Custom, Excise & Service Tax Tribunal
Kolkata-V vs Mine Line Private Ltd on 1 May, 2025
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EASTERN ZONAL BENCH: KOLKATA
REGIONAL BENCH - COURT NO. 1
Excise Appeal No. 76853 of 2016
(Arising out of Order-in-Original No. 04/Commissioner/CE/Kol-V/Adjn/2016 dated
21.07.2016 passed by the Central Excise Commissionerate Kolkata-V Kendriya
Utpad Shulk Bhawan 180, Rajdanga Main Road Shantipally Kolkata-700107)
Commissioner of Central Excise, Kolkata-V : Appellant
Commissionerate,
180 Shanti pally, Rajdanga Main Road,
Kolkata-700107
VERSUS
M/s. Mine Line Private Limited : Respondent
23, Indrani Park, Kolkata 700 033
APPEARANCE:
Shri S. K. Dikshit, Authorized Representative for the Appellant
Shri Samir Chakravorty, Sr. Advocate
Shri Abhijit Biswas, Advocate, for the Respondent
CORAM:
HON'BLE SHRI ASHOK JINDAL, MEMBER (JUDICIAL)
HON'BLE SHRI K. ANPAZHAKAN, MEMBER (TECHNICAL)
FINAL ORDER NO.76316/2025
DATE OF HEARING / DECISION: 01.05.2025
Order: [PER SHRI ASHOK JINDAL]
The Revenue is in appeal against the impugned
order.
2. The facts of the case are that the respondent is
engaged in the manufacture and sale of mining
electrical equipment and clearing the same on
payment of duty. The respondent is also engaged in
the business of trading of spare parts relating to the
said mining equipments manufactured and supplied
by it, mainly to various collieries of Coal India
Limited and also some private parties engaged in the
business of mining.
Page 2 of 11
Appeal No.: E/76853/2016-DB
Periodical audit took place and on 11th June, 2009,
the factory premises of the respondent was visited.
It was found that apart from manufacturing mining
electrical equipment, the respondent also engaged in
the activities of packing, repacking, labelling,
relabelling, etc., the parts and therefore, the
Revenue was of the view that the activity of trading
of parts amounts to manufacture. Accordingly, it was
alleged that the respondent is liable to pay duty on
clearance of the said parts for the period from July,
2010 to June, 2015, by way of issuance of a Show
Cause Notice dated 04th August, 2015.
3. The ld. adjudicating authority examined the
issue and vide the impugned order, dropped the
charges against the respondent.
4. Aggrieved from the said order, the Revenue is
before us, on the ground that the said parts are
deemed to have been manufactured as per Section
2(f)(iii) of the Central Excise Act, 1944 by way of
packing/re-packing, labelling/re-labelling,
undertaking activity to improve the marketability and
alteration of retail sale price of the goods covered
under the Third Schedule, without getting central
excise registration.
5. The ld. adjudicating authority has dropped the
charges against the respondent as the respondent
have admitted that they had carried out the said
activities. The Revenue prays that the impugned
order be set aside.
6. On the other hand, the Ld. Counsel appearing
on behalf of the respondent submitted that there is
no such activity carried out by the respondent with
regard to the subject goods i.e., traded goods, which
in any manner whatsoever attracts the provisions of
Section 2(f) (iii) of the Act. It is his submission that
Page 3 of 11
Appeal No.: E/76853/2016-DB
no activity of packing/repacking of such goods, or
labelling/relabelling thereof or alteration of retail sale
price of the said packaged goods, was done, nor was
there any adoption of any other treatment of the
said goods so as to render the said products
marketable to the consumers. He further stated that
the spare parts mainly comprise fuses, bolts, relays,
contractors, cables, vacuum bottles, isolators, etc.
These trading items are mainly manufactured by
Siemens L&T, BCH, Crompton greaves, English
Electric, TVS and other large multinational
companies; the company procured the said products
from the open market from the dealers of such
goods and most of the said products are duty-paid
and no credit has been taken by the respondent on
the said goods. It is further stated that these items
are sold by the respondent in their respective
original packing and labelling individually, without
any alteration of either price, label or name
affixed/printed thereon; no testing or value addition
is done in any way on the said bought-out items.
7. Therefore, the Ld. Counsel for the respondent
contends that their trading activity cannot be termed
as manufacture in terms of Section 2(f)(iii) of the
Central Excise Act. In these circumstances, it is his
prayer that the appeal filed by the Revenue be
dismissed and the impugned order be upheld.
8. Heard the parties and considered their
submissions.
