Custom, Excise & Service Tax Tribunal
Cotmac Pvt Ltd vs Chennai-Iii on 5 March, 2024
1
E/42026-42059/2014
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
COURT HALL No. III
(All the appeals are arising out of Order in Original No. 01/2014 (R.C. Ex.)
dated 28.3.2014 passed by the Commissioner of Central Excise, Chennai III
Commissionerate)
Excise Appeal No. 42026/2014
M/s. Titan Company Limited, ...Appellant
3, Sipcot Industrial Complex,
Hosur - 635 126
Excise Appeal No. 42027/2014
M/s. Elkom Enterprises Pvt. Ltd. ...Appellant
(M/s. Medicos Agencies),
92, Elliot Road, Kolkatta,
West Bengal.
Excise Appeal No. 42028/2014
M/s. Subhas Udyog ...Appellant
G/3 & G4, Birenu Dwarka Palace
143,Ambagan Road, Sakchi,
Jamshedpur, Jharkhand.
Excise Appeal No. 42029/2014
M/s La & Lall Services P. Ltd., ...Appellant
229-B, Srikrishnpuri,
Sahadeo Mahto Marg,
Patna - Bihar.
Excise Appeal No. 42030/2014
M/s. Mohan Lall Mukund Lall & Co., ...Appellant
Anant Building, Bank Road,
Rai Market, Ambala Cantt,
Haryana.
Excise Appeal No. 42031/2014
M/s. Ram Ditta Mal Ganga Ram, ...Appellant
SCO 31 sector-26, Chandigarh -
Chandigarh
Excise Appeal No. 42032/2014
M/s.Sequel Logistics, ...Appellant
Khasra No. 2357/1, 2358/2, 2359,
Mahabewala Indl Area, Dehradun,
Uttaranchal.
2
E/42026-42059/2014
Excise Appeal No. 42033/2014
M/s. Shambavi Enterprises, ...Appellant
87/A, 1st Floor, Sri Aurobindo Marg,
Adchini, New Delhi.
Excise Appeal No. 42034/2014
M/s. D Rackman & Co., ...Appellant
C-56, LGF, Preet Vihar,
Vikas Marg, Delhi.
Excise Appeal No. 42035/2014
M/s.AC & Company, ...Appellant
C-103 Lal Kothi Scheme,
Janpath, Jaipur,
Rajasthan.
Excise Appeal No. 42036/2014
M/s. BBP & Co. (unit of BBP Infotech P Ltd.), ...Appellant
1st Floor Bharati Bhawan,
211, Western Kutchery Road,
Meerut - Uttar Pradesh.
Excise Appeal No. 42037/2014
M/s. TIWA, ...Appellant
1st Floor, Cosmic Embassy
No.10, 1st B Cross,
SGN Layout, Lalbagh Road,
Bangalore - Karnataka.
Excise Appeal No. 42038/2014
M/s. TIWA, ...Appellant
No: 10/1A, Ward
No: 12 Graphite India Road,
Mahadevapura Near Hoody Circle,
Bangalore_ Karnataka
Excise Appeal No. 42039/2014
M/s. D.C. Johar & Sons P. Ltd, ...Appellant
Door No: 43/632A Ground Floor,
Pawathil Cross Road,
Cochin- Kerala.
Excise Appeal No. 42040/2014
Ms. Gajalakshmi Enterprises, ...Appellant
No.36 AKS Nagar, Thadagam Road,
Coimbatore - Tamilnadu
3
E/42026-42059/2014
Excise Appeal No. 42041/2014
M/s. Cotmac Pvt. Ltd., ...Appellant
Martin's enclave, Dona Paula Road,
Opp. Syndicate Bank,
Caranzalem Panaji- Goa.
Excise Appeal No. 42042/2014
M/s Drive India Enterprise Solutions Ltd., ...Appellant
No:16-18, gundalapalli VIll, Mechal Mandal,
RR Dist, Secunderabad- Andhra Pradesh.
Excise Appeal No. 42043/2014
M/s. Wilson & Co. Ltd., ...Appellant
Anna Salai, Chennai, Tamil Nadu.
Excise Appeal No. 42044/2014
M/s.APR Agencies, ...Appellant
1st Floor, No.182-A, Vakkil new Street,
Madurai, Tamil Nadu.
Excise Appeal No. 42045/2014
M/s. Ratna Commercials, ...Appellant
40-1-142 A, Maalika .Apts,
Venkateswarapuram, M.G.Road,
Vijayawada - Andhra Pradesh.
Excise Appeal No. 42046/2014
M/s Fairdeal Traders, ...Appellant
1002, AKIK, Opp. Raj Path Club,
S.G.Highway, Ahmedabad, Gujarat.
Excise Appeal No. 42047/2014
M/s. Mehta Sons, ...Appellant
B/19, Dev Prayag Complex,
Bhakthi Mandir Marg,
Hariniwas, Thane, Maharashtra
Excise Appeal No. 42048/2014
M/s. S.M. Enterprises, ...Appellant
No.26, Scheme 54, P.U.3, Commercial Bhanmori,
A.B. Road, Indore, Madhya Pradesh.
4
E/42026-42059/2014
Excise Appeal No. 42049/2014
M/s. Mehta Sons Gala, ...Appellant
5A, Varadhan Complex, L
BS Marg, Vikroli(w), Mumbai .
