evading Central Excise duty by marketing labeled products. It was also emphasised that Government was heavily losing revenue on this account. 19. With regard to the immunity from prosecution and penalty prayed for by the applicant, the Revenue submitted that huge amount of duty was involved and their investigation had unearthed the entire modus-operandi and collusion of Directors in systematically and fraudulently evading the duty payable and, therefore, it was prayed that certain amount of penalty is definitely called for. 20. The applicants Revenue submitted their written s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was required to be done on these products including the containers containing the products in order to make them marketable......... 22. Further para 8 of the affidavit states a perusal of the sticker affixed by OIPL on the imported finished goods would show that the sticker contains only the following information: Mfg. Oriflame Mfg. Limited, Dublin-18, Ireland Mkt by Oriflame India Pvt. Ltd., 456, SFS Pkt-C, PH-1, Sheikh Sarai New Delhi-17 M.L.No.60238 Mfd. Jan 96 M.R.P.₹ 190/-(Include. Taxes) 23. We find the aforesaid position quite clear. According to us Oriflame have simply affixed the stickers indicating MRP and the name of the unit marketing the product in India. This is clearly with a view to comply with the legal requirement under the Indian laws. In no manner, they have altered the information already indicated on the product such as the name of the manufacturer, the character of the product, date of manufacture etc. The products as imported were clearly fully finished and in ready to market condition. Chapter note 4 to chapter 33 is to the following effect: 4. In relation to products of heading Nos. 33.03, 33.04 and 33.05, conversion of powd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the instant case may not be covered by note 5 chapter 30 of me CETA, 1985. 25. The aforesaid instructions are quite clear and are equally applicable to chapter note 4 of chapter 33 which is worded in exactly the same terms. These instructions and the Trade Notice issued their upon was clearly binding on the Central Excise Authorities in terms of the established law of the land as contained in the Hon'ble Supreme Court's order in 1996 (16) RLT 501 (SC) =1996(87) ELT 19(SC) - Ranadey Micronutrients Vs. CCE. 26. We are unable to agree with the Revenue that they were not bound by the Trade Notice in question. The established position in law as laid down by the Apex Court in Steel Authority of India Vs. CCE (sic) CC, Bombay - 2000 (36) RLT 369 (SC)=2000 (115) ELT 42 (SC) is quite clear that Trade Notice issued by one Commissionerate are binding on all Commissionerates throughout India as they deal with Central levies which cannot be subject to different interpretation by different Commissioners ignoring the instructions of the board. As observed by the Apex Court such circulars are meant for adoption of uniform practice and uniform interpretation and consistency and dis ..... 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