9. We have gone through the impugned order
wherein the ld. adjudicating authority has recorded
as under:-
"8. Therefore, the basic issue to be decided is as
to whether Noticee no. 1 have resorted to deemed
manufacture and clearance of goods i.e. spare parts of
the mining electrical equipment's in the guise of trading
without payment of Central Excise Duty leviable
thereon.
Page 4 of 11
Appeal No.: E/76853/2016-DB
8.1 So far as the facts are concerned in this case, I find
that during the course of investigation, it was noticed
that the notice procures spare parts of the flameproof
mining electrical equipment (i.e. their manufactured
item) from local manufacturers or local dealers or any
dealers of reputed brand.
8.2 On going through the statement of Director of M/s.
Dhanbad Electricals Pvt. Ltd., Kolkata Shri Subhas
Kumar Agarwal, a vendor of the said noticee no. 1, I find
that in his statement recorded on 28.05.2015, Shri
Subhas Kumar Agarwal stated that the company is
dealing with reputed brands like GE, Cooper Bussman
etc. and most of the products (spare parts) are having
MRP printed on the packets. M/s. Dhanbad Electricals
Pvt. Ltd. sells those products to the clients after giving
them some discount. Sri Agarwal has also stated that all
goods sold by M/s. Dhanbad Electricals Pvt. Ltd. 10 M/s.
Mine Line carry MRP. Further, Shri Subhas Kumar
Agarwal also stated that the materials as received by
M/s. Dhanbad Electricals Pvt. Ltd. from the
manufacturer have MRP on each box. These boxes are
packed in a carton and sent to M/s. Mine Line Pvt. Ltd.
From a challan of M/s. Dhanbad Electricals Pvt. Ltd.
having number 1484 dated 01.06.2013 it is seen that
the MRP/Unit Rate of HRC HT PT Fuse is Rs. 802/-and
the Director of M/s. Dhanbad Electricals Pvt. Ltd. also
stated in statement that they allow 20% to 30%
discount on the MRP. On scrutiny of the documents in
relation to Purchase Price and Sale Price submitted by
the noticee no. 1, it is noticed that they have purchased
HRC HT PT Fuse at Rs. 688/- and sold the same at Rs.
1,017/-
8.3 The show-cause notice alleges that the noticee
no. 1 is selling spare parts at much more than the
Maximum Retail Price (MRP)/ Retail Sale Price (RSP)
resorting to alteration of MRP/RSP, rendering the goods
as Deemed Manufacture as per Sub-section (iii) of
Section 2(f) of Central Excise Act, 1944.
8.4
..........................................................................................
......
8.5 As per Section 2f(iii) if there is declaration or alteration of retail sale price on the container of the goods then it should amount to manufacture. Here in this case the notice is selling spares purchased from M/s. Dhanbad Electricals Pvt. Ltd at a much higher price than the MRP/RSP. In the show cause notice no evidence of declaration or alterations of MRP on the container of the spares has been cited. The Noticee No. 3 Shri Santanu Ghosh, the Chief Accountant of the Noticee No. 1 in his statement categorically stated that they do not alter or affix or tamper with the MRP sticker. The spares are sent to the different mining industries as it is with MRP Sticker. Mrs. Nandini Chakravarty, Noticee No. 2, the Managing Director of Noticee No. 1 in her statement recorded on 21.07.2015 stated that spares contactors are supplied in large box which contains many of the contactors packed together. These smaller Page 5 of 11 Appeal No.: E/76853/2016-DB packets are sealed packets and are sent to the buyers in identical condition and MRP stickers are not altered or tampered or deleted in any way. I find that no evidence have been produced in the show cause to refute the claim of the Noticees regarding alteration of MRP (emphasis added) 8.6 As per the statement dated 27.05.2015 of Shri Prateek Surana, Authorised Signatory of M/s. Associated Engineers, a supplier of the notice no. I as well as Central Excise registered dealer of L&T products, it is stated that all products dealt by M/s. Associated Engineers have MRP affixed on them. It is further seen from the Tax Invoice of M/s. Associated Engineers having number as 572/13-14 dated 29.07.2013 that the notice no. 1 has purchased "Overload Relay Type MN2 at Rs. 926.5 after being allowed a discount of 15% on MRP Rs. 1090. However, the said noticee has sold the same item at Rs. 4668 vide Invoice No. MLPL/73/13-14-T dated 05.09.2013. The show cause notice by relying upon the above referred invoice has alleged that selling the Overload relay Type MN2 at a price much higher than that of the MRP is a clear alteration of MRP and the notice No. 1 has rendered the spare part Overload relay Type MN2 to be deemed manufactured as per Section 2f(iii) of Central Excise Act 1944. But, I find, in this case also no evidence has been cited which proves declaration or alteration of retail sale price on the container of the spares effected by the noticee no. 1. 8.7 The photographs of the IRC Fuse Links, MNX9 Contactor carrying MRP were reproduced in the show cause notice and relied upon as proof of alteration of MRP by the notice. But I find that the photographs reproduced at page 7 and 8 of the show cause notice shows that there has been no alteration of MRP. In both the photos the MRP is being clearly depicted and I could see that the MRP is of the original manufacturer of the spare. As per the provisions of the Section 2f (iii) of Central Excise Act. 1944 any process of alteration of retail sale price on the unit container would be treated as deemed manufacture. I could find no evidences of physical alteration of the MRP/RSP on the unit package of the traded goods supplied by the notice.