Excise Appeal No. 42050/2014
M/s. NGDA Watches Pvt. Ltd., ...Appellant
Chinna Chambers, 2nd Floor,
Mound Road Extension,
Sadarangpur- Maharashtra.
Excise Appeal No. 42051/2014
M/s. Hindustan Enterprises, ...Appellant
Office Complex, Plot No.02, Bapuji Nagar,
Bhubaneshwar- Orissa.
Excise Appeal No. 42052/2014
M/s. Pharma Combines, ...Appellant
Talisquare, 2nd Floor,
18/280-P, Puthiyapalayam,
Tali - Kerala.
Excise Appeal No. 42053/2014
M/s B. Mohinuddin Agencies, ...Appellant
Madina Manzil, Medical College road,
Raipur, Chattisgarh.
Excise Appeal No. 42054/2014
M/s. Sadana Warehousing & Agencies P. Ltd., ...Appellant
Hotel Empire, 5th Floor, HB Road,
Fancy Bazar, Guwahati - Assam.
Excise Appeal No. 42055/2014
M/s. Glacier Cold Storage & Ice Mills, ...Appellant
174 Canal Road, Jammu-
Jammu & Kashmir.
Excise Appeal No. 42056/2014
M/s. H B Enterprises Pvt. Ltd., ...Appellant
No.41, 1st Floor, Santishar Singh Nagar,
Improvement Trust Flats, Pakhowal Road,
Ludhiana - Punjab.
5
E/42026-42059/2014
Excise Appeal No. 42057/2014
M/s Das Services, ...Appellant
5, Gulzar Colony, New Berry Road,
Lucknow- Uttar Pradesh
Excise Appeal No. 42058/2014
M/s. Saravnaa Associates, ...Appellant
No. 440, 1st Floor, Anna Salai,
Pondicherry.
Excise Appeal No. 42059/2014
M/s. Sehgal Motors (P) Ltd., ...Appellant
No. 6-3-1092A, Rajbhavan Road,
Hydrebad - 500082.
Versus
The Commissioner of GST & Central Excise ...Respondent
No.1 Foulkes Compound Anaimedu, Salem - 636001.
APPEARANCE:
Shri Lakshmi Kumaran V., Advocate For the Appellants Shri Anoop Singh, Addl. Commissioner / A.R. Shri M. Selvakumar, Asst. Commissioner / A.R. For the Respondent CORAM :
HON'BLE MS. SULEKHA BEEVI C.S. MEMBER (JUDICIAL) HON'BLE SHRI. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) Final Order Nos.40227 - 40260/2024 Date of Hearing: 14.02.2024 Date of Decision: 05.03.2024 Per Ms. Sulekha Beevi C. S., The issue involved in all these appeals being same and connected, these appeals were heard together and are disposed of by this common order.6
E/42026-42059/2014
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 Dehradun, Baddi and Rourkee are cleared without payment of duty as per availment of Area Based Exemption under Notification No.50/2003 CE dated 10.06.2003.
1.1 The watches are either sold through TITAN owned showrooms or moved to the distributing locations situated across India for further distribution to the retail outlets. These distributing locations are managed by Clearing and Forwarding Agents (CFAs) appointed by TITAN. In case of any change in the MRP due to various reasons, the revised MRP is affixed by way of relabeling on all the unsold stocks lying in TITAN showrooms and also lying at CFA locations. The relabeling was done by affixing new label on the bottom of the watch box and also by changing the tag which is tied to the watch strap. 1.2 The officers of DGCEI visited the show rooms and CFAs situated across India, and in such search operations found that the appellant was engaged in the activity of "labelling or relabeling, declaration by affixing fresh Maximum Retail Price (MRP) stickers" on each unit pack, by altering the retail price stickers already affixed on the watches received from the factory and that such activity undertaken by showrooms and CFAs amount to 'manufacture' as per Section 2 (f) (iii) 7 E/42026-42059/2014 of the Central Excise Act 1944. These showrooms and CFAs failed to discharge Central Excise duty on clearances of watches. 1.3 During the investigations it was found that the MRP stickers with revised prices required for affixing at Showrooms and CFAs wa supplied by TITAN by price revision Circulars through e-mail or by post. 1.4 Since no duty was discharged on the wrist watches in the showrooms owned by TITAN at Hosur the officers of the department detained writ watched valued at Rs.32,80,000/-. Subsequently on information by TITAN that they paid Rs.50,00,000/- (Rupees fifty lakhs only) towards excise duty vide challans dated 01.02.2010 and 13.01.2010, the detention was lifted and the watches were released.
1.5 The department recorded statements of Store Manager of Showroom at Hosur and General Manager (Commercial). Based on such investigations, show cause notices were issued to 22 showrooms owned by TITAN and to 33 CFAs, proposing to demand central excise duty on the watches cleared by them after labelling/relabeling, affixing fresh MRP stickers. The notice proposed to demand interest and also for imposing penalties. After due process of law, the 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:
8
E/42026-42059/2014 S. Name of the Party MRP SCN date Duty amount No revision dates 1 N.G.D.A. Watches (P) 01.04.2008 06/2011 dtd 20,88,104 Ltd., Nagpur 01.11.2008 01.2012 01.12.2008 01.04.2009 2 A.C. & Co., Jaipur April 2008 08/2011 51,37,855 Oct 2008 dtd.
