Custom, Excise & Service Tax Tribunal
M/S.Ici India Ltd vs Cce, Delhi-Ii on 12 August, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing:01.08.2016 Date of Decision:12.08.2016
Excise Appeal No.E/2014/2008-EX(DB)
[Arising out of Order-in-Appeal No.74-74/CE/DLH/2008 dated 20.06.2008 passed by the Commissioner (Appeals),Central Excise, New Delhi.]
For Approval and Signature:
Honble Mr. Justice (Dr.) Satish Chandra, President
Honble Shri V. Padmanabhan, Member (Technical)
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Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
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Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
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Whether Their Lordships wish to see the fair copy of the Order?
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Whether Order is to be circulated to the Departmental authorities?
M/s.ICI India Ltd. Appellants
Vs.
CCE, Delhi-II Respondent
Appearance:
Rep. by Shri Amit Jain, Advocate for the appellant.
Rep. by Shri R.K. Manji, DR for the respondent.
Coram: Honble Mr. Justice (Dr.) Satish Chandra, President Honble Shri V. Padmanabhan, Member (Technical) Final Order No.53012/2016 /Dated:
Per V. Padmanabhan:
The appeal is filed against the impugned order dated 26.02.2008 passed by the Commissioner (Appeals), Delhi. The appellant is a manufacturer of various types of paints and thinner classifiable under Chapter 32 and 38 of the Schedule to the Central Excise Tariff Act. The paints and thinner are chargeable to duty on the basis of the MRP. The appellants cleared their final products i.e. base paints along with tinters and ready colour shades on stock transfer basis to the various depots located all over India on payment of duty on the MRP affixed on the packages. At the depot, depending upon the requirements, the base paints and tinters are mixed in the required combination using specially designed mixtures in order to obtain the desired colour/shades. After this operation, the paint of various colours are filled in unit containers at the depot and sold to ultimate customers after packing. 2. The Revenue took the view that the process of mixing the base paint with tinters etc. is a process of manufacture in terms of Section 2 (f) (iii) of the Central Excise Act. Accordingly, the appellant was charged with payment of excise duty for clearances made from depots, even though the base paint and tinter are cleared on stock transfer basis from the original factory after they were already charged to duty on MRP basis. The duty demand of Rs.3,87,418/- was confirmed by the Original Authority along with penalties, which was upheld by the Commissioner (Appeals) in this impugned order. Hence, the present appeal.
3. The appellant is in appeal before this Tribunal claiming that the process of tinting does not amount to manufacture, since this process does not bring into existence any new goods. They have relied upon various case laws to support their argument. They have also cited in their support, the CBEC Circular No.247/81/96-CX dated 3.10.96, in which it was clarified that the process of tinting on duty paid base paint with duty paid stainer to obtain paints of different shades, does not amount to manufacture.
4. We have heard Shri Amit Jain, ld. Counsel for the appellant as well as Shri R.K. Manjhi, ld. DR for the Department.
5. The process of mixing base paint with tinters to obtain paint of the desired colours/shades has been held to be a process of manufacture by the Lower Authorities. To appreciate this, we extract below, Section 2(f) of Central Excise Act:-
2(f) manufacture includes any process,-
(i) Incidental or ancillary to the completion of a manufactured product; and
(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 labeling or re-labelling of containers including the declaration or alternation of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer,]
6. There is no dispute that commodity paint is specified in the 3rd Schedule and assessed to duty under Section 4 A on MRP basis. It is also not in dispute that the appellant is undertaking the process of mixing of paints with tinters and re-packing the same in unit containers and are labeling the same with MRP at their depots before dispatching them for sale to the ultimate consumers. These processes are clearly covered by sub-section (iii) of Section 2(f). Consequently, the process undertaken by the appellant would amount to manufacture and excise duty will need to be paid, at the stage of the depot.
7. The ld. DR countered this and submitted that such a plea cannot be taken at this stage, not having been raised before the lower authorities. We also note that once base paint is mixed with tinter, the resultant paint will have a higher MRP.
8. To conclude in line with the above discussions, we hold that the process of mixing base paint with tinter amounts to manufacture and is liable to payment of duty at the depot. The impugned order is upheld and appeal dismissed.
9. With the above direction, the appeal is dismissed in the above terms.
[Order pronounced in court on 12.08.2016.] ( Justice Dr. Satish Chandra) President ( V. Padmanabhan ) Member (Technical) Ckp.
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