Custom, Excise & Service Tax Tribunal
Gainwell Commosales Private Limited vs -Ranchi Commissionerate on 23 August, 2023
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
KOLKATA
REGIONAL BENCH - COURT NO.1
Excise Appeal No.75840 of 2022
(On behalf of Appellant)
(Arising out of Order-in-Original No.22/ST/Pr.Commr./2022 dated 04.08.2022 passed
by the Pe.Commissioner of CGST & Excise,Ranchi)
M/s Gainwell Commosales Private Limited
(Formerly M/s TIL Limited)
(Central Maintenance Complex, West Bokaro Collieries, Ghatotand, Ramgarh-825514,
Jharkhand)
Appellant
VERSUS
Commissioner of CGST & Excise,Ranchi
(Central Revenue Building,5A, Main Road, Ranchi-831001)
Respondent
APPERANCE :
Shri B.L.Narasimhan, & Ms.Udita Saraf,both Advocates for the Appellant Shri K.Chowdhury, Authorized Representative for the Respondent CORAM:
HON'BLE MR.ASHOK JINDAL, MEMBER (JUDICIAL) HON'BLE MR.K.ANPAZHAKAN, MEMBER (TECHNICAL) FINAL ORDER NO...76550/2023 DATE OF HEARING : 23 .08.2023 DATE OF DECISION : 23 .08.2023 Per Ashok Jindal :
The appellant is in appeal against the impugned order wherein the demand of duty has been confirmed against the appellant along with interest and an equivalent amount of penalty was also imposed on the appellant for the period from 01.04.2015 to 30.06.2017 by issuance of show-cause notice dated 26.06.2000.
2. The facts of the case are that the appellant is engaged in maintenance and repair services of Heavy Earth Moving Machinery ('HEMM'), which also entail supply of spare parts in respect of such 2 Service Tax Appeal No.75840 of 2022 HEMM. For the purpose of said activity, the Appellant entered into long term comprehensive maintenance and repair contracts ('MARC') with Tata Iron and Steel Company Ltd. ("TISCO") in relation to the heavy earth moving machineries (HEMM) like Rear Dump Truck, Dozers etc. procured by TISCO from M/s Caterpillar India Ltd. and M/s Caterpillar Singapore.
2.1 The appellant entered into a contract and as per the contract, the appellant was receiving considerations as R & M Spare Parts and Fees by paying VAT on the value of spare parts supplied from Excise Store and Spare consumed from non-excisable store. GET fees, on which the appellant paid VAT since this was for supply of spares of ground engaging tools. The Manpower fees, on which the appellant paid service tax since this was for pure labour charges and On-site support fees, on which the appellant paid service tax. For purposes of supply of spare parts to TSL, the appellant imports such parts from the principal manufacturer. As such spare parts received from the said manufacturer are subject to labelling, re-packing etc. Such spare parts falling under heading 8426, is covered under Serial No. 100A of the Third Schedule of the Central Excise Act, 1944. Hence, the aforementioned activity falls within the definition of 'manufacture' in terms of Section 2(f)(iii) of Excise Act, accordingly, the appellant took registration under Central Excise Act at the premises of TSL, which are specifically allocated to the appellant to facilitate provision of service under the MARC.
2.2 Subsequently, based on certain observations with respect to the registered premises of the appellant under Excise Act, show-cause 3 Service Tax Appeal No.75840 of 2022 notice was issued to the appellant alleging that (a) during the course of audit/ physical visit, no activity of packing, re-labelling etc. of spare parts were found in the registered premises of the appellant (b) the appellant is not declaring retail sale price on any spare parts sold to TSL and (c) the appellant has falsely obtained registration as deemed manufacturer and paying duty of abated value, thus leading to surplus credit in CENVAT Credit account. Such credit is wrongly utilized by other unit of the Appellant for payment of service tax on works contract services.
2.3 In these set of facts, the show-cause notice was issued to the appellant alleging that the appellant is not engaged in the activity of manufacturing, therefore, they are not entitled to take cenvat credit. 2.4 The matter was adjudicated. The demand was confirmed by denying cenvat credit to the appellant and to impose equal amount of penalty.
2.5 Against the said order, the appellant is before us.
3. The ld.Counsel for the appellant submits that the activity of packing and re-labelling undertaken by the appellant qualifies as manufacture under Section 2(f)(iii) of the Central Excise Act, 1944. It is his submission that the definition of manufacture also includes following activity as 'deemed manufacture' in terms of Section 2(f)(iii) of Central Excise Act:
- process involving packing/re-packing of goods (specified in third schedule) in the unit container; or
- labelling/re-labelling of containers; or 4 Service Tax Appeal No.75840 of 2022
- The declaration/alteration of retail sale price; or
- Adoption of any other treatment on the goods to render it marketable to the consumer.
