2013 (12) TMI 808 - AT - Central Excise

Activity manufacture or not - Refilling of gas from tankers to cylinders Held that - As per Note 10 of Chapter 28, two requirements were needed to be satisfied - One, there should labeling or re-labeling of the container and second repacking from bulk packs to retail packs - When both these conditions are satisfied, the activity would amount to manufacture - nowhere it is coming out that the appellant has done labeling and re-labeling on the gas cylinder - the gas has been supplied by the appellant in the buyer s cylinders Thus, the question for re-packing from bulk pack to retail pack would not arise Decided against Revenue.

Summary

Issues:
1. Whether refilling of gas from tankers to cylinders amounts to "manufacture" for the purpose of Central Excise duty liability.
2. Interpretation of Note 10 of Chapter 28 of the Central Excise Tariff Act, 1985 regarding labeling, re-labeling, and repacking activities constituting "manufacture."

Issue 1: Refilling of gas from tankers to cylinders

The appeal pertained to the question of whether refilling gas from tankers to cylinders constitutes "manufacture" for Central Excise duty liability. The respondent, a manufacturer of goods under Chapter 28, purchased Argon Gas in tankers, unloaded it into tanks, and then filled it into cylinders. The Revenue contended that this activity amounted to manufacture and demanded excise duty. However, the respondent argued that based on a Tribunal decision and the absence of labeling or re-labeling, the activity did not constitute manufacture. The lower appellate authority and the Tribunal concurred, holding that the refilling process did not meet the criteria for manufacture, as per relevant legal provisions and precedents.

Issue 2: Interpretation of Note 10 of Chapter 28

The debate centered on the interpretation of Note 10 of Chapter 28 concerning activities that amount to "manufacture." The Revenue relied on a circular and argued that the refilling activity fell within the ambit of manufacture based on the definition of "packing" and the presence of the manufacturer's name on the cylinders. Conversely, the respondent contended that they did not engage in labeling or re-labeling, and the refilling did not constitute repacking from bulk to retail packs. The Tribunal analyzed the legal requirements under Note 10, emphasizing the necessity of labeling and repacking for an activity to qualify as manufacture. It concluded that the refilling process undertaken by the respondent did not fulfill these conditions, thereby upholding the lower appellate authority's decision and dismissing the Revenue's appeal.

In conclusion, the Tribunal ruled in favor of the respondent, holding that the refilling of gas cylinders from tankers did not amount to "manufacture" under the Central Excise Tariff Act. The decision was based on the lack of labeling or re-labeling activities and the absence of repacking from bulk to retail packs, as required by the relevant legal provisions. The Tribunal emphasized the specific criteria outlined in Note 10 of Chapter 28 and clarified that the refilling process alone did not meet the threshold for manufacture. Consequently, the appeal filed by the Revenue was dismissed for lacking merit, affirming the lower appellate authority's decision.