VASANTHAM ENTERPRISES Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THIS appeal arose out of order of adjudication dated 01/08/2009 for the period 01.01.2006 to 24.11.2007 denying the claim of area based exemption and plea of no manufacturing activity carried out by the appellant. Appellant's plea that it was registered under Finance Act, 1994 and paid service tax on the activity of banding unit packed soaps as provider of taxable service of manpower recruitment agency carried out did not find favour by Revenue. Ld. Adjudicating Authority held that the activity carried out by the appellant was "manufacture" and benefit of notification No. 214/86 -CE was deniable to it not being a job worker. Consequently, central excise duty of Rs. 73,28,419/ - was levied on the appellant followed by penalty of equal amount under section 11AC of the Central Excise Act, 1944 (hereinafter referred to as "the Act") and interest on the duty imposed.

(2.) 1 As a result of aforesaid denial, Central Excise duty of Rs. 37,46,69,391/ - was levied on the appellant under Central Excise Act, 1944 (wherein after referred to as "the Act") followed by equal amount of penalty under section 11AC thereof and interest on the duty demanded also followed.

(3.) 1 Ld. Counsel appearing on behalf of the appellant assailed the demand on five counts. The first contention is that the activity of banding of the goods manufactured by HUL by a strip, using manpower of the appellant does not amount to manufacture in spite of deeming fiction appearing in Chapter Notes of Chapter 33 and 34 and section 2(f)(iii) of the Act at relevant point of time. The activity of binding was to convert the unit packed soap case into multi -piece pack and such unit packed soap were marketable without any treatment made by the appellant. There was no enhancement of marketability made by appellant making any value addition thereto. Therefore, the relevant Chapter Note of Chapter 33 and 34 during different periods is of no consequence. The appellant being entitled to the area based exemption having been situated in the notified area, it was entitled to the benefit of Notification NO. dated 10.06.2003 read with Circular No. dated 23.12.2009 since HUL situated at same place was entitled to area based exemption.