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Supreme court upholds CESTAT view that the process of labeling/ re labeling, packing / re-packing amounts to “manufacturing”.

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Case title: Commissioner of central excise Belapur V. Jindal Drugs Ltd

Case no: Civil appeal No. 1121 of 2016 and 788-790 of 2022

Dated on: 30th April, 2024

Quorum: Justice Abhay S. Oka and Justice Ujjal Bhuyan

Facts of the case: 
This is an Appeal against the Order dated 16.04.2015 passed by Customs Excise and Service Tax Appellate Tribunal (CESTAT) against Appeal No.E/86389/13-Mum.The 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. The Cocoa butter 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 goods received from its Jammu factory and had 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 which was received at Taloja.  The factory of the respondent at Taloja was visited by the officials of the appellant and it was found that the respondent was not only putting labels on the good bought from the Jammu unit but also was putting labels on the imported goods. As the labels were already fixed on the boxes containing the two goods additional labels affixed did not amount to manufacture as the additional labels affixed would not enhance the marketability of the goods which were already marketable. The appellant then issued a show cause notice to the respondents on 09.10.2012 to show cause as to why activity of labelling undertaken by the respondent on the product received from the Jammu unit and also on the imported goods are not to be held as activity of manufacturing in the terms of Note 3 chapter 18 of the Central Excise Tariff Act. It was alleged that the respondent had wrongly availed cenvat credit amounting to Rs. 23,02,53,752/. from the period of June, 2008 to July 2012. It was also alleged that the rebate amounting to Rs. 13,22,30,368 from the period of June, 2008 to July, 2011 was erroneously sanctioned. Thereafter, hearing the respondent, appellant passed an order on 25.02.2013 that the cenvat credit availed was irregular and the rebate sanctioned was erroneous thereby, the respondent was made liable to refund the credit availed for Rs. 23,02,53,752/- and a rebate of Rs. 13,22,30,368/- along with interest and penalty of 23,02, 53,752/- However, the penalty could be reduced to 25%, if the assessee paid the duty within 30 days of order.   The Respondent preferred appeal before CESTAT. After hearing the matter CESTAT passed an order dated 16.04.2015 by stating that activity undertaken by respondent is covered by Note 3 to chapter 18 which amounts to manufacture and that there was no suppression or misrepresentation of the material fact by the respondent. That being the position the cenvat credit and the refund availed by the respondent was right and hence no penalty could be imposed. Aggrieved by the same, the appellant has now preferred appeal. 
Contentions of the appellant: 
The activity undertaken at the Taloja unit i.e; putting labels on both the sides of the cartons that were labelled at Jammu is not a manufacturing activity. Note 3 to chapter 18 Central Excise Tariff Act cannot be read in the manner that the activity of the labelling amounted to manufacture. The Technical Member of CESTAT had given a good reason to why such an activity cannot be considered as a manufacturing activity. 
Contentions of the respondent: 
In Note 3 chapter 18 of the Central Excise Tariff Act, Parliament has consciously replaced the word ‘and’ by the word ‘or’, vide amendment dated 01.03.2008, thereby making it clear that the activity of labelling or re-labelling amounted to “manufacture”. 
Legal provisions: 
Section 11A (1) of the central excise act- deals with recovery of duties not levied or paid or short-levied or short-paid or erroneously refunded. 
Rule 14 of Cenvat credit rules 2004- credit has been taken wrongly or erroneously refunded. 
Rule 3 of cenvat credit rules- A manufacturer or producer of final products shall be allowed to take credit. 
Note 3 Chapter 18 Central Excise Tariff Act 
Issues: 
Whether the activity of labelling amounts to manufacture? 
Courts analysis and judgement: 
Supreme court examined the definition of “manufacture” under Section 2(f)(ii) under Central excise Act “manufacture” includes any process,- (i) incidental or ancillary to the completion of a manufactured product; 
(ii) which is specified in relation to any goods in the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act (5 of 1986) as amounting to manufacture; or 
(iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking 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, and the word “manufacturer” shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account;  Therefore, the word ‘manufacture’ includes any process which is incidental or ancillary to the completion of a manufactured product; any process specified in Section or chapter notes of the first schedule to the Central Excise Tariff Act or any process in relations to goods specified in 3rd schedule which involves packing or re-packing, labelling or re-labelling, declaration or alteration of retail sales price or adoption of any other treatment on the goods to render the product marketable. Further, post-amendment of 01.03.2008 to Note 3 to chapter 18 of the Central Excise and Tariff Act, “manufacture” contemplates any of the three processes. The three process are- 
i) labelling or re-labelling of containers; or 
ii) repacking from bulk packs to retail packs; or 
iii) the adoption of any other treatment to render the product marketable to the consumer.  If any one of the above three processes is satisfied then the same would amount to “manufacture” under Section 2 (f) (ii) of the Central Excise Act. There is no dispute as to the activity carried out by the respondent at the Taloja unit. Whether the goods are brought from Jammu or are imported, those re-labelled on both the sides of the pack containing the goods at the Taloja unit and thereafter, introduced in the market or sent for exports, in terms of Note 3 to the chapter 18 this process of re-labelling amounts to “manufacture”. The view taken by the CESTAT is correct and no case for interference is made out. Accordingly, the civil appeal 788-790 of 2022 stands dismissed.

