1981 (10) TMI 180 - CGOVT - Central Excise

Summary

Issues:
Interpretation of Central Excise Tariff for excisable goods; Liability for duty on repacking and sale in smaller containers; Assessment of assessable value under Section 4 of the Central Excise and Salt Act, 1944; Claim for revision of demand for duty.

Analysis:
The case involved manufacturers of excisable goods falling under specific Tariff Items of the Central Excise Tariff. The goods were cleared from the factory in barrels after paying appropriate duty based on filed price-lists. Subsequently, the goods were sent to duty paid godowns in Bombay and outside Bombay. The dispute arose when the goods were sold from these godowns after being repacked in smaller containers at enhanced prices. The Asstt. Collector held that duty should be paid based on the sale price for smaller containers, leading to the recovery of differential duty. The Appellate Collector rejected the appeals, emphasizing that the assessable value should be based on the price after repacking, not on whether repacking constituted a process of manufacture.

The manufacturers contended that a significant portion of goods were sold in bulk without repacking at the same prices as declared in the price-lists. They argued that repacking did not amount to a manufacturing process, thus challenging the duty imposition. They presented invoices showing bulk sales at factory gate prices to support their claim. Additionally, they sought revision of the demand for duty, highlighting discrepancies in the assumption that all repacked goods were in the smallest containers.

The Government acknowledged that a substantial portion of goods were cleared in bulk at the factory gate with consistent pricing. They held that the normal price for bulk clearances should apply unless a further manufacturing process was undertaken post-clearance. The Government agreed with the manufacturers that repacking did not constitute a manufacturing process in this context. Consequently, the order-in-appeal was set aside, and the revision application was allowed, relieving the manufacturers from the duty liability based on repacked prices.

In conclusion, the judgment clarified the assessment of duty on goods repacked and sold in smaller containers, emphasizing the normal price for bulk clearances and the non-manufacturing nature of repacking in this case. The decision favored the manufacturers by setting aside the duty imposition and highlighting the importance of normal pricing for excisable goods.