Nov 2008 19.01.2012
Dec 2008
April 2009
Dec 2009
3 Shambavi 01.04.2008 92/2011 dtd 81,19,749
Enterprises, New 01.10.2008 30.12.2011
Delhi 01.11.2008
01.12.2008
01.04.2009
15.12.2009
4 Wilson & Co., 01.04.2008 86/2011 78,82,779
Chennai 01.10.2008 dtd.
01.11.2008 22.12.2011
01.12.2008
01.04.2009
5 Glacier Cold Storage April 2008 04/2012 17,06,419
& Ice Mills, Jammu Nov. 2008 dtd.
Dec. 2008 11.01.2013
6 Elkom Enterprises 01.04.2008 06/2012 dtd 1,15,42,789
(P) Ltd., Kolkatta 01.10.2008 11.01.2013
01.11.2008
01.12.2008
01.04.2009
15.12.2009
7 Mehta Sons, Thane 01.04.2008 07/2012 35,85,790
01.11.2008 dtd
01.12.2008 19.01.2012
01.04.2009
15.12.2009
8 S.M. Enterprises, 01.04.2008 09/2012 47,65,986
Indore 01.10.2008 dtd.
01.11.2008 20.01.2012
01.12.2008
01.12.2009
15.12.2009
9 Cotmac (P) Ltd., 01.04.2008 10/2012 21,03,612
Hubli 01.10.2008 dtd
01.11.2008 20.01.2012
01.12.2008
01.04.2009
15.12.2009
9
E/42026-42059/2014
10 D.C. Johar & Sons (P) 01.04.2008 11/2012 dtd 17,97,750
Ltd., Cochin 01.10.2008 20.01.2012
01.11.2008
01.12.2008
01.04.2009
15.12.2009
11 APR Agencies, 01.04.2008 14/2012 22,76,956
Madurai 01.10.2008 dtd
01.11.2008 20.01.2012
01.12.2008
01.04.2008
15.12.2009
12 Mohanlal Mukundlal 01.04.2008 15/2012 dtd 42,86,783
& Co., Ambala 01.10.2008 25.01.2012
01.12.2008
01.04.2009
13 Ramditta 01.04.2008 18/2012 dtd 29,24,586
Malgangaram, 01.11.2008 17.02.2012
Chandigarh 01.12.2008
01.04.2009
15.12.2009
14 Saravana Associates, 01.04.2008 20/2012 dtd 5,35,199
Pondicherry 01.11.2008 22.02.2012
01.12.2008
15 B.B.P. & Co., Meerut April 2008 145/2012 79,53,553
Oct 2008 dtd
Nov 2008 24.12.2012
Dec 2008
April 2009
Dec 2009
16 Hindustan April 2008 146/2012 21,40,459
Enterprises, Oct 2008 dtd
Bhubaneswar Nov 2008 24.12.2012
Dec 2008
17 Mehta Sons, Mumbai April 2008 147/2012 80,20,794
Oct 2008 dtd
Nov 2008 24.12.2012
Dec 2008
April 2009
18 Fair Deal Traders, 01.04.2008 148/2012 76,01,155
Ahmedabad 01.10.2008 dtd
01.11.2008 24.12.2012
01.12.2008
01.04.2009
15.12.2009
19 Ratna Commercial, April 2008 149/2012 25,80,918
Vijayawada Oct 2008 dtd
Nov 2008 24.12.2012
Dec 2008
April 2009
10
E/42026-42059/2014
20 D Rackman & Co., April 2008 150/2012 79,53,553
Delhi Oct 2008 dtd
Nov 2008 24.12.2012
Dec 2008
April 2009
Dec 2009
21 Dass Services, April 2008 151/2012 79,38,969
Lucknow Nov 2008 dtd.