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Judgement reviewed by- Parvathy P.V.
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Fraud under Section 23(1) of Senior Citizens Act Limited to Violation of Transferor’s Upkeep Condition, Cannot Extend to Civil Law Fraud: Karnataka High Court

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Case title: Jayashankar and the Assistant Commissioner and Ors. 

Case no: Writ appeal No. 339 of 2023 (GM-RES)

Dated on: 24th April, 2024

Quorum: Hon’ble Justice Mr. N.V. Anjaria and Hon’ble Mr. Justice Krishna S Dixit.

Facts of the case: 
Under Section 4 of the Karnataka High Court Act, 1961 the writ appeal was directed against a judgement and order of a learned counsel dated on 03.03.2023 passed in a writ petition No. 12226 of 2020, dismissing the petition. There was an order passed under 23(1) of the maintenance and welfare of parents and senior citizens Act, 2007. The tribunal had declared that the registered gift deed dated 28.01.2014 was liable to be treated as cancelled as the transfer of property was void. The complainant K.V Nanjappa aged nearly hundred stated that the ancestral property is being partitioned but the complainant has retained one house, certain sites and 5acres of land. It was stated that the younger son of the complainant Jayashankar took the complainant to the Taluka office by misrepresentation saying that his presence is needed for a pension case and instead he got registered the document from the complainant in his favour. The complainant recently learned that his younger son Jayashankar had gotten the property registered without his knowledge. The complainant stated that he did not execute such gift deed to his son. The Tribunal declared that the registered Gift Deed dated 28.01.20214 to be cancelled as transfer of the property is void. The Original Petition was filed under Section 4 of the Karnataka High Court 1961 to set aside the Order dated 06.01.2014 passed by the President of the Maintenance and Welfare of Parents and Senior Citizens Tribunal. On Appeal, the Learned Single Judge observed that the Gift Deed was unequivocal and the property was gifted provided the Appellant took care of the father. The Petitioner was found to be not taking care and hence the condition of the Gift Deed was breached and the said finding by the Assistant Commissioner under the Maintenance and Welfare of Parents and Senior Citizens Act,2007 was based on the admission of the Appellant that his father is not residing with him. This Writ Appeal is filed under Section 4 of the Karnataka High Court Act, 1961, to set aside the impugned Order dated 03.03.2023 passed by the Learned Single Judge in WP 12226 of 2020.

Contentions of the appellant:

The single Judge overlooked the aspect that while providing the gift deed and transfer thereunder, the Competent Authority came to the conclusion that Gift Deed was acted upon by fraud. However, there was no evidence before the Authority that the Gift deed was executed by fraud. After death of the Complainant, it came to light that the father had executed a Will and that the Respondents were not happy with the Will and lodged Complaint under Section 379,420,447,448,465,468,471 and 506 of IPC. Apart from the same the Respondents also filed OS 70/2019 to declare the registered Will as null and void. All these material aspects were disregarded by the learned single Judge to confirm the judgment and order of the Tribunal.

Issues:

Whether the Competent Authority under the Maintenance and Welfare of Parents and Senior Citizens Act, 2007 has passed order by going beyond the purview of Section 23 (1) of the Act?