8.8 Therefore, I am of the opinion that the allegation of alteration of MRP/RSP which renders the goods supplied by M/s. Mine Line as spares of the mining electrical equipments manufactured by them as 'deemed manufactured as per Section 2f(iii) of Central Excise Act, 1944, is not sustainable for the lack of concrete evidence (emphasis added) 8.9 From scrutiny of the records it is revealed that the Noticee No. 1 have placed purchase order to M/s. B. M. Packers for procuring wooden crates that were consigned at M/s. Mine Line Pvt. Ltd., 23, Indrani Park, Kolkata 700033 i.e. the office address of the noticee No.1.
Page 6 of 11Appeal No.: E/76853/2016-DB 8.10 In the statement of Noticee No. 3 Shri Santanu Ghosh, the Chief Accountant of the Noticee No. 1 recorded on 27.06.2014 it is stated that the Spares are received by the Noticee No. 1 at the office address i.e. 23, Indrani Park, Kolkata 700033 in packed condition and despatched as such to the customers namely Coal India and its subsidiaries and all the private mine owners and companies. It is also stated by Shri Ghosh that the spares are normally supplied to the various parties in original packing when those are small in size and number. However, for safety and security of the spares which may get damaged during transportation are additionally packed in cartons or wooden crates. Spares are also packed in bigger cartons when several items are needed to be supplied at a time as per purchase order. But I find that in the show cause notice inference has been drawn that the noticee no. I has adhered to packing and repacking of their bought out items on the basis of the facts that wooden crates have been procured by them. Here I would like to refer to the Sub-section (iii) of Section 2(f) of the Central Excise Act, 1944, where it is stated 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." But no evidence has beencited in the show cause notice to show that the noticee no, I have been engaged in packing repacking of their bought out items in unit containers. On going through the investigation reports, statements recorded during investigation process and submissions of the noticees it is inferred by me that wooden crates were used for unit packing of individual spare parts, only, I could not find any evidence which proves that such crates wre used for unit packing of inchistrial spare parts, instead I find that a variety of spare parts were put together in the wooden crates, either in bare form or in their original packing and this was done mainly for safety of the spares during transit. Thus, the wooden packing done by the notice is for logistical reasons only In CESTAT's order in the case of Johnson and Johnson Vs CCE (2003(156) ELT 134 (Tri.)] which was later upheld by SC [2005 (188) ELT 467 (SC)] it was held that mere repacking was not enough and it had to be repacking from bulk to retail packs.
(emphasis added) 8.11 The wooden crates and the bigger cartons inside which the spares are packed for despatch to the buyers are affixed with the stickers on which the text "Supplied by Mine Line" and the office address of the noticee no. 1 is mentioned. It has been alleged in the show cause notice that stickers contains brand name of the company and affixing of these sticker means labelling or relabeling of containers.
8.12 Generally speaking, a label is a written illustration of the goods, upon which it is affixed, as to its characteristics, quality or ownership etc. A label is not an indication of the goods inside the package or container to which it is affixed. Here in this context I draw reference to the case of Taxchem vs. CCE [2003(151) ELT 610 9CEGAT] where it is stated that Page 7 of 11 Appeal No.: E/76853/2016-DB labelling requires furnishing of information as to name of the product, its contents, its price etc. Mere putting name of the consignor or the consignee on the container or the goods cannot be termed as labelling. While delivering the judgement the hon'ble CESTAT have observed that "mere putting of the name and address on the container of the goods of the consignee and consignor does not, in our opinion, amount to labelling as it is generally understood and therefore as to be denoted by the notes in question. If putting names and addresses on packages amounts to labelling, every person who writes a letter and puts upon the letter indicated the recipient of his own name and address has to be considered to have labelled that letter. This is clearly contrary to the normal use of the word. It would be appropriate to say that labelling requires furnishing information as to the nature of the product, its contents, its price etc. A garment may bear on it label of a well- known manufacturer. That would be a label. Putting a sticker containing the name of the product on a box in which the garment is placed would not amount to labelling. It must be borne in mind that in accordance with well settled principles of interpretation these deeming provisions must be construed strictly, all the words contained in their given normal meaning This decision was affirmed by the Apex Court in [2006(202)ELT A21] and departmental appeal dismissed by the Apex Court.
