TMI Blog2024 (3) TMI 588X X X X Extracts X X X X X X X X Extracts X X X X ..... of COMMISSIONER OF C. EX., NEW DELHI VERSUS PANCHSHEEL SOAP FACTORY [ 2002 (4) TMI 152 - CEGAT, NEW DELHI] . A sticker merely containing the name of importer and MRP was held to be not a label . In common parlance, a label on a product is understood to contain description of the goods, its character, usage, expiry date etc., A label is a brief and quick information to the consumer as to the details of the product. A MRP sticker is information about its price only. The Tribunal in the said case was considering Note 6 to the Chapter 34 which is similarly worded as 2 f (iii). It was held by Tribunal that simply putting a MRP sticker does not amount to manufacture. It was also observed that the products were already marketable and the activity of affixing the MRP sticker did not enhance its marketability. Again, the allegation is that the activity of affixing altered MRP amounts to deemed manufacture. There is no allegation that such activity has rendered the product marketable to the ultimate consumer. In the case of Lakme Lever Ltd., Vs CCE [ 2000 (10) TMI 96 - CEGAT, MUMBAI] , the Tribunal observed that the process/activity should attribute marketability to the product which was oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, M/s. S.M. Enterprises, M/s. Mehta Sons Gala, M/s. NGDA Watches Pvt. Ltd., M/s. Hindustan Enterprises, M/s. Pharma Combines, M/s B. Mohinuddin Agencies, M/s. Sadana Warehousing Agencies P. Ltd., M/s. Glacier Cold Storage Ice Mills, M/s. H B Enterprises Pvt. Ltd., M/s Das Services, M/s. Saravnaa Associates, M/s. Sehgal Motors (P) Ltd. Versus The Commissioner of GST Central Excise, Salem MS. SULEKHA BEEVI C.S. MEMBER (JUDICIAL) AND SHRI. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) For the Appellants - Shri Lakshmi Kumaran V., Advocate For the Respondent - Shri Anoop Singh, Addl. Commissioner / A.R. Shri M. Selvakumar, Asst. Commissioner / A.R. ORDER The issue involved in all these appeals being same and connected, these appeals were heard together and are disposed of by this common order. 1. Brief facts are that M/s Titan Industries Ltd., (appellant in E/42026/2014) are manufactures of Analog Wrist Watches classified under Chapter Heading 9101 and 9102 of Central Excise Tariff Act, 1985. The factories of TITAN are located in Hosur, Dehradun, Baddi and Rourkee. The watches manufactured at Hosur factory are cleared on payment of duty, whereas, watches manufactured at factories located in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... original authority confirmed the demand and interest. However, no penalties were imposed. Aggrieved by such order, the appellants are now before the Tribunal. 2. The Learned Senior Counsel, Shri. Lakshmi Kumaran appeared and argued for the appellants. The details of the show cause notices issued to 33 CFAs and 22 Showrooms of TITAN as given in the appeal are as under: S. No Name of the Party MRP revision dates SCN date Duty amount 1 N.G.D.A. Watches (P) Ltd., Nagpur 01.04.2008 01.11.2008 01.12.2008 01.04.2009 06/2011 dtd 01.2012 20,88,104 2 A.C. Co., Jaipur April 2008 Oct 2008 Nov 2008 Dec 2008 April 2009 Dec 2009 08/2011 dtd. 19.01.2012 51,37,855 3 Shambavi Enterprises, New Delhi 01.04.2008 01.10.2008 01.11.2008 01.12.2008 01.04.2009 15.12.2009 92/2011 dtd 30.12.2011 81,19,749 4 Wilson Co., Chennai 01.04.2008 01.10.2008 01.11.2008 01.12.2008 01.04.2009 86/2011 dtd. 22.12.2011 78,82,779 5 Glacier Cold Storage Ice Mills, Jammu April 2008 Nov. 2008 Dec. 2008 04/2012 dtd. 11.01.2013 17,06,419 6 Elkom Enterprises (P) Ltd., Kolkatta 01.04.2008 01.10.2008 01.11.2008 01.12.2008 01.04.2009 15.12.2009 06/2012 dtd 11.01.2013 1,15,42,789 7 Mehta Sons, Thane 01.04.2008 01.11.2008 01.12.2008 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 2008 Oct 2008 Nov 2008 Dec 2008 159/2012 dtd 24.12.2012 6,57,530 29 Subash Udyog, Jamshedpur April 2008 Nov 2008 Dec 2008 April 2009 157/2012 dtd 24.12.2012 24,59,774 30 H.B. Enterprises, Ludhiana April 2008 Nov 2008 Dec 2008 160/2012 dtd 24.12.2012 34,05,359 31 Drive India Enterprises Solutions Ltd., Secunderabad Dec 2009 5/2013 dtd 11.01.2013 2,24,433 32 Sequel Logistics, Dehradun April 2008 Nov 2008 Dec 2008 April 2009 7/2013 dtd 11.01.2013 7,19,852 33 Dehgal Motors (P) Ltd., Hydrabad April 2008 Oct 2008 Nov 2008 Dec 2008 April 2009 8/2013 dtd 11.01.2013 48,57,413 TOTAL 14,61,69,868 Details of 22 SCNs issued to Showrooms of the Appellant 1 World of Titan, Hosur 01.04.2008 01.10.2008 01.11.2008 01.12.2008 01.04.2009 15.12.2009 95/2011 dtd 17.02.2012 6,79,674 2 World of Titan, Chennai 01.04.2008 01.10.2008 01.11.2008 01.12.2008 01.04.2009 15.12.2009 24/2012 dtd 27.02.2012 16,06,749 3 World of Titan, Bangalore 01.10.2008 01.11.2008 01.12.2008 01.04.2009 01.12.2009 26/2012 dtd 29.02.2012 4,68,679 4 World of Titan, Gurgaon 01.10.2008 01.11.2008 01.12.2008 15.12.2009 27/2012 dtd 29.02.2012 3,25,436 5 World of Titan, Delhi 01.04.2008 01.11.2008 01.12.2008 01.04.2009 15.12.2009 28/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s liable to be paid on the revised MRP affixed on the watches at the Titan owned showrooms (collectively, show rooms ) and CFA premises though the watches were originally manufactured and cleared from the units availing area-based exemption under Notification no: 50/2003-C.E. dated 10.06.2003 ( ABE Notification ). 