Dec 2008 24.12.2012
22 Sadhana April 2008 152/2012 26,72,951
Warehousing, Nov 2008 dtd
Gauhati Dec 2008 24.12.2012
23 Mobinuddin April 2008 153/2012 15,12,081
Agencies, Raipur Oct 2008 dtd
Nov 2008 24.12.2012
Dec 2008
24 T.I.W.A. Bangalore April 2008 154/2012 1,13,87,494
Oct 2008 dtd
Nov 2008 24.12.2012
Dec 2008
April 2009
Dec 2009
25 T.I.W.A. Bangalore April 2008 155/2012 90,00,423
Oct 2008 dtd
Nov 2008 24.12.2012
Dec 2008
April 2009
Dec 2009
26 Lal & Lal Services (P) April 2008 156/2012 33,70,825
Ltd., Patna Nov 2008 dtd
Dec 2008 26.12.2012
April 2009
Dec 2009
27 Gajalakshmi 01.04.2008 158/2012 29,58,575
Enterprises, 01.10.2008 dtd
Kodaikanal 01.11.2008 24.12.2012
01.12.2008
01.04.2009
15.12.2009
28 Pharma Combines, April 2008 159/2012 6,57,530
Calicut Oct 2008 dtd
Nov 2008 24.12.2012
Dec 2008
29 Subash Udyog, April 2008 157/2012 24,59,774
Jamshedpur Nov 2008 dtd
Dec 2008 24.12.2012
April 2009
30 H.B. Enterprises, April 2008 160/2012 34,05,359
Ludhiana Nov 2008 dtd
Dec 2008 24.12.2012
11
E/42026-42059/2014
31 Drive India Dec 2009 5/2013 dtd 2,24,433
Enterprises Solutions 11.01.2013
Ltd., Secunderabad
32 Sequel Logistics, April 2008 7/2013 dtd 7,19,852
Dehradun Nov 2008 11.01.2013
Dec 2008
April 2009
33 Dehgal Motors (P) April 2008 8/2013 dtd 48,57,413
Ltd., Hydrabad Oct 2008 11.01.2013
Nov 2008
Dec 2008
April 2009
TOTAL 14,61,69,868
Details of 22 SCNs issued to Showrooms of the Appellant 1 World of Titan, Hosur 01.04.2008 95/2011 dtd 6,79,674 01.10.2008 17.02.2012 01.11.2008 01.12.2008 01.04.2009 15.12.2009 2 World of Titan, 01.04.2008 24/2012 dtd 16,06,749 Chennai 01.10.2008 27.02.2012 01.11.2008 01.12.2008 01.04.2009 15.12.2009
3 World of Titan, 01.10.2008 26/2012 dtd 4,68,679 Bangalore 01.11.2008 29.02.2012 01.12.2008 01.04.2009 01.12.2009 4 World of Titan, 01.10.2008 27/2012 dtd 3,25,436 Gurgaon 01.11.2008 29.02.2012 01.12.2008 15.12.2009 5 World of Titan, Delhi 01.04.2008 28/2012 dtd 3,69,612 01.11.2008 29.02.2012 01.12.2008 01.04.2009 15.12.2009 6 World of Titan, 01.04.2008 30/2012 dtd 14,47,084 Mumbai 01.10.2008 01.03.2012 01.11.2008 01.12.2008 01.04.2009 15.12.2009 12 E/42026-42059/2014 7 World of Titan, Noida Oct 2008 83/2012 dtd 98,504 April 2009 23.08.2012 8 World of Titan, 01.04.2008 86/2012 dtd 10,64,571 Bangalore 01.10.2008 30.08.2012 01.11.2008 01.12.2008 01.04.2009 15.12.2009 9 World of Titan, Noida April 2008 87/2012 dtd 7,17,871 Nov 2008 30.08.2012 Dec 2009 10 World of Titan, 01.04.2008 88/2012 dtd 2,24,337 Kolkatta 01.10.2008 31.08.2012 01.12.2008 01.04.2009 15.12.2009 11 World of Titan, Dec 2009 89/2012 dtd 83,232 Bangalore 31.08.2012 12 World of Titan, 01.04.2008 92/2012 dtd 13,96,896 Bangalore 01.10.2008 31.08.2012 01.11.2008 01.12.2008 01.04.2009 15.12.2009 13 World of Titan, Delhi 01.04.2008 94/2012 dtd 14,56,312 01.10.2008 05.09.2012 01.11.2008 01.12.2008 01.04.2009 15.12.2009 14 World of Titan, Delhi 01.04.2008 95/2012 dtd 2,93,099 01.10.2008 05.09.2012 01.11.2008 01.12.2008 01.04.2009 15.12.2009 15 World of Titan, 01.04.2008 96/2012 dtd 9,65,887 Mumbai 01.10.2008 05.09.2012 01.11.2008 01.12.2008 01.04.2009 01.12.2009 16 World of Titan, New 01.04.2008 97/2012 dtd 4,65,929 Delhi 01.10.2008 05.09.2012 01.11.2008 01.12.2008 01.04.2009 15.12.2009 17 World of Titan, Delhi Dec 2009 98/2012 dtd 71,292 05.09.2012 13 E/42026-42059/2014 18 World of Titan, Dec 2009 99/2012 dtd 1,34,106 Hyderabad 05.09.2012 19 World of Titan, Dec 2009 100/2012 dt 1,32,837 Bangalore 05.09.2012 20 World of Titan, Dec 2009 101/2012 dt 30,628 Gurgaon 05.09.2012 21 World of Titan, April 2008 102/2012 dt 8,31,061 Kolkatta Oct 2008 05.09.2012 Nov 2008 Dec 2008 Dec 2009 22 World of Titan, Hosur Dec 2009 103/2012 dt 14,305 05.09.2012 TOTAL 1,28,78,100 2.1 The Learned Counsel explained the facts as under :
2.2 The Appellant is a renowned manufacturer of watches, jewellery, and eyewear. The Appellant manufactures watches out of 4 locations in India, namely, ▪ Hosur (Tamil Nadu), ▪ Rourkee (Uttarakhand), ▪ Baddi (Himachal Pradesh), ▪ Dehradun (Uttarakhand).
2.3 The present Appeal is confined to a dispute over excise duty liability in respect of watches manufactured at the units in Rourkee , Baddi, and Dehradun. The demand is confirmed on the ground that the activity of relabeling and alteration of Maximum Retail Price ("MRP") amounts to 'manufacture' under Section 2(f)(iii) of the Central Excise Act, 1944 ("Excise Act") and therefore excise duty is liable to be paid on the revised MRP affixed on the watches at the Titan owned showrooms (collectively, "show rooms") and CFA premises though 14 E/42026-42059/2014 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 Company's policy to sell watches at the same MRP all over India on any given time, the revised MRP on the watches held in stock at the Show rooms and at CFAs locations is altered by affixing a new sticker on the bottom of the watch box and by changing the tag which is tied to the watch strap. 2.6 The watches with revised MRP tags and stickers are then sold to retail customers without payment of excise duty. 2.7 This practice was followed routinely and the Appellant had also intimated the Department about the operations undertaken by it with 15 E/42026-42059/2014 respect to the revising of MRP of the watches as per Letter dated 20.05.2005.