Legal provisions:

Section 23 (1) of the Maintenance and Welfare of Parents and Senior Citizens Act, 2007: Section 23 of the Maintenance and Welfare of Parents and Senior Citizens Act, 2007 empowers a senior citizen to approach the Maintenance Tribunal to declare a certain specific transfer of property, by way of gift or otherwise, after the commencement of the MWPSCA, as void, if in case the transfer of property was premised on the condition that the transferee shall provide for the basic amenities and physical needs of the transferor; and after the transfer got effected such transferee refused or failed to provide for such basic amenities and physical needs.

Section 379- Theft imprisonment for three years with fine or both.
Section 420- deals with act of cheating.
Section 447- criminal trespass.
Section 448- house trespass.
Section 465- punishment for forgery.
Section 468- forgery.
Section 471- using a forged document as genuine.
Section 506- punishment for criminal intimidation.

Courts analysis and judgement:

The Supreme Court in Sudhesh Chhikara Vs Ramti Devi held that for attracting Section 23(1) two conditions must be fulfilled (a) The transfer must have been made subject to the condition that the transferee shall provide the basic amenities and basic physical needs to the transferor and (b) The transferee refuses or fails to provide such amenities and physical needs to the transferor. If both the conditions are fulfilled then by legal fiction the transfer shall be deemed to have been made by fraud or coercion or undue influence and the transfer shall become voidable. The facts suggests that an obligation was there on the Appellant to take care of the Complainant father and on such condition the gift deed was executed. The said condition was breached, as per the finding of the Competent Authority and the learned single judge as well. The Appellant admitted that father was not residing with him. The Complainant had to stay at the elder son’s house. The condition of treating the Gift Deed void was satisfied and hence there is no error in the order of the single judge for confirming the Order of the Tribunal by treating the gift deed as cancelled. However, the Tribunal while ordering cancellation of the gift deed cast doubt on the execution of the Gift Deed for the reason that while executing Gift Deed the Complainant has put thumb impression on the document but at the time of filing the complaint, he has put his signature which creates serious doubts about the consent and knowledge of the Complaint with regard to execution of the Gift Deed. The aforesaid finding by the Tribunal is unwarranted and further the Tribunal has gone beyond the operational purview of Section 23 (1). The section treats the transfer of the property in a particular manner to be deemed to have been made by fraud or coercion upon breach of condition of taking care and providing basic amenities i.e; the idea of fraud or coercion in section 23 (1) is in reference to breach of condition I.e; providing basic amenities and physical needs to the senior citizen. The words fraud and coercion could not be enlarged to normal concept of fraud or coercion in civil law. To establish fraud, evidence is required to prove the facts of fraud. Tribunal is neither a civil court nor the power exercised by the Tribunal is under the provisions of the Civil Court. The powers granted under the Act is to provide effective recourse in law or maintenance and welfare of parents and senior citizens and to guarantee and recognize them their rights. The Tribunal misdirected itself in law in making observations on paragraph 13 of the Order by suggesting that the gift deed was fraudulently obtained from the complainant. The findings are beyond powers and jurisdiction of the Tribunal. Accordingly, the observations in paragraph 13 of the Order of Tribunal are not sustained and are set aside. The Judgment and order of the learned single judge is modified to the said extent and rest of the part is confirmed. Accordingly, the Writ appeal is dismissed subject to the observations and findings and modifications.

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Judgement reviewed by- Parvathy P.V.

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Supreme Court Directs Implementation of Standard Operating Procedure for Filing Paper Books.

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Case title: Anjumol V.A. and Ors V. Kerala Public Service Commission and Ors.

Case no: petition (s) for special leave to appeal (C) No. 13242/2021

Dated on: 16.04.24

Quorum: Hon’ble Mr. Justice J.K. Maheshwari and Hon’ble Mr. Justice Sanjay Karol.

Facts of the case:

The Petition(s) for Special Leave to Appeal (C) No. 13242/2021 is arising from final. Judgment and Order dated 04-06-2019 passed by the Hon’ble High Court of Kerala at Ernakulum) in OPKAT No. 62/2017.