2.4 Appellant manufactures various models of watches, which are moved from the 3 units at Himachal Pradesh and Uttarakhand above to the Showrooms and to the CFA premises for onward sale to customers. The watches manufactured out of the 3 units at Rourkee, Baddi, and Dehradun ( ABE Factories ) are cleared without payment of excise duty availing benefit of the ABE Notification. There is no dispute that Appellant is eligible for the exemption under the ABE Notification. At the time of movement of the watches from the 3 units to the showrooms and the CFA premises, the watches carry MRP in two modes: a. A tag is attached to the watch-strap; b. A sticker is stuck onto the case in which the watch is enclosed. 2.5 In certain circumstances, the MRP of the watches is revised as and when required due to change in cost of production or owing to business scenarios. In line with the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tickers does not amount to labelling or relabelling A.1. Section 2(f)(iii) of the Excise Act provides that manufacture includes any process: 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 goods to render the product marketable to the consumer . A.2. Admittedly, the only activity undertaken by the Appellants is affixing of MRP stickers on the containers and MRP Tags on the watches. As held in the judgments, noted below, affixation or alteration of MRP using stickers does not amount to labelling or relabelling so as to deem it to be manufacture: C.C.E. vs Panchsheel Soap Factory [2002 (145) ELT 527 (Tri-Del) upheld in 2003 (156) ELT A382 (SC)] CCE vs. Lo real India Ltd. [2004 (167) E.L.T. 417 (Tri. - Mumbai)] ; Lal International Pvt. Ltd. vs C.C.Ex. Noida [2003 (154) ELT 520 (Tri-Del.)]. Alteration of MRP should render the goods marketable. A.3. In the instant case the goods are cleared with an MRP affixed from the ABE factories and, as such, they are alread ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h does not exist. D. Altered MRP is deemed to be the MRP of the watches manufactured under the ABE Notification and takes effect from the date and place of removal. D.1. Explanation 2 to Section 4A provides that where the retail sale price, declared on the package of any excisable goods at the time of its clearance from the place of manufacture, is altered to increase the retail sale price, such altered retail sale price shall be deemed to be the retail sale price. D.2. Thus, once certain goods are cleared from the factory after affixation of retail sale price and subsequently increased, the increased retail price shall be deemed to be the retail sale price and the assessee would be required to pay excise duty by taking into account the new price. D.3. A combined reading of the Sections 2(f), Explanation 2(b) to Section 4A of CEA and the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 would demonstrate that: MRP should be marked on the goods as the packaged commodity leaves the factory. Afterwards if the MRP is changed elsewhere, then Explanation 2(b) deems that the revised MRP is the MRP for the purposes of Section 4A. The alteration of MRP is deemed to be man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufactured under ABE in their godown, thus holding that there could not have been any intention to evade duty. E.5. Further, the Appellant was under a bonafide belief that the watches manufactured in the ABE factories would not fall within the meaning of pre-packaged commodities under the PC Rules, 1976. The said issue was subject to conflicting views in the a number of decisions and was subsequently referred to a larger bench in State of Maharashtra vs Subhash Arjundas Kataria [2012 (275) ELT 289 (SC)]. E.6. Consequently, the invocation of extended period of limitation is incorrect. It is prayed that the appeals may be allowed. 3. The Learned AR Shri Anoop Singh appeared and argued for the department. The definition of manufacture was explained by the Ld.AR and argued that the appellants admit to have done the activity of labelling relabeling, declaration of new MRP by affixing MRP stickers on the watches at the premises of CFAs and Showrooms. This activity was undertaken on the watches after the watches were cleared from the factory which availed area-based exemption. The activity of affixing the new MRP stickers would definitely fall within the meaning of deemed manufacture. 3.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not applicable to the issue or facts of this case. The Ld.AR prayed that the appeals may be dismissed. 4. Heard both sides. 5. The issues that pose for consideration are (i) whether the activity of affixing revised MRP tags and labels on the watches amounts to manufacture as per Section 2 (f) (iii) of Central Excise Act, 1944. (ii) whether extended period is invokable or not. 5.1 For better appreciation Section 2 (f) is reproduced as under: (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 (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 hire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to products of this Chapter, labelling or re-labelling of containers and repacking from bulk packs to retail packs or the addition of any other treatment to render the product marketable to the consumer, shall amount to manufacture . The respondents in the present case, admittedly are only pasting the sticker on the packing of the imported soap to indicate the name of the importer and the MRP which is the requirement under the Standards of weights and Measures Act. Simply putting a sticker, in our view, will neither amount to labelling or re-labelling, the processes which have been deemed to be a process of manufacture by