The process of re-labelling amounts to 'manufacture' as per Note 3 to Chapter 18 of the Central Excise Tariff Act.

JUDGMENT

UJJAL BHUYAN, J.

Heard learned counsel for the parties.

2. Issue raised in the present batch of appeals is identical. Therefore, the civil appeals were heard together and are being disposed by this common judgment and order.

3. However, Civil Appeal No. 1121 of 2016 was argued as the lead appeal. Therefore, for the sake of convenience, we would refer to the facts of this appeal.

4. This is an appeal by the revenue under Section 35L(1)(b) of the Central Excise Act, 1944 (referred to hereinafter as ‘the Central Excise Act’) against the order dated 16.04.2015 passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Mumbai (briefly ‘CESTAT’ hereinafter) in Appeal No. E/86389/13-Mum. (Jindal Drugs Limited Vs. Commissioner of Central Excise, Belapur).

4.1. By the impugned order dated 16.04.2015, CESTAT has allowed the appeal filed by the respondent holding that as per Note 3 to Chapter 18 of the Central Excise Tariff Act, 1985 (referred to hereinafter as ‘the Central Excise Tariff Act’), the activity of labelling amounted to manufacture and hence the activity of the respondent fell within the ambit of the definition of manufacture as per the said Note. Therefore, the respondent was eligible for availing the cenvat credit of the duty paid by its Jammu unit and was also eligible for rebate on the duty paid by it while exporting its goods. CESTAT further held that there was no suppression by the respondent and, therefore, the extended period of limitation was not available to the department (revenue).

5. Though facts lie within a narrow compass, nonetheless it is necessary to make a brief reference to the relevant facts for a proper perspective.

5.1. Respondent is engaged in the business of exporting cocoa butter and cocoa powder. Its factory at Jammu manufactures cocoa butter and cocoa powder. Respondent has another unit located at Taloja in the State of Maharashtra. Cocoa butter and cocoa powder manufactured at Jammu are received by the respondent’s unit at Taloja. In the Taloja unit, respondent affixed two labels on two sides of the packages of the said goods received from its Jammu factory and cleared the same for export on payment of duty and claimed rebate of the duty paid on the exported goods. Further, respondent availed cenvat credit of the duty paid on those two goods at the time of clearance from Jammu. Respondent also imported cocoa butter and cocoa powder from China and Malaysia, receiving the same in its factory at Taloja.

5.2. The factory of the respondent at Taloja was visited by officials of the appellant and it was found that the respondent was only putting labels on the goods brought from Jammu as well as on the imported goods. As the labels were already fixed on the boxes containing the two goods, additional labels affixed by the respondent did not amount to manufacture since affixing of additional label did not enhance the marketability of the goods which were already marketable.

5.3. In such circumstances, appellant issued show cause cum demand notice dated 09.10.2012 to the respondent to show cause as to why the activity of labelling undertaken by the respondent on the product cocoa butter received from the Jammu unit and also on the imported goods should not be held as activities not amounting to manufacture in terms of Note 3 to Chapter 18 of the Central Excise Tariff Act. It was alleged that respondent had wrongly availed cenvat credit amounting to Rs. 23,02,53,752.00 for the period from June, 2008 to July, 2012 which should not be demanded and recovered under Rule 14 of the Cenvat Credit Rules read with Section 11A(1) of the Central Excise Act (since renumbered as Section 11A (4) of the Central Excise Act with effect from 08.04.2011). It was further alleged that rebate claims amounting to Rs. 13,22,30,368.00 for the period from June, 2008 to July, 2011, were erroneously sanctioned and utilised by the respondent which should not be demanded and recovered under Section 11A(1) of the