Relief to Eveready Industry: CESTAT quashes Excise Duty Demand on clearance of Primary Batteries on ground of absence of manufacturing u/s 2(f) of Central Excise Act [Read Order]

The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) granted relief to the Eveready Industry by quashing the excise duty demand on the clearance of primary batteries on the ground of absence of manufacturing under section 2(f) of the Central Excise Act,1944. 

Eveready Industries India Ltd, the appellant assessee engaged in the manufacture of primary cells and primary batteries falling under heading 8506 of the 1st Schedule to the Central Excise Tariff Act, 1985, and in addition to manufacturing and clearance of the aforesaid goods on payment of duty, the assessee was also engaged in trading of “Eveready Recharge” which was packed by a job worker, The New Engineering Company, on behalf of the assessee. 

The assessee appealed against the order passed by the Commissioner of Central Excise, Kolkata for confirming the Central Excise duty Rs. 4,12,67,046/- was confirmed along with interest, and a penalty equal to the duty confirmed was also imposed against the assessee. 

B. L. Narasimhan, Deepro Sen, and Shovit Betal, the counsels for the assessee contended that the activity of packing has been held as not amounting to “manufacture” under the provisions of the Central Excise Act. 

Mihir Ranjan and S. S. Chattopadhyay, the counsel for the department relied on the decisions made by the lower authorities and contended that the assessee was liable to pay the excise duty demand and the activity done by the assessee amount to the manufacturer and liable for the payment of excise duty. 

The Bench observed that the activity of mere packing and labeling undertaken by the assessee would not amount to “manufacture” in terms of Section 2(f) of the Central Excise Act. Accordingly, the demand confirmed in the impugned order was not sustainable. Since the demand was not sustainable, the question of demanding interest and imposing a penalty does not arise. 

The two-member bench comprising Muralidhar (Judicial) and Anpazhakan (Technical) quashed the excise duty demand against the assessee while allowing the appeal filed by the assessee. 

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