Case Law Details
Y & Associates Vs Commissioner of Central Excise (CESTAT Mumbai)
It is apparent from the schema of ‘deemed’ manufacture that emergence of goods of another description from any process to which the enumerated goods are subjected to would take it outside the scope of ‘deemed’ and requiring conformity with the general comprehension of ‘manufacture’ or be ‘incidental or ancillary to the completion of a manufactured product’ in section 2(f) of Central Excise Act, 1944. It is not the case of Revenue that the impugned goods, before or after repacking, are not ‘baby diapers’ or ‘sanitary napkins’ but that they do correspond to the description in serial no. 55 of the Third Schedule to Central Excise Act, 1944. As ‘baby diapers’ or ‘sanitary napkins’ are not enumerated in the Third Schedule to Central Excise Act, 1944, their incorporation in notification no. 4/2006-CE dated 1st March 2006 does not suffice for excisability under ‘deemed’ manufacture to be invoked.
It offends the validity of a tax demand to be founded on a judgement except for the dispute that it purports to resolve; only the relevant statute, subject to judicial interpretations of such, can save a demand. Even less so is a random culling in which the issue, as well as the resolution, has been carefully obscured. The reliance placed by the adjudicating Commissioner on the decision of the Tribunal in re Lakme Lever Ltd is akin to placing the cart before the horse. Doubtlessly, the Tribunal did emphasize certain expressions as intended to assist in concluding the goods could be ‘deemed’ to have been ‘manufactured’ but were made in the context of the proposition that that such process must inevitably restrict itself to altering the threshold of marketability with any processing thereafter being mere embellishment that does attract excisability once again. For the impugned order to appropriate that logic for the proposition that the essence of marketability afforded by a process suffices, and to the exclusion of any or all other conditions in a statute, for goods to be deemed to have been ‘manufactured’ is but semantic contortion for enabling overreach by the tax administrator.
‘Baby diapers’ and ‘sanitary napkins’ are not ‘cleansing or facial tissues, handkerchiefs and towels of paper pulp, paper, cellulose wadding or webs of cellulose fibres’ in the Third Schedule to Central Excise Act, 1944. We find that decision of the Hon’ble High Court of Calcutta in re Naffar Chandra Jute Mills Ltd is of no avail in constructing an alternative opinion.
From the discussion supra, we entertain no doubt that impugned order has erred in not considering the scope of the legislative intent of ‘deemed’ manufacture of goods enumerated in the Third Schedule to Central Excise Act, 1944 and, on that fragile sustenance, the demand of duties and imposition of penalties does not have the wherewithal to survive.
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