3.1 It is his submission that that the appellant undertakes packing, re-labelling containing identification of spare parts, description of principal manufacturer, supplier details, MRP etc, from the bulk import received by the Appellant. It is his submission that the spare parts pertain to the HEMM which falls under tariff item 8426 41 00, which is specifically covered under Sl. No. 100A of the Third Schedule of the CEA. Hence, activity undertaken by the Appellant qualifies as manufacture in terms of Section 2(f)(iii) of the Act. To support his contention, he relies on the decision of this Tribunal in the case of Mercedes Benz India Pvt. Ltd. v. CCE, Pune-III 2018 (364) ELT 226 (Tri.-Mumbai), wherein it was held that packing/repacking in a unit container, labelling and affixing brand name along with MRP amounts to manufacture under Central Excise Act, 1944.
3.2 With regard to the observation regarding marketability of goods, it is submitted that the phrase 'to render the product marketable to the consumer' is only in respect of the activity of adoption of any other treatment on the goods and not in relation to any of the previously stated activities of packing or repacking in unit container, labelling/ re-
labelling etc. 3.3 It is his contention that the ld.Adjudicating Authority has observed that since TSL is only buyer of the appellant. Therefore, the appellant is not under any obligation to undertake any activity such as packing, re- 5
Service Tax Appeal No.75840 of 2022 labelling etc, so as to render the spare parts marketable. He, therefore, submits that it is a well settled position of law that test of marketability does not depend upon the number of buyers. It is submitted that even one purchaser is sufficient to meet the criteria of marketability. 3.4. To support of his contention, the ld.Cousel for the appellant relied on the following decisions :
· A.P. State Electricity Board v. CCE, Hyderabad - 1994 (70) ELT 3 (S.C.) · CCE, Delhi- III v. Uni Products India Ltd - 2020 (372) ELT 465 (S.C.).
· CCE, Bangalore v. Karnataka Soaps & Detergents ltd - 2017 (355) E.L.T. 161 (S.C.) · Tejas Networks India Ltd. v. Commissioner - 2015 (316) E.L.T. A157 (S.C.)] 3.4 In alternate, he submits that the cenvat credit which is sought to be denied, has been utilised by the appellant for payment of duty. Therefore, the payment shall amount to reversal of cenvat credit as held by this Tribunal in the case of Ajinkya Enterprises v. Commissioner of Central Excise, Pune-III 2013 (288) ELT 247 (Tri-Mumbai), which has been affirmed by the Hon'ble Bombay High Court in 2013 (294) ELT 203 (Bom.).
3.5 He also contended that the extended period of limitation is not invokable in the facts and circumstances of the case.
4. On the other hand, the ld.A.R. for the Revenue, supported the impugned order.
5. Heard both the parties and considered the submissions. 6
Service Tax Appeal No.75840 of 2022
6. In this case, we find that a short issue is involved before us that whether the activity of packing, re-labelling of the spare parts of HEMM undertaken by the appellant amounts to manufacture or not.
7. We find that the Section 2(f)(iii) of Central Excise Act, 1944, states that :
"which, in relation to the goods specified in the Third Schedule, involves packing or re-packing 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."
8. We find that the parts in question are covered by Serial No.100A of the Third Schedule of the Central Excise Act, 1944. The said issue has been dealt by this Tribunal in the case of Mercedes Benz India Pvt. Ltd. (supra), wherein this Tribunal has observed as under :
"7. From reading of the Section 2(f)(iii), it is seen that in respect of goods specified in Third Schedule activity such as packing or repacking of such goods in a unit container or labelling or relabelling 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 amounts to manufacture. In the facts of the present case, the goods as discussed above are falling under various chapter heading as proposed in the show cause notice are covered under Third Schedule and the activity which is undisputedly carried out by the appellants are packing in unit container, labelling with declaration of the MRP on the unit container are clearly covered under Section 2(f)(iii) therefore amounting to manufacture. In this undisputed fact the appellant was liable to pay excise duty on the basis of MRP based valuation under Section 4A after deduction of abatement as provided under notification issued thereunder. 7
Service Tax Appeal No.75840 of 2022 Therefore we are of the view that on merit, the activity being one of manufacturing, clearance of the goods was liable to payment of duty."
9. It is seen that the goods are marketable as the same has been sold to M/s TSL on against the payment. Therefore, we hold that the said parts are marketable.
10. In that circumstances, the activity undertaken by the appellant amounts to manufacture. Consequently, the cenvat credit availed by the appellant, cannot be denied to the appellant.
11. As the appellant is paying duty on the manufactured goods by availing CVD paid on the imported goods, in that circumstances, we hold that the appellant is correctly taken the cenvat credit.
12. We also gone through the records as the appellant has registered with the Department and their activity is known to the Department, the appellant is also filing ER-I Returns regularly showing payment of duty and availing cenvat credit therein, in that circumstances, the extended period of limitation is not invokable in the facts and circumstances of the case. Therefore, on limitation also, the show-cause notice is not sustainable.
13. In view of the above discussions, we set aside the impugned order and allow the appeal with consequential relief, if any.
(Operative part of the order was pronounced in the open court) Sd/-
(Ashok Jindal) Member (Judicial) Sd/-
(K.Anpazhakan)
mm Member (Technical)