2007 (6) TMI 135 - AT - Central Excise

Re-labeling of medicines Fixing the label without re-packing goods - Only re-packing from bulk pack amounts to manufacture Labeling of goods without undertaking any activity is not liable to pay duty as no manufacture is involved

Summary

Issues:
1. Interpretation of Chapter note 5 of Chapter 30 regarding labelling/re-labelling of containers as manufacturing activity.
2. Applicability of CBEC circular on labelling as manufacture.
3. Consideration of Tribunal's decision in Johnson & Johnson Ltd. case.
4. Effect of Hon'ble Supreme Court's judgment on similar issue.

Analysis:
1. The case involved a dispute over whether labelling or re-labelling of containers amounts to manufacturing activity under Chapter note 5 of Chapter 30. The appellant argued that mere labelling does not constitute manufacture as the goods were already in a marketable condition at the time of import. They relied on statutory requirements under the Drug & Control Cosmetics Act and Standards of Weights and Measures Act to support their position.

2. The appellant further contended that the CBEC circular No. 102/4/95-CX.3 clarified that mere fixing of labels does not amount to manufacture. However, the Commissioner rejected these arguments, citing Chapter note 5 and the withdrawal of the Board's Circular of 1996. The Commissioner confirmed the demand and imposed penalties based on this interpretation.

3. The Tribunal considered the appellant's reliance on the decision in Johnson & Johnson Ltd. case, which held that labelling not accompanied by repacking from bulk to retail does not amount to manufacture. The Tribunal noted that the Commissioner did not consider this precedent. Additionally, the Tribunal mentioned that the Revenue's appeal against the Tribunal's decision was dismissed by the Hon'ble Supreme Court in a related case.

4. In light of the Hon'ble Supreme Court's judgment, which emphasized the necessity of repacking from bulk to retail packs to constitute manufacturing, the Tribunal found that the appellant's activity of solely labelling the goods did not meet the criteria for manufacturing. Therefore, the Tribunal set aside the impugned order, allowed the appeal, and provided consequential relief to the appellant based on the Supreme Court's decision.

This detailed analysis reflects the thorough consideration of legal interpretations, precedents, and relevant statutory provisions in the judgment delivered by the Appellate Tribunal CESTAT, Ahmedabad.