2.8 It is pertinent to note that the same modus operandi is followed in respect of watches manufactured and assembled at Hosur.
However, as the unit at Hosur is not governed by any exemptions, the watches manufactured out of Hosur unit would be cleared upon payment of applicable duty. At the time of affixing the revised MRP, the Appellant would remit applicable excise duties under Section 4A of the Excise Act.
2.9 The above mode of increasing the MRP was stopped since December 2009. These facts are not in dispute. 2.10 Pursuant to audit investigations carried out in 2005 and 2009, the Revenue initiated proceedings under 22 Show Cause Notices against the Showrooms and under 33 Show Cause Notices against the CFA premises, alleging that excise duty ought to have been remitted by the showrooms and the CFAs on the activity of affixing revised MRP tags and labels.
2.11 The case of the Department is that the activity of attaching revised MRP Tags to the watch straps and affixing labels to the watch cases amount to 'deemed manufacture' within Section 2(f)(iii) of the Excise Act. The Department has also alleged wilful suppression with intent to evade payment of duty against the showrooms and CFA premises.
2.12 The 22 SCNs issued to the Showrooms and the 33 SCNs issued to the CFA premises contained identical allegations and were adjudicated under the Impugned Order. The Impugned Order recorded 16 E/42026-42059/2014 common findings against all 55 Show Cause Notices. Hence, the Appeal No. E/42026/2014-DB may be referenced as the lead Appeal for the batch of 34 Appeals filed against the Impugned Order. 2.13 SUBMISSIONS A. The activity of affixing sticker to the container and tags to the watch straps does not amount to manufacture under Section 2 (f)(iii) of the Excise Act. Affixing stickers 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.)].17
E/42026-42059/2014 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 already marketable. Therefore, alteration of MRP does not render them marketable. Reliance is placed on:
▪ Lakme Lever Ltd. vs. CCE, Mumbai [2000 (10) TMI 96 CEGAT, Mumbai] ▪ CCE vs. Rafique Malik [2018 (360) ELT 454 (Bom.)] B. Section 2(f)(iii) does not apply to goods manufactured under ABE Notification B.1. The concept of 'deemed manufacture' in terms of Section 2(f)(iii) read with Third Schedule of the Excise Act would not apply to goods manufactured at area-based exemption availing factories for the reason that, if the concept is applied, it would make the goods dutiable which are otherwise exempt.
B.2. The purpose of introduction of 2(f)(iii) is for situations where goods are subject to valuation under Section 4A of the Excise Act and cleared but subsequently the MRP is enhanced and duty is evaded. Such a situation does not arise in the present case because even if the goods were subject to a higher MRP in the ABE factory, no duty would have been payable. Consequently, there is no question of duty evasion in the present case. Section 2(f)(iii) becomes relevant only when the goods were otherwise dutiable when cleared from the factory with the altered MRP.
B.3. If the exempted goods are subject to the rigors of Section 2(f)(iii), then the exemption availed would become a nullity and the goods just 18 E/42026-42059/2014 because they are marked with revised M.R.P. would become liable to duty on the entire new M.R.P. including the M.R.P. at which the goods originally left the factory under exemption. B.4. Even if the goods were brought back to the ABE Factory pursuant to Rule 16 of the Central Excise Rules, 2002 for the purpose of altering the MRP by affixing stickers, there would be no duty payable on account of the ABE Notification.
C. Duty Demanded on CFAs and Show Rooms are incorrect. C.1. It is submitted that any demand of duty ought to have been made on the ABE factories and not on the CFAs or Show Rooms. C.2. Even in Titans own case, on an identical issue relating to the factory at Hosur, the demand was raised on the Hosur Factory and not on the CFAs and Show Rooms.
C.3. In the present case, even the demand against the ABE factories cannot be sustained as they are situated within the area exempted under ABE Notification. The department cannot adopt two different methods of raising the demand just because the factory is exempt and attach a duty liability on the CFAs and Show Rooms which 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 19 E/42026-42059/2014 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 'manufacture' under Section 2(f)(iii).
