2003 (2) TMI 255 - AT - Central Excise

Summary

Issues Involved:
Interpretation of Note 5 to Chapter 30 of the Central Excise Tariff Act regarding re-labelling of medicaments.

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi involved the question of whether Note 5 to Chapter 30 of the Central Excise Tariff Act applied to the re-labelling of medicaments by M/s. Lincoln Parentarals Limited. The Appellants argued that the re-labelling done to correct a printing mistake on the labels did not constitute manufacture under Note 5. They contended that the correction of the labels under Rule 173H of the Central Excise Rules was not a process covered by Note 5 and therefore did not attract duty liability. The Appellants relied on previous Tribunal decisions to support their argument that mere re-packaging or re-labelling for rectifying errors does not amount to manufacture as defined in Note 5.

The Respondent, represented by Shri V. Valte, reiterated the findings of the impugned order which confirmed the duty demand and penalty imposed on the Appellants for re-labelling the medicaments. The Respondent maintained that the re-labelling process fell within the ambit of Note 5 to Chapter 30, thereby constituting manufacture and attracting duty liability.

Upon considering the submissions from both sides, the Tribunal analyzed Note 5 to Chapter 30, which specifies that certain processes like re-labelling intended for consumers amount to manufacture. However, the Tribunal found merit in the Appellants' argument that the correction of the potency information on the labels due to a printing error did not qualify as re-labelling under Note 5. The Tribunal concluded that the corrective action taken by the Appellants did not transform the product into a new marketable form but merely rectified an error. Therefore, the Tribunal set aside the impugned order, ruling in favor of the Appellants and allowing the appeal.

In essence, the judgment clarified that the correction of labels to rectify errors, without altering the essential nature of the product or making it more marketable, does not amount to re-labelling as defined in Note 5 to Chapter 30 of the Central Excise Tariff Act. This decision underscores the distinction between genuine manufacturing processes and corrective actions taken to ensure accurate labeling, providing clarity on the scope of Note 5 in the context of re-labelling medicaments.