8.12 Smt. Juhi Majumder, Accountant of M/s. Phoenix Engineering Co, another vendor of the said noticee, in her statement recorded on 03.06.2015 has submitted that "we send our products in bare condition to all purchasers and also that we do not undertake any testing of materials." The show cause notice alleges that since the vendor does not test the products supplied. Noticee No. 1 does the testing process before supply of the products to the recipient.
8.13 Similar allegation was brought based on the statement of Shri Gautam Sur. Proprietor of M/s. Electro Enterprises, another vendor of the said noticee, recorded on 03.06.2015 wherein he stated that "we supply the materials in a carton box" and also that "we received the rejected materials both from factory and office of Mis. Mine Line (P) Ltd. Then I change the materials and sent either to their factory or to office as received from them". It is alleged from the above statement that to reject the supplied goods, the Noticee No. 1 must have tested the goods and hence, increased it marketability. However, the show cause notice does not provide any evidence that whether the products that are rejected are unpacked and tested in either at the factory or at the office of the Noticee No. 1.
(emphasis added) 8.14 The letter M13/SCCL/84 dated 31.01.2013 of the Noticee No. 1 was relied upon in the show cause notice wherein in response to "Supply of Spares for mine line make equipment under rate contract for a period of 2 years" to the Chief General Manager, (Purchase), The Singareni Collieries Company Ltd., they have affirmed Page 8 of 11 Appeal No.: E/76853/2016-DB that "we do test all components before these are delivered". It is thereby alleged that the Noticee No. 1 does testing for individual spare products. However, the subject paragraph-4 of the said letter in whole reads as "4. It is not practical to give Test Certificate for individual components like Resistances, Diodes, Fuses and other such items as it does not serve any practical purpose to anyone. We hence request you to kindly refrain from requesting individual Test Certificates for the individual components. However, we will submit a broad spectrum Test Certificates for the particular order against a particular Challan as we do test all components before these are delivered." Therefore, it is clear from the paragraph itself that the Noticee No I do not test the individual spare parts. Further, in subsequent communication dated 12.02.2013 of the Noticee No. 1 to the Chief General Manager, (Purchase), The Singareni Collieries Company Lid, which was collected during the search, in the subject of Supply of Spares for mine lime make equipment under rate contract for a period of 2 years stated that we will not be able to provide Test Certificates for the spore items individually as testing is not possible. Our suppliers corry out such text during their routine inspection and provide us with Test Certificate"
8.15 Hence, in vice of the above observations, I find that the allegation of reating done by the Noticee No, I is mere speculation and cannot be sustained by the available evidence/records."
(emphasis added) 8.16 I find that the Show Cause Notice in the beginning relied upon the NIT (Notice Inviting Tenders) document of Singareni Collieries. It has been stated in the show cause notice that at Para-24 of NIT in between the option of "Manufacturer" and "Authorised Dealer the said noticee has opted for "Manufacturer". At Para-35 of NIT. from the option of declaring the status of bidder whether manufacturer or dealer or trader, the said noticee has opted as "manufacturer", Further, is has been stated in the show cause notice that in the delivery terms clause of the NIT the said noticee has mentioned as "Ex-Works" from which it appears that spares are to be supplied from works Le. from the manufacturing unit. But, it has been seen from the documents that the spare parts claimed to be traded by the said noticee have been supplied from the office address i.e. 23, Indrani Park, Kolkata-700033 of the said noticee.
8.17 On the basis of the above observations obtained from the NIT documents of the Singareni Collieries it has been inferred that the notice no. I has been resorting to "Deemed manufacture".
8.18 I find that in the statement dated 21.07.2015 Smt. Nandini Chakravarty, (Noticee No. 2) the MD of Noticee No. I have categorically stated that the NIT document relied upon is an open tender for "Spare parts of Mine line equipment". In the tender Noticee have declared themselves as manufacturer as they do manufacture the equipment for which they are Page 9 of 11 Appeal No.: E/76853/2016-DB registered with the Department. The spares of the equipment are trading items and such items do not enter the declared Excise premises where goods are manufactured.
