Custom, Excise & Service Tax Tribunal
M/S Zeal Agro Chem. (P) Ltd vs Cce, Indore on 27 April, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Date of Hearing/Order :27.4.2016 For Approval & Signature : Honble Mr. S.K. Mohanty, Member (Judicial) Honble Mr. R.K. Singh, Member (Technical) 1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy of the order? 4. Whether order is to be circulated to the Department Authorities? Appeal No. E/468/2006 -EX. (DB) M/s Zeal Agro Chem. (P) Ltd. Appellant Vs. CCE, Indore Respondent
E/744-747/2006 & E/1015/2006 CCE, Indore Appellant Vs. M/s Zeal Agro Chem (P) Ltd. Respondent M/s Zeal Agro Chem (P) Ltd.
Shri Jay Pranav Ayurvedic Pharma Shri Amit Mehta M/s Zeal Agro Chem (P) Ltd.
No. E/1016-1017/2006 [Arising out of common Order-in-Appeal No. IND-I/485 to 488/2005 dated 29.11.2005 & IND-I/499-501/2005 dated 27.12.2005 passed by the Commissioner (Appeals), Central Excise, Indore] Shri Amit Mehta Appellant Shri Girish Garg Vs. CCE, Indore Respondent Appearance Ms. Priyanka Goel, Advocate - for the appellant/assessee Shri R.K. Mishra, D.R. - for the Revenue CORAM: Honble Mr. S.K. Mohanty, Member (Judicial) Honble Mr. R.K. Singh, Member (Technical) Final Order No. 51734-51741/2016 Per R.K. Singh:
Appeals have been filed against order in appeal dated 29.11.2005 in terms of which service tax demand of Rs.28,74,000/- was confirmed along with interest and penalties.
2. The facts of the case, briefly stated, are as under:
M/s Zeal Agro Chem (P) Ltd.. 76/1, Industrial Estate, Maksi Road, Ujjain was manufacturing a product (powder) called Body Plus marketed by Rachna Health Care Pvt. Ltd. which owned the brand name Body Plus. The said product was cleared by M/s Zeal Agro Chem (P) Ltd., Maksi Road, Ujjain (hereinafter referred to appellant No. 1) in bulk without putting any brand name thereon. These goods in bulk were transferred to M/s Zeal Agro Chem (P) Ltd.s godown about 20 km away from appellant No. 1 where these bulk goods were repacked in containers of 200 gms and labelled with the brand name Body Plus and cleared therefrom. The show cause notice alleged that against classification under CTH 19.01 claimed by the appellant leviable to nil rate of duty, the goods were classifiable under heading 2108.99 leviable to duty @ 16% subject to applicability of SSI exemption Notification 8/2000-CE and the godown located 20 km away at Badarkha Babaji was merely an extension of the factory of appellant No. 1 (at Maksi Road).
3. Ld. Advocate for the appellant contended as under:
(i) As per chapter note 3 and chapter 19 and chapter note 7 of Chapter 21 of Central Excise Tariff, labelling, relabelling or repacking from bulk pack to retail pack amounts to manufacture in respect of goods covered under the said chapters and therefore the processes carried out at the godown located at Badarkha Babaji village amounted to manufacture and the goods became branded goods only when they were repacked and labelled with the brand name there.
(ii) Badarkha Babaji is located in the rural area as has been certified by tehsildar and therefore as per Notification No. 8/2000-CE clearances there-from are eligible for SSI exemption even for branded goods.
(iii) No show cause notice has been issued to the Badarkha Babaji godown which is a separate manufacturing location.
(iv) The goods cleared from the factory on Maksi Road were not branded goods and therefore could not be classified under 2108.99 but would at the most be covered under 2108.91 where duty rate is nil.
4. Ld. DR, on the other hand argued that the Director in his statement had agreed that the impugned goods were liable to duty @ 16% ad. val. under Chapter 2108.99 and that sending the goods in bulk to godown at Badarkha Babaji to repack and put the brand name was only a modus operandi to evade payment of duty and Badarkha Babaji godown was nothing but an extension of the factory at Maksi Road, Ujjain.
