2013 (9) TMI 813 - AT - Central Excise

Cenvat Credit of Additional Duty of Customs (CVD) - whether repacking of goods amount to manufacture of not - import of cerium chloride - Held that - adoption of any other treatment to render the product marketable to the customer shall amount to manufacture. It is not only packing of the goods into retail packs which amounts to manufacture. Further, it is also to be noted that Cenvat Credit Scheme is for ensuring that the credit chain from the bulk stage to the ultimate consumer is not broken. The chemical under consideration by its very nature is to be used in industrial processes and different users requiring it may need it in different quantities. What is retail sale depend on the product involved - Applicant had made out a prima facie case for total waiver of duty and penalty demanded under the impugned order. I grant such wavier for admission of the appeal - Decided in favour of assessee.

Summary

Issues:
1. Interpretation of Chapter Note No. 9 of Chapter 28 of the Central Excise Tariff regarding the activities amounting to manufacture.
2. Validity of taking Cenvat credit and paying duty on the final product.
3. Determination of whether repacked goods qualify as retail packs for the purpose of law.
4. Granting of waiver for total duty and penalty demanded under the impugned order.

Analysis:
1. The primary issue in this case revolved around the interpretation of Chapter Note No. 9 of Chapter 28 of the Central Excise Tariff, which states that certain activities, including repacking from bulk packs to retail packs, amount to manufacture. The Applicant argued that their activities fell within this definition, emphasizing that they repacked imported cerium chloride into smaller packets for sale, thereby rendering the product marketable to customers.

2. The Applicant asserted that they had followed the law by taking Cenvat credit and paying duty on the final product. The Respondent, however, contended that the repacked goods did not qualify as retail packs, and the buyers were not retail consumers. This raised a question regarding the legality of the Applicant's actions in claiming credit and paying duty.

3. The Tribunal analyzed the Chapter Note in question and highlighted that the adoption of any treatment to make a product marketable constituted manufacture, not limited to packing goods into retail packs. Considering the nature of the chemical involved and the varying needs of different users, the concept of "retail sale" was deemed dependent on the specific product. Ultimately, the Tribunal was convinced by the Applicant's arguments, indicating a prima facie case for waiving the duty and penalty demanded in the order under appeal.

4. In light of the above analysis, the Tribunal granted a waiver for the total duty and penalty demanded, allowing the appeal to proceed without the collection of the said amount during its pendency. This decision was based on the Tribunal's interpretation of the relevant legal provisions and its assessment of the Applicant's compliance with the law in taking credit and paying duty on the final product.

This comprehensive analysis of the judgment highlights the key legal issues addressed by the Tribunal, the arguments presented by the parties, and the Tribunal's reasoning leading to the decision to grant a waiver for the duty and penalty demanded.