As a matter of fact, no company manufactures all the components required for their finished product. Inputs and raw materials are bought from other companies. Like as an example, for an automobile segment, the axles, shockers. T rods etc are manufactured by other ancillary units known as the OEMs i.e. other equipment manufactures. In the case of the present noticee, it is seen that they are manufacturing flame proof equipments used in the mining segment. These equipments also contains number of electronics components like resistence, cut outs, fuses etc. These specialized components are inturn manufactured by other units like Siemens. L&T etc. The original Equipment manufacturer in the instant case i.e. M/s. Mine Lines procure the same for manufacture of their finished product. This is seen as interdependence between various manufacturing units wherein finished product of one becomes the raw material or component for the other.
Rule 6 of the Legal Metrology (Packaged Commodities) Rules, 2011, clearly spells out the requirements as far as labelling etc is concerned. According to Rule 6 every package shall have-
.........................................................................................................
I find that in the instant case, the label used is merely "Supplied by Mine Lines. which in no way can be said as relabelling as the said term i.e. labelling has a wider connotation and covers in its ambit host of information which is legally required to be given. Secondly by use of the word "Supplied by Mine Lines", it is seen that M/s. Mine Lines are in a way categorically stating that the items are being supplied by them and can in no way be extended as being manufactured by them.
8.19 I find that the allegation of "Deemed manufacture" has been made in the show cause notice mainly on assumption. The charges that the notice is undertaking packing or repacking of the spare parts in unit containers or labelling or re-labelling or alteration of retail sale parts in unit containers or labelling or re- labelling 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 were not substantiated with concrete evidences. In every occasion the charges were of speculative nature. The products in question are spare parts of reputed brands like GE, Cooper Bussman, Siemens, L&T. Crompton Greaves and combining various such items in a combination pack or a set do not impart any attribute of marketability that these spares did not possess earlier as each of the items were already marketable. The allegations, as put forth needs to be substantiated beyond doubt and not on the basis or premonitions and presumptions. It is a settled principle that in the event of any doubt arising on the culpability of offence by an individual or a company, the Page 10 of 11 Appeal No.: E/76853/2016-DB element of benefit of doubt goes to the accused. However, in the instant case, it is seen that there is no concrete evidence to establish the guilt and allegations levelled by the department on the Noticees (emphasis added) 8.20 The fact that the noticee had claimed in the NIT that they are manufacturer and the fact that the noticee are responsible for the warranty of the spares in case these gets rejected by the buyers cannot be a reason to conclude that the notice would be covered by the definition of manufacturer under the Central Excise Act, 1944 in view of the fact that the original manufacturer of these spares clears these goods on payment of the Central Excise duty In this regard reference may be drawn to the observation of Hon'ble CESTAT in the case of ASKA EQUIPMENT PVT. LTD. vs. CCE/2006(202) ELT 795] (Tri. Mum)] where it was held that - Fact that appellant/trader had claimed before Government companies, who are buyers of lower that they manufacture the same or that they give warranty, cannot be a reason to hold them manufacturer under section 2(f) of the Central Excise Act, 1944-Placing a sticker on tower showing brand name of appellants will not render appellants as a manufacturer of tower.
This decision was affirmed by the Apex Court in [2010 (254) ELT A37 (S.C.)] and departmental appeal dismissed by the Apex Court"
10. We also find that in this case, the respondent is not affixing any price or undertaking packing/repacking of the said goods. These goods are coming in their original packing and labelling. The respondent is putting all these parts in a big box, for proper transportation of the same and no testing has been done by the respondent. Thus, it is clear that these goods have been sold in their original packing.
11. With regard to MRP, the respondent, in view of tenders raised by buyers, put their quotations and on those quoted values, the respondent is clearing the goods, without changing the MRP affixed by the manufacturers.
12. Further, we also take note of the fact that most of the items are duty-paid items and no CENVAT Credit has been availed by the respondent.Page 11 of 11
Appeal No.: E/76853/2016-DB
13. In these circumstances, it cannot be held that the activity carried out by the respondent with regard to the bought-out items amounts to manufacture in terms of Section 2(f)(iii) of the Central Excise Act, 1944.
14. In that view, we do not find any infirmity in the impugned order. The same is therefore upheld. In the result, the appeal filed by the Revenue is dismissed.
(Operative part of Order was pronounced in Open court) (ASHOK JINDAL) MEMBER (JUDICIAL) (K. ANPAZHAKAN) MEMBER (TECHNICAL) rkp