2006 (10) TMI 46 - AT - Central Excise

Manufacture Deemed manufacture Packing and labelling of refined edible oil from bulk to retail pack - Assessee not repacked RBD palmolien from bulk packs to small packs Packing from large pack to small pack not amount to manufacture

Summary

Issues:
1. Whether packing and labeling of refined edible oil in bulk into retail packs amount to manufacture in terms of Note 4 to Chapter 15 of the First Schedule to the CETA 1985.
2. If yes, whether repacked and labeled goods are eligible for exemption under Notification No. 6/02-CE dated 1-3-2002 if the input oil was cleared under DEPB scheme.

Analysis:

Issue 1:
The case involved determining whether packing and labeling of imported palm oil/palmolein in bulk into retail packs constituted manufacturing under Note 4 to Chapter 15 of the CETA 1985. The Commissioner found the process undertaken by the appellants as repacking and labeling, which amounted to manufacture as per the relevant Chapter Note. The appellants argued that since the goods received in bulk were already marketable, there was no new product manufactured. They cited case law to support their argument, but the Commissioner distinguished those cases as not relevant to the present scenario. The Tribunal analyzed the Chapter Note's requirements and concluded that the appellants' activities did not amount to manufacture as they did not repack the oil from bulk packs into smaller packs, and did not undertake any other treatment to render the product marketable.

Issue 2:
Given the finding on Issue 1, the Tribunal determined that the question of whether the input oil had suffered excise duty or additional customs duty was irrelevant. The Tribunal held that the impugned orders demanding duty were not sustainable in law for both appellants, Ruchi Health Foods Ltd. and KTV Oil Mills. Consequently, the Tribunal set aside the orders and allowed all three appeals.

In conclusion, the Tribunal ruled in favor of the appellants, holding that their activities did not amount to manufacture under the relevant Chapter Note, thereby rendering the duty demands unsustainable.