2005 (9) TMI 568 - AT - Central Excise

Summary

Issues:
Department's demand for duty on re-packed and re-labelled goods at enhanced value.

Detailed Analysis:
The case involved a dispute where the Department demanded duty from the Respondent on goods that were re-packed and re-labelled at an enhanced value before being sold to customers. The Respondent had initially ordered bulk drugs from suppliers and, upon receiving the goods, re-packed and re-labelled them before selling at a higher price. Subsequently, due to customer dissatisfaction, the goods were returned to the Respondent, who re-availed the credit and returned the goods to the original suppliers. The Department then demanded enhanced duty, claiming that the value addition resulted from the re-packing and re-labelling process. A Show Cause Notice was issued, proposing duty demand, which was confirmed by the Additional Commissioner. However, the Order-in-Original was set aside by the Commissioner (Appeals), leading to the Department's appeal.

The Commissioner (Appeals) noted that the re-packing and re-labelling process did not result in the creation of a new commodity, as the raw materials remained the same. Despite this, the Commissioner held that the process constituted "manufacture" under the Central Excise Tariff Act, necessitating duty payment upon selling the goods. However, the Commissioner also recognized that imposing duty on the Respondent would allow the original suppliers to claim a higher amount of credit than initially paid by the Respondent for the goods.

Ultimately, the Commissioner (Appeals) found the reasons for setting aside the Order-in-Original to be valid and justified. It was concluded that the Department had already availed eligible Modvat credit during the original supply, and therefore, there was no further grievance for the Department to pursue. Consequently, the appeal was dismissed, and other issues raised were deemed unnecessary for consideration.

In conclusion, the judgment upheld the decision of the Commissioner (Appeals) to set aside the duty demand on re-packed and re-labelled goods, emphasizing the absence of additional grievances for the Department regarding the Modvat credit already availed.