Court’s  Analysis and Judgement 

The Hon’ble Supreme Court, while hearing the above case, has perceived various practical difficulties both on miscellaneous or non-miscellaneous days and some of them are as mentioned herein below:

(i) The Orders passed during the proceedings are not attached to the paper books;

(ii) In Service matters, the counsels for the Petitioner are not attaching the relevant Service Rules with Appendix in the SLP paper book or the same is not referred in the pleadings. The Rules, sometimes, are filed in piecemeal with Applications or with additional documents, due to which matters are postponed. This causes financial burden upon the parties and further results in delay in adjudication;

(iii) Counter Affidavits are sometimes attached to the main SLP paper book without flagging, inviting attention and sometimes as separate paper book which requires unnecessary search and wastage of time by the Judges;

(iv) Upon directions and after filing the convenience compilation, the same is not sent to the residential offices of the Judges either in hard copy or by way of email and even during the hearing;

(v) The IA number is not properly exhibited on its face. The Applications are not attached date wise, with paper books. This causes inconvenience to the Judges;

(vi) Other ancillary issues in various paper books is also causing difficulty in day to day court functioning.

In view of the above, the Secretary General and the Registry Officers, in particular the Registrar (Judicial) shall prepare a Standard Operating Procedure (SOP) for properly maintaining the SLP paper books and also to eliminate the difficulties mentioned above. The SOP is to be notified after seeking appropriate orders from the Hon’ble Chief Justice of India. The due compliance shall be made as expeditiously as possible for efficient functioning of the court. Learned counsel for the parties were heard the hearing is concluded. The Learned State Counsel and the Counsels for Respondents are granted two weeks’ time to file affidavit clarifying how many persons have been appointed along with their qualifications and the status of the Petitioners in the present Special Leave petition.

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Judgement reviewed by- Parvathy P.V.


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Karnataka HC upholds that accidental fall from train entitles to receive compensation from the railway tribunals even if that falls within the ambit of “self-infliction”‘.

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Case title: Rojamani (since deceased represented by LRs) and Union Bank of India.

Case no: M.F.A. NO.3651/2016 (RCT)

Dated on: 19thApril, 2024

Quorum: The Hon’ble Mr. Justice H.P. Sandesh

Facts of the case:

On 22.02.14 the deceased Jayamma along with her sister went to Channapatna railway station and purchased the railway ticket to go to Ashokapuram Mysore. Both the of them had to board the Tuticorin express and realised that the said train would not go to Ashokapuram they alighted from the train while alighting the deceased lost her balance and sustained injuries resulting in her death. The respondent railway disputed the claim and denied their liability by stating that the death was not due to accidental fall, within the Section 123 of the railway Act alighting from train which amounts to self-inflicted injuries by virtue of provision of sect124 of railway act. The railway tribunal while affirming that deceased was a bona-fide passenger but denied the compensation on the grounds that the fall of deceased was due to her own voluntary act.

Contentions of the appellant:

Tribunal failed to appreciate that the deceased was an aged person and not a daily commuter. So, when she realized that she boarded the wrong train she alighted suddenly and lost her balance resulting to fatal injuries. In Jameela V. UOI, the counsel for the appellant held that the act amount to mere negligence and not criminal negligence. The counsel relied on the judgement of the SC of Rina Devi V. UOI , reported in 2018 AIR (SC) 2362 that death or injury in course of boarding or deboarding the train will be an untoward incident. Victim will be entitled to compensation and wont fall under section124A merely on plea of negligence as contributory factor. In, Anuradha V. UOI held that “Even the deceased boarded in a wrong train having a valid journey ticket and died while alighting the train that does not mean that he was not a bona fide passenger and on that ground claim cannot be rejected”.

Contentions of the respondent:

The counsel of respondents contended that it’s a clear case of attempt to deboard from running train when it was noticed that they boarded the wrong train for which they relied on Kerala court decision on Joseph P.T. V. UOI AIR 2014, Kerala. Held that passenger moving from a boarded train off side is amounting to carelessness and would be self-inflicting and cannot claim compensation.

Legal provisions:

Section 16 of Railway Claims Tribunal Act, 1987- A person seeking any relief in respect of the matters referred to in sub-section (1) 8 [or sub-section (1A)] of section 13 may make an application to the Claims Tribunal.

Section 124A of Indian Railway Act, 1989- Section 124A of the Indian Railways Act, 1989 pertains to compensation for untoward incidents.

Issue:

Whether the fall amounts to accidental fall within the purview of section of 123 of the Indian Railways Act?