D.4. If Section 2(f)(iii) were to be applicable, Titan would be the manufacturer and the CFAs would also be deemed as the manufacturers, rendering both parties liable to remit excise duty at the increased MRP as Explanation 2(b) of Section 4A and Section 2(f)(iii) obligates payment of excise duty on the increased MRP. Such interpretation can never be the legal mandate. E. The demand is time barred and Extended Period is not invokable.20
E/42026-42059/2014 E.1. The demand has been confirmed for the impugned period from 01.04.2008 to 31.12.2009 under cover of 55 identically framed Show Cause Notices. During the impugned period, the normal period of limitation was one year from the date of filing of return. The earliest of the Show Cause Notices were:
▪ SCN No. 86/2011 dated 22.12.2011 issued to CFA Wilson & Company;
▪ SCN No. 92/2011 dated 30.12.2011 issued to CFA Shambavi Enterprises;
▪ SCN No. 95/2012 dated 17.02.2012 issued to Showroom. E.2. There is no suppression on part of the Appellants since Titan had intimated the details of its operation to the jurisdictional commissioner vide Letter dated 20.05.2005. Further, the units were subjected to Internal Audit Wing of the Central Excise Department and by CERA on multiple dates. When the factory has already been audited by the Audit Officers the impugned Order holding suppression with intent to evade payment of central excise duty is incorrect and is not maintainable. E.3. It is pertinent to note that the Department had initiated proceedings against the Appellant's Hosur unit on similar grounds commencing with the SCN No. 48/2003 dated 29.08.2003 which eventually culminated into the order Titan Industries vs. CCE [2007 (217) ELT 423 (Tri-Chennai)] which records the operations of the Appellants in detail. The Respondent refers to the said order in paragraph 16 of the Impugned Order. Therefore, the department was aware of the operations of the Appellant all along and cannot now claim 21 E/42026-42059/2014 that the Appellant has suppressed the facts of the case to invoke the extended period of limitation.
E.4. Reliance is further places on Bio Veda Action Research Pvt. Ltd. vs CCE, Delhi [2017 (10) TMI 1030 - CESTAT New Delhi] where under identical circumstances involving products manufactured under ABE Notification, the Hon'ble CESTAT, New Delhi had held that the Appellant could not have gained anything by labelling the goods manufactured 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 22 E/42026-42059/2014 affixing the new MRP stickers would definitely fall within the meaning of deemed manufacture.
3.1 The evidences in the form of documents and depositions was adverted to by the Learned AR to submit that the CFA agents were receiving the stock of products and stored them in godown in safe custody. They raise invoice and deal with the product as instructed by TITAN from time to time. They also collect cheque /DD on behalf of TITAN and deposit the same in TITAN 's bank account. The agreement entered by TITAN with CFAs also showed that there was no opportunity for CFA to return the goods once the goods are delivered to CFA. The CFA has to incur all expenses for storage and safety. Any damage due to loading and unloading has to be shouldered by CFA. It is stipulated in that the agreement shall not create a partnership or the relationship of employer and employee between TITAN and CFA. Thus, the CFAs have done the activity independently. The activity of labelling and relabeling and affixing revised higher MRP has been done at the premises of the CFA and the place of manufacture would be the place of CFA.
3.2 Thus the activity of deemed manufacture having taken place at the Showrooms and CFAs, the demand of excise duty is legal proper. Further in the appellants' own case, for clearances made from Hosur factory, on the very same issue, TITAN INDUSTRIES Vs CCE 2007 (217) ELT 423 (Tri- Chennai) the appellant had admitted their liability and the finding of the Commissioner that the activity amounts to manufacture was upheld by the Tribunal. The present argument by 23 E/42026-42059/2014 the appellant that the activity does not amount to manufacture therefore cannot be accepted.
3.3 The arguments on the issue of limitation was countered by the Ld. AR by submitting that the non-payment of duty would not have come to light, if the officer of DGCEI had not conducted the investigations. The appellant has argued that the department was already aware of their activities. The documents furnished is a letter to the department, on price revision in respect of watches. These documents do not indicate anything on the activities carried on at the premises of the Showrooms or CFAs. Hence, the appellant does not have any ground to dispute the invocation of extended period. Though the appellant contends to have informed the department by issuing letter, the said letter does not contain the details as to the activity carried out at Showrooms and CFA. It is submitted the decisions relied by the appellant are 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;24
E/42026-42059/2014
(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 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; 5.2 The analysis of the provision contained in Section 2 (f) (iii) would show that for an activity to be deemed as manufacture:
(a) the goods are to be those specified in Third Schedule
(b) packing or repacking of such goods in a unit container, OR
(c) labelling or relabeling of containers including the declaration or alteration of retail sale price on it, OR
(d) adoption of any other treatment on goods
(e) these activities should be to render the product marketable to the consumers (i.e. ultimate consumer).
5.3 In the present case, there is no dispute that watches fall under third schedule. The department alleges that the Showrooms and CFAs have done activity of labelling or relabeling of containers 'including the declaration or alteration of retail sale price on it'. According to the appellant there is no activity of labelling or re-labelling and the activity undertaken is affixing of MRP stickers on the Containers (watch boxes) and MRP tags on the watches. The samples of the stickers affixed are as below:-
25
E/42026-42059/2014 5.4 The department does not have a case that appellant has for the first-time mentioned brand name Titan, or any such new details while affixing the fresh MRP stickers. The appellant has merely changed the MRP in fresh stickers. The distinction between a label and an MRP sticker was analysed in the case of CCE New Delhi Vs Panchsheel Soap Factory (supra). 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 26 E/42026-42059/2014 manufacture. It was also observed that the products were already marketable and the activity of affixing the MRP sticker did not enhance its marketability. The relevant para of the decision of the Tribunal reads as under:
We have considered the submissions of both the sides. Note 6 to Chapter 34 reads as under: "in relation 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. The Board clarified that Note 5 to Chapter 30 may not be attracted in such a situation. Note 5 to Chapter 30 is para meteria to Note 6 to Chapter 34. Accordingly, we do not find any infirmity in the impugned Order and therefore reject the appeal filed by the Revenue.
