Custom, Excise & Service Tax Tribunal
Avon Beauty Products India Pvt Ltd vs Additional Director General ... on 19 September, 2022
Author: Dilip Gupta
Bench: Dilip Gupta
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. I
EXCISE APPEAL No. 51010 OF 2020
(Arising out of Order-in-Original No. 11/2020-CX dated 20 May, 2020 passed by the
Additional Director General (Adjudication), New Delhi)
M/s Avon Beauty Products India Pvt. Ltd. ........Appellant
401, Paras Trade Centre, Sector-2, Gwal Pahari
Gurgaon-Faridabad Expressway
GURGAON - 122 003
versus
Additional Director General (Adjudication) ......Respondent
Directorate General of GST Intelligence West Block-VIII, Wing No. 6, Sector-1, R.K. Puram New Delhi - 110 066 APPEARANCE:
Shri Shashvat Arya, Advocate for the Appellant Shri Sanjay Kumar Singh, Authorised Representative of the Respondent CORAM: HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT HON'BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL) FINAL ORDER NO. 50900/2022 Date of Hearing/Decision: September 19, 2022 JUSTICE DILIP GUPTA:
This appeal has been filed by M/s Avon Beauty Products India Pvt. Ltd.1 to assail the order dated May 20, 2020 passed by the Additional Director General (Adjudication) confirming the demand of excise duty with penalty and interest by invoking the extended period of limitation contemplated under section 11A(4) of the Central Excise Act 19442.
2. The benefit of the area based exemption Notification dated 10.06.2003 that exempted the goods specified in the First and the
1. the appellant
2. the Excise Act 2 E/51010/2020 Second Schedule to the Central Excise Tariff Act 19853 and cleared from a unit located in the Industrial Growth Centre or Industrial Infrastructure Development Centre or Export Promotion Industrial Park or Industrial Estate or Industrial Area or Commercial Estate from the whole of the duty of excise or additional duty of excise leviable thereon subject to certain specified conditions, has been denied to the appellant. The said exemption notification was to apply to new industrial units which had commenced commercial production on or after the 7th day of January, 2003 but not later than the 31st day of March, 2010 and was to apply for a period not exceeding ten years from the date of publication of the notification in the Official Gezette or from the date of commencement of commercial production, whichever was later. The condition stipulated in paragraph 4 of the notification, which is the relevant clause, is reproduced below:
"4. The exemption contained in this notification shall not apply to such goods which have been subjected to only one or more of the following processes, namely, preservation during storage, cleaning operations, packing or repacking of such goods in a unit container or labeling or re- labelling of containers, sorting, declaration or alteration of retail sale price and have not been subjected to any other process or processes amounting to manufacture in the States of Uttarakhand or Himachal Pradesh."
(emphasis supplied)
3. The issue involved in this appeal is whether the activity of the appellant of making nail polish from base liquer and colour solution excludes the appellant from availing the area based exemption, by virtue of paragraph 4 of Notification dated 10.06.2003.
3. the Tariff Act 3 E/51010/2020
4. The appellant, located in the State of Uttrakhand, is engaged in the production and clearance of nail polish or lacquers falling under Chapter 33 of the First Schedule of the Tariff Act.
5. The appellant had set up an industrial unit in Uttarakhand, which was an exempted area, covered by Notification dated 10.06.2003. Accordingly, a declaration dated 05.02.2010, as required under the Notification, was filed by the appellant and it commenced commercial production prior to 31.03.2010. Thereafter, the appellant filed an additional declaration dated 02.12.2013 and extended its production facility to start manufacturing nail polish w.e.f January 2014.
6. The manufacture of nail polish has been described by the appellant. According to the appellant, it procured base lacquer and colour solution from their supplier in bulk. Such ingredients were first tested for their chemical properties. Thereafter, the base was added into the „mixing vessel flame arrestor‟ and stirred slowly till the base reached uniformity. The mixing vessel flame arrestor was then used to mix base with the colour solution. A slow mixing was done to ensure that colour particles were properly dispersed. Thereafter, different colours were added to the mix, as per the required formula. At first 50% of the colour solution was added and accordingly more/different colours were added, to obtain the necessary shade. A „viscometer' was, thereafter, used to measure the fluidity of the liquids. Since the consistency of the colour solution may have varied from shade to shade, the use of viscometer was necessary to ensure fair fluidity and to render the product marketable to the consumers. In certain cases, 'pearls' were added to provide 'glitter‟ and 'shine' to 4 E/51010/2020 the nail polish. The quantity of pearl used depended on the level of desired lustre, colour and the opacity of the nail polish.
7. According to the Department, the appellant merely undertook basic activities, such as, packaging, labelling, re-labelling to prepare the nail polish and no other process was done which could amount to manufacture. Thus, the appellant was not entitled to claim exemption under the aforesaid Notification dated 10.06.2003.
8. The issue involved in this appeal was considered and decided by a Division Bench of the Tribunal in GS Pharmabutors Pvt. Ltd. (Unit-II) vs Additional Director General (Adjudication)4. It was held that the appellant was entitled to the benefit of the area based notification dated 10.06.2003. The relevant observations are:
"24. A conjoint reading of the definition of manufacture in section 2(f) (iii) of the Excise Act and Chapter Note 5 of Chapter 33 of the First Schedule to the Excise Act and the aforesaid treatment adopted on the goods (colour solution) by the appellant would render the product marketable to the consumer as nail enamel and, therefore, the appellant would be covered by the exemption notification dated 10.06.2003 since the appellant has adopted such a treatment to the goods that rendered them marketable to the consumer.
25. xxxxxx xxxxxx xxxxx
26. It is, therefore, not possible to accept the contention advanced by learned authorised representative appearing for the Department that the only change brought about by the appellant when the colouring matter is mixed to a solvent is to reduce the viscosity and this would not amount to manufacture. It cannot also be accepted that when the resultant product achieves superior quality, a new product marketable to the consumers as nail enamel does not come into existence as in the present case it
4. 2022 (2) TMI 615 - CESTAT New Delhi 5 E/51010/2020 has been found as a fact that a new marketable product comes into existence."
9. The appellant, therefore, for all the reasons stated in the aforesaid Division Bench decision of the Tribunal in GS Pharmabutors, would be entitled to the benefit of the area based exemption Notification dated 10.06.2003.
10. The order dated May 20, 2020 passed by the Additional Director General cannot, therefore, be sustained and is set aside. The appeal is, accordingly, allowed.
(Dictated & pronounced in the open Court) (JUSTICE DILIP GUPTA) PRESIDENT (P.V. SUBBA RAO) MEMBER (TECHNICAL) Golay