2006 (8) TMI 369 - AT - Central Excise

Summary

Issues:
Whether the removal of leather chemicals by the respondents during a specific period was dutiable, and if the activity of pouring chemicals from bulk containers into small containers constitutes 'manufacture' under the Central Excise Act.

Analysis:
The appeal in question revolves around the dutiability of goods, specifically leather chemicals, removed by the respondents during a particular period. The original authority had demanded duty from the party and imposed penalties, which were later set aside by the first appellate authority. The central issue is whether the activity of pouring chemicals from bulk containers into small containers qualifies as 'manufacture' as per Note 6 to Chapter 34 of CETA Schedule.

Upon examining the records and arguments from both sides, the appellant contends that the activity of repacking chemicals from bulk packs into retail packs amounts to 'manufacture' under the Central Excise Act. The respondents explained that they poured chemicals from bulk containers into small containers at the time of sale, with customers often bringing their own containers. The appellant did not dispute this account. The issue framed by the Commissioner (Appeals) focused on whether pouring chemicals from bulk to small containers constitutes 'manufacture.'

The Tribunal found that the mere act of pouring chemicals from bulk to small containers does not meet the criteria of 'repacking' as outlined in the Chapter Note. For an activity to be considered 'repacking,' the goods in bulk containers must be repacked into retail packs to become a marketable product. The Tribunal emphasized that the formation of definite retail packs is essential, which was not the case in the scenario presented. Therefore, the Tribunal upheld the decision of the Commissioner (Appeals) and dismissed the appeal.

In conclusion, the Tribunal determined that the pouring of chemicals from bulk to small containers by the respondents did not amount to 'manufacture' under the Central Excise Act. The activity did not meet the requirements for 'repacking' as specified in the Chapter Note, leading to the dismissal of the appeal against the decision of the Commissioner (Appeals).