5.5 The appeal filed by the department before the Hon'ble Apex Court against the above decision of the Tribunal was dismissed as reported in Commissioner Vs. Panchsheel Soap Factory 2003 (156) ELT A382.
5.6 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 27 E/42026-42059/2014 attribute marketability to the product which was otherwise not marketable. The relevant paras read as under:-
The goods manufactured by the appellant or obtained by it, all fall under chapter 33 of the tariff. Note 4 to this chapter at the relevant time (1996-97) reads as follows:
"In relation to products of heading nos. 33.03, 33.04 and 33.05, conversion of powder into tablets, labelling or relabeling of containers intended for consumers or repacking from bulk packs to retail packs or the adoption of any other treatment to render the products marketable to the consumer, shall be construed as 'manufacture'.
The notice issued to the appellant alleged, and the Commissioner agrees that the repacking done in the depot of the appellant falls within the scope of "adoption of any other treatment to render the product marketable to the consumers". Therefore the goods have been manufactured.
4. One of the meaning of the word 'rendering' the one that would obviously apply, to the phrase of the note under consideration is "cause to be or become; make of a certain nature, quality, condition etc." (New Shorter Oxford English Dictionary). From this meaning and indeed by common usage of this word, it is only the treatment which makes a product marketable to the consumer which was so rendered. That is to say, the process to fall within the scope of the "any other treatment" it must be one which confers upon a product the attributes of marketability which it did not possess earlier. We must note here the significance of the word 'consumer' in the note. Thus the product must be referred 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 and that they were in fact marketed to the vast majority of the customers prior to such treatment. Repacking therefore either did not confer on 28 E/42026-42059/2014 them or attribute any marketability except possibly to one particular customer. The process undertaken by the appellant therefore did not render them marketable. Further, the activities undertaken by the appellant also did not involve any treatment of the goods, or of an individual retail pack. It merely consists of transferring them from one kind of retail pack to another.
6. The Commissioner, before whom these arguments were advanced has said that it is the value addition resulting from the repacking that it attempted to be taxed. A mere addition to value of goods does not by itself amount to manufacture. For that purpose it must fall within the legal definition of manufacture. Apart from that there was no value addition in fact. The appellant sell the goods to the CSD at a price lower than the price at which it sells the goods to the other customers, for two reasons, that CSD was a large and continuing customer, and that sales to it were exempted from sales tax. It is therefore not correct to say that there is any value addition as a result of this process, if at all, there is a value reduction, both on account of lower prices and on account of expenses incurred in the process. The demand on this ground is therefore clearly not sustainable.
7. The demand has also been raised on another ground. It is that during the period June to September 1997 the appellant affixed on the cartons of the goods sold by it to CSD, label appearing the words "Canteen Stores Department - in the service of defence services - Golden jubilee - 1949-1998" The Commissioner has held this also to be treatment rendering the goods marketable. On the reasoning that we have explained earlier, this labelling also did not confer on the goods any attribute of marketability that they did not possess earlier. This was obviously a method by which inception to the raising of the CSD to advertise its virtue.
8. The appeal is accordingly allowed and the impugned order set aside. Consequential relief.
5.7 In the case of CCE Vs. Rafique Malik 2018 (360) ELT 454 (Bom) similar issue was considered. It was held that affixing brand name on finished footwear received in labelled boxes affixed with MRP did not amount to manufacture. The relevant para reads a under:
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 29 E/42026-42059/2014 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 size, colour, style and M.R.P.
(iii) Sometimes they receive footwear from karigars in finished form in boxes bearing the M.R.P., which are thereafter labeled with their brands "Metro" or "Mochi" and put into boxes without relabeling the boxes."
3. In this Appeal, we are concerned with the activity covered by clause (iii). As regards this activity, the material allegation is contained in paragraph 12 of the show cause notice which reads thus :-
"It further appears that, in the cases where the assessee has received footwear from the karigars, as per para (10)(iii) above, the activity undertaken by the assessee is nothing but "opening to container - affixing the label of brand on the footwear for marketing the product - repacking it." However in this case the goods are actually removed for inspection and for sticking of labels on the footwear and thereafter they are repacked in the boxes. This brings out the fact that the processes carried out amounts to manufacture within the amended definition of manufacture under Section 2(f) of Central Excise Act, 1944 and hence liable to duty."
4. The show cause notice was replied by the respondent- assessee. The contention of the respondent-assessee was that the activity of taking out footwear in finished form from the boxes bearing M.R.P. and labelling the same with their brand names "Metro" and "Mochi" and of putting them into the same boxes is not "manufacture" as defined under clause (f) of Section 2 of the Central Excise Act, 1944 (for short "the said Act"). The said contention was not accepted by the Commissioner of Central Excise and it was held that the said activity amounts to manufacture under Section 2(f) of the said Act. Accordingly, the demand made on the basis of show cause notice was confirmed. Being aggrieved by the said order, the respondent preferred an Appeal before the Appellate Tribunal. The Appeal was partly allowed only in relation to the said activity referred in clause (iii) paragraph 10 of the show cause notice.