Note 6. It is not the case of Revenue that the label has been replaced by a new label or any label has been pasted over the existing label. Accordingly, it cannot be claimed that the process undertaken by the appellants amounts either to labelling or re-labelling. The Central Board of Excise Customs has taken the same view in respect of imported finished medicines which were sold after pasting sticker on the cartons of the imported item in view of the requirement of the Drugs and Cosmetics Act without altering any information originally contained in the packet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to must be rendered marketable to the consumer. Although this word is not defined it evidently refers to one who purchase the product for consumption by him, as distinct from a purchaser who trades in it. Therefore for any treatment to fall within the scope of the note to the chapter it must be one that confers upon a product a quality as a result of which the product, which was otherwise not marketable is now rendered marketable. If the product were already marketable any amount of treatment to enhance its marketability would not amount to manufacture within the meaning of this note. That treatment does not render it marketable when it earlier was not. That is the object of the note is also clear from the fact that the processes which is specified in it as manufacture conversion of powder into tablets, labelling or re-labelling of containers intended for consumers, re-packing bulk drugs to retail packs are all activities which result in the products being made marketable to the individual consumers. 5. Against this background it will be clear that the 'treatment' (that describes the activities undertaken by the appellant) in question did not render the product marketable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... When this Appeal is called out for hearing, the submissions of the Learned Counsel for the parties have been heard. 2. The challenge in this Appeal by the appellant revenue is to the judgment and order dated 29th June, 2005 passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Mumbai (for short the Appellate Tribunal ). The dispute involved in this Appeal is considerably narrow. A show cause notice was issued by the Assistant Commissioner of Central Excise to the respondent-assessee, a copy of which is annexed as Exhibit A to the memorandum of appeal. The paragraph 10 of the show cause notice is material for our consideration which reads thus:- As per the assessee s letter dated 31-3-2004 and as per the statement dated 3rd April, 2004 of Shri Sadiquali M. Noorani, it is evident that the assessee is involved in following activity in their registered premises : (i) Footwear are received in loose conditions, which are thereafter labeled with their brands Metro or Mochi . (ii) Labeled footwear are packed in their (Assessee s) boxes which bear their brand name either Metro or Mochi printed on it. These boxes are labeled with bar codes which display the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctured by artisans. 5.8 The Tribunal in the case of CCE, Mumbai Vs L Oreal India Ltd., 2004 (167) ELT 417 (Tri Mum) held that pasting of stickers on the imported goods for compliance of Standard Weights and Measures (Packaged Commodity) Rules, 1977 did not amount to manufacture. The Tribunal followed the decision in the case of Panchsheel Soap Factory (supra). The decision in the case of Panchsheel Soap Factory was followed by Tribunal in the case of Lal International Pvt. Ltd., Vs CCE Noida 2003 (154) ELT 520 (Tri-Del). 5.9 The meaning of marketability is that the goods must be capable of being bought and sold as such. In order to fall within definition of manufacture , the process or activity must bring some transformation to the article in such manner that was not present on the article earlier. In the present case the watches are already marketable and the affixing of MRP does not enhance marketability. From the discussions above and following the decisions we have no hesitation to conclude that the activity does not amount to manufacture. 6. The Ld. AR has argued that in an earlier case, in which watches were cleared from Hosur factory, the appellant had admitted their activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale price which is not the retail sale price as required to be declared under the provisions of the Act, rules or other law as referred to in sub-section (1); or (b) tampers with, obliterates or alters the retail sale price declared on the package of such goods after their removal from the place of manufacture, then, such goods shall be liable to confiscation and the retail sale price of such goods shall be ascertained in the prescribed manner and such price shall be deemed to be the retail sale price for the purposes of this section. Explanation 1.--For the purposes of this section, retail sale price means the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumer and includes all taxes local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertisement, delivery, packing, forwarding and the like, as the case may be, and the price is the sole consideration for such sale: Provided that in case the provisions of the Act, rules or other law as referred to in sub-section (1) require to declare on the package, the retail sale price excluding any taxes, local or otherwise, the retail sale price sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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