2015 (11) TMI 705 - AT - Central Excise

Activity manufacture or not - Refilling of gas from tankers to cylinders Held that - Even CBEC in Circular No.910/30/2009-CX dt. 16/12/2009 had considered the very same issue and had considered the amended Chapter Note and had come to the conclusion that tankers cannot be considered as bulk packs and therefore the activity of transferring the goods from tankers into smaller drums/cylinders cannot be covered by the Chapter Note. In view of the above, we take a view that on the first issue, the impugned order cannot be sustained. - Board had issued a clarification in the Circular No.236/70/96-CX dt. 01/08/1996 that conversion of anhydrous ammonia into aqueous solution of ammonia does not amount to manufacture. In the case of Hari & Mahesh (P) Ltd. Vs. CCE, Haldia 2008 (8) TMI 178 - CESTAT, KOLKATA , the Tribunal also had taken the view that conversion of anhydrous ammonia into liquid ammonia or ammonia aqueous solution does not amount to manufacture. - impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
1. Whether the activity of filling anhydrous ammonia from tankers into cylinders amounts to manufacture under Chapter Note No.9 to Chapter 28.
2. Whether the activity of dissolving anhydrous ammonia in water to obtain aqueous ammonia or liquor ammonia amounts to manufacture.

Analysis:
1. The appellant, engaged in buying and selling anhydrous ammonia, faced proceedings on whether filling anhydrous ammonia from tankers into cylinders constitutes manufacture. The Tribunal cited a previous case where a similar activity with oxygen gas was deemed not manufacturing. The Chapter Note No.9 specifies that labeling, repacking, or other treatments for consumer marketability amount to manufacture. The Department argued that repacking from tankers to smaller containers is manufacturing, but a CBEC Circular and Tribunal precedent disagreed. Thus, the Tribunal held that the activity does not amount to manufacture, overturning the impugned order.

2. Regarding the dissolution of anhydrous ammonia in water, the Commissioner's order was challenged. Another Commissioner had previously ruled that this activity does not constitute manufacture. The process involves dissolving ammonia in water under pressure for transportation convenience, with the resulting aqueous ammonia not used as is. The Central Board of Excise and Customs clarified that this process does not amount to manufacture. The Tribunal referenced a Circular and a previous case supporting this view. Consequently, the Tribunal set aside the impugned order on this issue as well, allowing the appeal with any consequential relief for the appellant.