5. We have considered the contentions of both sides. At the very outset it needs to be noted that as per chapter notes 7 of Chapter 21 and Chapter Note 3 of Chapter 19 in relation to products covered under the said chapters, labelling or relabelling of containers and repacking from bulk packs to retail packs amounts to manufacture. Therefore the operation carried out in the godown at Badarkha Babaji village amounted to manufacture of goods. It is a fact that brand name Body Plus was put on the goods only in the godown at Badarkha Babaji village and not at the time of clearance of the goods in bulk from Maksi Road factory (appellant No. 1). No show cause notice demanding duty has been issued in respect of clearances from godown at Badarkha Babaji. Incidentally, the ld. Advocate contended that Badarkha Babaji is located in the rural area and therefore clearances from the said godown were entitled to the SSI exemption as per para 4(c) of Notification No. 8/2000-CE which inter alia states that even branded goods will be eligible for SSI exemption if they are manufactured in a factory located in a rural area. Ld. Advocate produced a certificate No. 154/6114/03-04 dated 10.4.2004 from Tehsildar, Tahsil Ghatia that Badarkha Babaji is located in rural area and we have already shown that the activity carried out in the godown amounted to manufacture and therefore as per definition of factory given in Section 2(e) of Central Excise Act, the said godown would qualify as factory. However, we are not dwelling on this point any further because clearances from godown at Badarkha Babaji are not a subject matter of this case and no show cause notice is issued to Badarkha Babaji unit of the appellant. We however do not agree with the contention of Revenue that godown at Badarkha Babaji which is 20 km away from appellant No. 1 (Maksi Road) is an extension of factory at Maksi Road. As regards the clearances of the impugned goods from factory at Maksi Road, Ujjain to which the show cause notice demanding impugned duty was issued, it is clearly stated in the show cause notice itself that the goods there-from were cleared in bulk in unbranded form in 25 kg packs. In other words, the clearances of the impugned goods from factory at Maksi Road, Ujjain (appellant No. 1) were not of branded goods. That being the case, we now come to the issue of classification. The show cause notice mentioned classification of the impugned goods under CTH 2108.99. For ease of reference description under Chapter 21.08 is reproduced below:
21.08 Edible preparations, not elsewhere specified or included 2108.10 - Preparations for Lemonades or other Beverages intended for use in the manufacture 2108.20 - Sharbat 2108.30 - Prasad or Prasadam 2108.40 - Sterilised or Pasteurised Miltone
- Other:
2108.91 - Not bearing a brand name 2108.99 - Other It is clear from the above description that the goods covered under CTH 2108.91 are those not bearing a brand name and CTH 2108.99 covers other goods, which means goods bearing brand name. Thus, notwithstanding the statement of the Managing Director, it is clear from the foregoing analysis that as the impugned goods cleared from Maksi Road factory did not bear any brand name, the question of their classification under CTH 2108.99 would not arise as CTH 2108.99 covers goods other than those not bearing brand name. Needless to say that show cause notice classified the goods under 2108.99 which means that as per show cause notice, the impugned goods were falling under category other mentioned below CTH 2108.40 and the said other has two parts, 2108.91 covering goods not bearing brand name and 2108.99 covering goods other than those not bearing brand name, which means CTH 2108.99 covers only those goods which bear brand name. Consequently the impugned goods, even going by the implication of the show cause notice, would at best be covered under CTH 2108.91 which attracts nil duty.
In these circumstances without going into any other aspect of case when the duty leviable on the impugned goods is nil the question of any evasion simply does not arise and consequently the question of any penalty on the appellants would also not arise.
6. In the light of the forgoing discussion, we do not find the impugned order sustainable. Revenue has come in appeal only for enhancement of penalty. When the demand itself does not survive and consequently question of penalty does not arise, the Revenues appeals is rendered infructuous. Thus the appellant-assessees appeal is allowed and Revenues appeal is dismissed.
(S.K. Mohanty) Member (Judicial) (R.K. Singh) Member (Technical) RM 2