Court analysis and judgement:

Its clear that from section 124 of the act has no compensation if passenger dies or suffers from injuries due to suicide, self- inflicted harm or due to insanity. The court considered that principles laid down in Jameela V UOI, that the deceased dead is not criminal and railway cannot claim compensation. The court has relied on apex court on UOI V. Prabhakaran held that strict liability can hold railways for compensation due to his own fault. The court goes ahead and states that strict liability is also to be considered. Principles laid down in Rine devi and Anuradha’s case is also applicable to the present case. In view of the aforesaid appeal the miscellaneous appeal was allowed and the order of railway tribunal is set aside by compensating an amount of 4,00,000 with 7% interest from date of filing. The tribunal committed in envoking section 124 of Indian Railways Act by concluding that it’s a self -inflicted injury and reasoning of tribunal is erroreneous and judgements referred above by appellants comes to their aid. The court says that if the compensation is less than 8,00,000 it will be compensated compeletly.

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Judgement reviewed by- Parvathy P.V

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Karnataka HC upholds that signing Jaya Bharata Jananiya Tanujate the State anthem in a particular tune will not infringe the fundamental right guaranteed under Art.19(1)(a) and (1)(g)

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Case title: Kikkeri Krishna Murthy and the State of Karnataka and Ors.

Case no: Writ petition No. 19801 of 2022

Dated on: 24th April, 2024

Quorum: The Hon’ble Mr. Justice Krishna S Dixit

Facts of the case:    petitioner is a well- known singer who has filed a complaint before the court by filing a writ petition against the State Govt of Karnataka order dated on 25.09.2022 whereby the State Government had directed the rendition of the State anthem ‘Jaya Bharata Jananiya Tanujate’ in a specific tune or raaga that was composed by Shri. Mysore Ananthaswamy .

Contentions of the appellant:

The impugned order constitutes an unreasonable restriction onto right to expression guaranteed under Article 19 (1) (a) of the constitution, asking citizens to sing a song in a particular tune or raaga is constitutionally impermissible unless it is authorized by law. There is no restrictions for citizens prescribed to sing any particular tune or raaga. Just because, a committee had recommended a particular tune or raaga in which the Naadageethe needs to be sung the impugned order does not get validated.

Contentions of the respondent:

Petitioner has not mentioned as to which right of his has been infringed by the impugned order. After, taking the unanimous report of the committee into consideration the State has prescribed a particular tune or raaga for rendering the naadageethe. In schools, Naadageethe has to be sung in a certain manner in order to maintain uniformity amongst the students; Similarly, in offices or Governmental bodies it’s made compulsory to sing in official occasions only. It is always open to citizens the said song in any tune or raaga of their choice. Under, the provisions of the Karnataka Education Act, 1983. The Govt has power to issue the impugned order which otherwise also has executive power that is vested under Article162 of the Indian Constitution.

Legal provisions:

Section 3(1) of Karnataka Education Act, 1983- generates general education, professional education, medical education, technical education at all levels in accordance with provisions of the act.

Article 19(1) (a) and 19 (1) (g)- guarantees its citizens the freedom of speech and expression. Also, grants its citizens the freedom to practice any profession or trade or business of his/her choice.

Article 162- extent of executive power of the state.

Issue:

Whether the action of the State Govt in prescribing a particular raaga or tune for the State anthem is arbitrary and unreasonable?

Court analysis and judgement:

The impugned order does not come in his way of singing the naadageethe in his tune or raaga . Despite the vehement submissions the petitioner isn’t in a position to demonstrate his right to sing in qualified spaces like schools, governmental bodies that is composed by other stalwarts in the variance once specified. Since, the impugned order does not infringe any right of the petitioner to sing naadageethe in any raaga anywhere anytime except in certain qualified places; he is not an “aggrieved person”. No school has come forward to challenge the order and the petitioner is not supporting cause of any school and hence the impugned order does not give a proper cause of action in maintaining the petition. Permission of singing the national anthem in any specified raaga is permissible under Article 162 of the constitution. In, Sahib Ram Jawaya Kapur V. State of Punjab (1955) 2 SCR 225 it was observed that when there is an residue of government function that remains after legislative and judicial function are taken away that is when the executive powers come into actions, and if such action effects rights of citizen the authority of law would be required. The contention of petitioner that his right to speech and expression under Art. 19(1)(a) and 19(1)(g) has been infringed by imposing unreasonable restrictions does not merit acceptance. The question of adjudging reasonable restrictions arises when the substantive right and curtailment is demonstrated. However, such demonstration lacks in the case. As, the petition is devoid of merit is liable to be dismissed.

“PRIME LEGAL is a full-service law firm that has won a national award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer”.

Judgement reviewed by- Parvathy P.V.

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