As held by us, on admitted facts even by giving liberal meaning sub-clause (iii) of Section 2(f), the case of the appellant-revenue 30 E/42026-42059/2014 cannot be accepted for the simple reason that the activity admittedly carried out by the respondent-assessee by itself did not render the goods marketable to the consumers inasmuch as the same were already marketable as the goods in question were footwear in finished form manufactured 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 activity to be 'manufacture' and the Tribunal had upheld the issue and demand as decided by Commissioner in favour of department. The Ld. Counsel for appellant countered this argument by submitting that there is no estoppel in taxation matters and relied on the decision of Hon'ble 31 E/42026-42059/2014 Apex Court in the case of Dunlop India Ltd., Madras Rubber Factory Ltd., Vs Union of India 1983 (13) ELT 1566 (S.C). We have to agree that even though the appellant might not have contested the issue in an earlier case, they are not prevented from disputing the dutiability in subsequent show cause notices. Further, in this case, the issue is with regard to watches cleared from factories which availed ABE notification.
7. We have already held that the activity of affixing the revised MRP stickers does not amount to manufacture. The department has raised the demand of duty on the Showrooms and CFAs alleging that their activity of affixing fresh MRP stickers amounts to manufacture. The Ld. AR has drawn our attention to Clause (b) of Explanation 2 of Section 4A which is reproduced below:
4A. Valuation of excisable goods with reference to retail sale price.-- (1) The Central Government may, by notification in the Official Gazette, specify any goods, in relation to which it is required, under the provisions of the 2[Legal Metrology Act, 2009 (1 of 2010) or the rules made thereunder or under any other law for the time being in force, to declare on the package thereof the retail sale price of such goods, to which the provisions of sub- section (2) shall apply.
(2) Where the goods specified under sub-section (1) are excisable goods and are chargeable to duty of excise with reference to value, then, notwithstanding anything contained in Section 4, such value shall be deemed to be the retail sale price declared on such goods less such amount of abatement, if any, from such retail sale price as the Central Government may allow by notification in the Official Gazette.
(3) The Central Government may, for the purpose of allowing any abatement under sub-section (2), take into account the amount of duty of excise, sales tax and other taxes, if any, payable on such goods.
(4) Where any goods specified under sub-section (1) are excisable goods and the manufacturer--
(a) removes such goods from the place of manufacture, without declaring the retail sale price of such goods on the packages or declares a retail sale 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 32 E/42026-42059/2014 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 shall be construed accordingly. Explanation 2. -- For the purposes of this section, --
(a) where on the package of any excisable goods more than one retail sale price is declared, the maximum of such retail sale price shall be deemed to be the retail sale price;
(b) where the retail sale price, declared on packages 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;
(c) where different retail sale prices are declared on different packages for the sale of any excisable goods in packaged form in different areas, each such retail sale price shall be the retail sale price for the purposes of valuation of the excisable goods intended to be sold in the area to which the retail sale price relates.
7.1 As per Clause (b) if the Retail Sale Price is altered after clearance from the factory, such altered Retail Sale Price shall be deemed to be the Retail Sale Price. In other words, the manufacturer has to discharge duty on the altered Retail Sale Price. In the present case, the manufacturer of watches is the factory at Baddi, Rourkee and Dehradun. The factory at these places have not discharged duty as they have availed benefit of ABE notification. The demand, if any can be raised only against the manufacturer. As no manufacturing activity has taken place at Showrooms and CFAs, the duty demand raised 33 E/42026-42059/2014 against them cannot be sustained. The issue on merits is answered in favour of appellant and against the Revenue.
8. The Ld. Counsel has argued on the ground of limitation also. The period involved is from 01.04.2008 to 31.12.2009. The show cause notices are issued invoking the extended period. Undisputedly, there were earlier proceedings against the appellant on very same issue as reported in the decision of Tribunal 2007 (217) ELT 423 Chennai. The department therefore had knowledge of the activity of affixing MRP stickers undertaken by the appellant. The earlier show cause notice is dated 29.08.2003 for the period 01.04.2002 to 22.09.2002. Further, the appellant vide letter dated 20.05.2005 informed the department that based on business decisions they require to revise MRP at their Showrooms and CFAs. The relevant part of letter reads as under:
________ Left - blank ________ 34 E/42026-42059/2014 35 E/42026-42059/2014 8.1 In para 19 of the impugned order dated 28.03.2014 it is noted by the adjudicating that on various occasions TITAN has informed the department on price revision on watches. It is argued by Ld. AR that the appellant has not stated in these letters about the activity carried out by them. We are unable to agree with this view. The letter would show that appellant has sufficiently informed department of the activity of affixing revised MRP stickers.36
E/42026-42059/2014 8.2 Further, the issue is purely interpretational. The issue as to whether the activity of affixing MRP amounts to manufacture has always been under litigation based on facts of each case. The department has not adduced any positive act of suppression against the appellant. The revised price list was available for perusal in the accounts maintained by appellant. We do not find any suppression of fact with intend to evade payment of duty on the part of the appellant. We hold that the show cause notice is time barred. The issue on limitation is answered in favour of appellants and against Revenue.
9. In the result, the impugned orders are set aside. The appeals are allowed with consequential reliefs if any.
(Pronounced in open court on 05.03.2024) (VASA SESHAGIRI RAO) (SULEKHA BEEVI C.S.) Member (Technical) Member (Judicial) psd