Custom, Excise & Service Tax Tribunal
Navsari Oil Products Ltd vs Mumbai I on 3 July, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEALS NO: E/1233 & 1234/2005
[Arising out of Order-in-Appeal No: BR(2649-2650)31-32/MI/2005 dated 07/02/2005 passed by the Commissioner of Central Excise (Appeals), Mumbai Zone I.]
For approval and signature:
Honble Shri P.K. Jain, Member (Technical)
Honble Shri S. S. Garg, Member (Judicial)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
Yes
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes
V.V.F. Limited
Navsari Oil Products Ltd.
Appellants
Vs
Commissioner of Central Excise
Mumbai I
Respondent
Appearance:
Shri Vishal Agarwal, Advocate for the appellant Shri N.N. Prabhudesai, Superintendent (AR) for the respondent CORAM:
Honble Shri P.K. Jain, Member (Technical) Honble Shri S. S. Garg, Member (Judicial) Date of hearing: 03/07/2015 Date of decision: 16/07/2015 ORDER NO: ____________________________ Per: P.K. Jain:
Brief facts of the case are that the appellants at their units located in Gujarat are manufacturing fatty acids, Oleic 26, Oleic 20 and LOFA. These goods are classifiable under Chapter 38. They pay excise duty and clear such goods in lorry tankers from the manufacturing units located in Gujarat and bring to Mumbai. In Mumbai, they have registration as a registered dealer. The duty-paid goods are unloaded into carboys of 90 litres and carboys of different capacity. On these carboys name of the manufacturer, quantity, batch number, etc. are labeled and thereafter kept in warehouse and sold to the customers. Normally, these goods are sold at the same value at which goods are cleared from factory. In case, goods are sold at higher value, differential duty is deposited to the jurisdictional excise authority at the manufacturing unit.
2. Case of the Revenue is that labelling and packing from bulk container to carboys amounts to manufacture as per Note 5 to Chapter Note 38 and, therefore, the appellants are required to pay duty in Mumbai on the repacked goods.
3. Learned counsel for the appellants submit that the Board vide Circular No. 910/30/2009-CX dated 16/12/2009 has clarified that the tankers cannot be termed as bulk packs and therefore the activity of transferring the goods from tankers into small drums does not amount to manufacture. Learned counsel also submitted the following case law in support of this contention.
(i) Commissioner of Central Excise, Chennai vs. Sigma Scientific Co. Ltd. 2009 (233) ELT 532 (Tri.Chennai);
(ii) Deepak Trading Co. vs. Commissioner of Central Excise, Kolkata I 2008 (225) ELT 532 (Tri.-Kolkata);
(iii) Ram Kishore Chemicals Co. Pvt. Ltd. vs. Commissioner of Central Excise, New Delhi 2002 (145) ELT 106 (Tri.-Del.);
(iv) Commissioner of Central Excise, Thane vs. Ammonia Supply Co. 2011-TIOL-1400-CESTAT-MUM
4. Learned AR on the other hand, opposes the appellants contention and submits that as per Chapter Note 5 to Chapter 38 in relation to products of this Chapter (other than products of heading No. 38.08), labelling or relabeling of containers and repacking from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer, shall amounts manufacture. Learned AR submits that it will be seen from the statement of Shri R.H. Subramanium, Manager and Authorised Signatory of the appellant, that their activities include offloading of the goods in the carboys, repacking of goods, storing the carboys in the godown, quantity of goods to be packed in pre-determined manner, purchaser being not present at the time of packing, packages are marked to show details such as name of manufacturer, name of product, gross weight, batch No. etc.; batch numbers are allotted by the dealer and not by the manufacturer. He submitted that in view of these activities read with Note 5 of Chapter 38, the activities carried out in Seweree, Mumbai would amount to manufacture and therefore, duty is payable. Learned AR also submitted that it is with these processes that goods have become marketable. In support of the contention, learned AR rely on the following case laws:
(a) Air Liquide North India Pvt. Ltd. vs. Commissioner of Central Excise, Jaipur I 2011 (271) ELT 321 (SC);
(b) Surya Air Products Pvt. Ltd. vs. Commissioner of Central Excise, Chandigarh 2012 (283) ELT 107 (Tri.-Del.);
(c) Abdos Trading Co. Pvt. Ltd. vs. Commissioner of Central Excise, Kolkata II 2013 (290) ELT 467 (Tri.-Kolkata)
5. Learned counsel for the appellants also submitted that they have a very strong case on limitation, as extended period of limitation is invoked. They are registered dealer and as a registered dealer, their activities are known to the Revenue. learned counsel submitted that even if their activity amounts to manufacture, they are entitled to the credit of the duty paid at the time of clearance and duty liability in Mumbai would be the same as the duty already paid and hence effectively no extra duty is required to be paid. Learned counsel submits that in the facts of the case, extended period of limitation is not invokable and also in case it is held that extended period is invokable then they should be given the benefit of credit of duty paid on the inputs.
6. We have considered the submissions. We find that Board vide Circular dated 16/12/2009 (supra) has examined this very issue and after examining both - before amendment on 01/03/2008 the relevant note and after amendment has to say as under:
Subject :?Clarification regarding labelling and repacking etc. amounting to manufacture.
It has been brought to the notice of Board that certain dealers are receiving liquid chemicals in bulk in containers and offloading the same at the dealers premises or godown into drums of 200ltrs for subsequent marketing of these materials to customers. Doubts have been raised as to whether such activity would amount to manufacture in terms of Chapter Note 10 to Chapter 29. As the said Chapter Note has been amended in 2008 budget, it has been contested that the said activity is covered by the present wordings of the Chapter note. The relevant portions of the chapter note reads as under:
Before Amendment (1.03.2008)
10. In relation to products of this Chapter, labelling or relabelling of containers and repacking from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer, shall amount to manufacture.
After amendment (1.03.2008)
10. In relation to products of this Chapter, labelling or relabelling of containers or repacking from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer, shall amount to manufacture.
2. Whether an operation amounts to repacking from bulk packs to retail packs or not, is a question to be decided on facts. However before examining the implication of the substitution of word and by or, it is necessary to examine whether the activity itself is covered by term repacking from bulk packs to retail packs. Hence the first issue which needs to be decided is whether the container/ lorry tanker can be considered as bulk pack.
3. Tribunal has in the case of Ammonia Supply Co. [2001 (131) ELT 626 (T)], held that As per Note quoted above, labelling or re-labelling of the container should take place at a time when the goods are packed from bulk packs to retail packs. The assessee was not getting Ammonia in bulk packs. They were getting it in tankers. Ammonia gas brought in tankers can never be termed as brought in bulk packs. So the assessee was not repacking the goods from bulk packs to retail packs. Accordingly the activity undertaken by the assessee in filling the smaller container from bulk container namely tankers can never fall within the fiction of manufacture as envisaged by Note 10 quoted above.
4. Therefore the tankers cannot be termed as bulk packs and therefore the activity of transferring the goods from tankers into smaller drums cannot be said to be covered by the said chapter note 10.
5. Pending cases may be disposed of accordingly.
7. In view of the said circular of the Board, which is in line with the decision taken by this Tribunal in various case laws cited by the learned counsel, we allow the appeals. We have also gone through the cases quoted by learned AR. The facts in these cases are different and therefore distinguishable.
8. Appeals are allowed (Pronounced in Court on 16/07/2015) (S. S. Garg) Member (Judicial) (P.K. Jain) Member (Technical) */as 7