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TMI Blog2024 (5) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the order dated 16.04.2015 passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Mumbai (briefly 'CESTAT' hereinafter) in Appeal No. E/86389/13-Mum. (Jindal Drugs Limited Vs. Commissioner of Central Excise, Belapur). 4.1. By the impugned order dated 16.04.2015, CESTAT has allowed the appeal filed by the respondent holding that as per Note 3 to Chapter 18 of the Central Excise Tariff Act, 1985 (referred to hereinafter as 'the Central Excise Tariff Act'), the activity of labelling amounted to manufacture and hence the activity of the respondent fell within the ambit of the definition of manufacture as per the said Note. Therefore, the respondent was eligible for availing the cenvat credit of the duty paid by its Jammu unit and was also eligible for rebate on the duty paid by it while exporting its goods. CESTAT further held that there was no suppression by the respondent and, therefore, the extended period of limitation was not available to the department (revenue). 5. Though facts lie within a narrow compass, nonetheless it is necessary to make a brief reference to the relevant facts for a proper perspective. 5.1. Respondent is engaged in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also called upon to show cause as to why interest at the appropriate rate on the cenvat credit wrongly availed of and utilised as determined and demanded should not be recovered from it under the provisions of Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11AB of the Central Excise Act (now Section 11AA of the said Act with effect from 08.04.2011). 5.4. Respondent submitted written reply dated 08.02.2013 denying all the allegations made in the show cause notice. 5.5. Following adjudication, the appellant vide the order in original dated 25.02.2013 held that cocoa butter received by the respondent at its Taloja unit from its unit at Jammu as well as the imported cocoa butter were already packed in corrugated boxes of 25Kg each. The exported cocoa butter was also in corrugated boxes of 25Kg each. Hence no repackaging activity was undertaken either on the goods received from the Jammu unit or on the imported cocoa butter. Appellant further held that the goods received from the Jammu unit already contained a label. On receipt of the goods at Taloja, two more labels on two sides of the carton were affixed. Appellant concluded that it was a case of additional labelling a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sand three hundred sixty eight only) sanctioned during the period from June 2008 to July 2012 was erroneous as the duty on the exported goods were paid by utilizing the regularly availed credit which was not eligible to the assessee. Hence, the same was demanded under Section 11A(1)/Section 11A(4) of Central Excise Act. 3. interest at the appropriate rate under Rule 14 of the Cenvat Credit Rules read with Section 11AA (erstwhile Section 11AB) of the Central Excise Act, was demanded on the irregular credit availed/erroneous rebate sanctioned. 4. penalty of Rs. 23,02,53,752.00 (Rupees twenty three crores two lakhs fifty three thousand seven hundred fifty two only) under the provisions of Rule 15(2) of Cenvat Credit Rules read with Section 11AC(1)(a) of the Central Excise Act was imposed. However, the penalty would be reduced to 25% of the above amount if the assessee paid the duty determined along with interest within 30 days of receipt of the order. The reduced penalty of 25% of the amount of duty so determined would be available to the assessee only if the 25% of the penalty was also paid within the period of thirty days of receipt of the order. Otherwise, the penalty imposed u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. Therefore, the respondent had rightly availed of the cenvat credit. Since the issue, whether the activity of labelling or re-labelling amounted to manufacture as per Note 3 to Chapter 18 of the Central Excise Tariff Act was related to interpretation of a statutory provision, question of any suppression or misrepresentation of fact by the respondent did not arise. Hence, question of getting the benefit of any extended period of limitation by the appellant for issuing show cause cum demand notice and thereafter passing adjudication order did not arise. In the above background, the Judicial Member set aside the order in original dated 25.02.2013. 5.8. However, the Technical Member did not agree with the view taken by the Judicial Member. He held that no manufacture had taken place in the Taloja unit of the respondent both in respect of the goods manufactured at Jammu as well as the imported goods. He further held that the activity of the respondent in bringing the goods from Jammu to Taloja and thereafter to affix labels so as to avail the benefit of Note 3 to Chapter 18 was not known to the department. Therefore, it was a case of misrepresentation of facts with the intent to av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod was not available to the revenue. He further held that the respondent is entitled to the credit of the duty paid on the goods received from the Jammu unit as well as credit of the countervailing duty paid on the imported goods. That being the position, he held that the credit and the rebate were rightly availed of by the respondent. Question of refund of the same did not arise. Further, no penalty can be imposed on the respondent. 5.12. Following the opinion rendered by the third member, the matter was placed before the two-member Bench of CESTAT. In view of the majority decision, the appeal filed by the respondent was allowed vide the order dated 16.04.2015. 6. This Court by the order dated 08.02.2016 had issued notice. Thereafter, the appeal was admitted on 18.11.2019. 7. Respondent has filed counter affidavit supporting the order of CESTAT and has sought for dismissal of the appeal. In response thereto, appellant has filed rejoinder affidavit reiterating the grounds urged in the appeal. 8. Learned counsel for the appellant has laid great emphasis on the fact that the activity undertaken by the respondent at its Taloja unit i.e. putting labels on the two sides of the cart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Excise Tariff Act (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 relabelling 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 own account; 12.2. Therefore, the word 'manufacture' includes any process which is incidental or ancillary to the completion of a manufacture product; any process which is specified in relation to any goods in the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act as amounting to manufacture; or 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 alter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o activities, Note 3 now contemplates three activities. As pointed out above, the composite activity of labelling or re-labelling of containers and repacking from bulk packs to retail packs has been split up into two activities i.e. labelling or re-labelling of containers is one and the other is repacking from bulk packs to retail packs. The other activity of adopting any other treatment to render the product marketable to the consumers remains the same. Therefore, Note 3, post amendment, as it exists today contemplates three different processes; if either of the three processes are satisfied, the same would amount to manufacture. The three processes are: (i) labelling or re-labelling of containers; or (ii) repacking from bulk packs to retail packs; or (iii) the adoption of any other treatment to render the product marketable to the consumer. 13.4. As already observed above, if any one of the above three processes is satisfied then the same would amount to manufacture. 14. We have already noticed the definition of 'manufacture' in the Central Excise Act. Any one of the processes indicated in Note 3 to Chapter 18 of the Central Excise Tariff Act would come within the ambit o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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