2018 (1) TMI 419 - AT - Central Excise

Manufacture - classification of bulk talc powder - dutiability - Held that - labeling or relabeling and repacking from bulk pack to retail packs to render the product marketable to the consumer shall amount to manufacture - there is no doubt that if the bulk talc powder purchased by the assesee fall chapter 25 the activities carried out by the assesee does not amount to manufacture. However if the bulk talc powder is a cement water proofing compound which classifiable under Chapter 38 the same activities would amount to manufacture. Right from the adjudication stage upto the Commissioner (Appeals) stage the core issue of correct classification of bulk talc powder and its technical characteristics were not considered. Therefore it is premature to come to a conclusion on the issue of manufacture and dutiability in respect of retail printed pack of talc powder which is marketed as cement water proofing compound. Matter remanded to the adjudicating authority for passing a fresh order - appeal allowed by way of remand.

Summary

Issues:
Classification of product Sika Noleek under Chapter 38244010, whether re-packing amounts to manufacture, correct classification of bulk talc powder, dutiability of the product.

Analysis:
1. The appellants were engaged in the manufacture of various products and were re-packing non-dutiable talc powder into small packs under the brand name Sika Noleek. Show-cause notices were issued, alleging that the product should be classified under Chapter 38244010 and duty should be paid. The adjudicating authority confirmed the demand, considering re-packing as manufacturing. The Commissioner (Appeals) had contradictory decisions in separate appeals filed by the revenue and the assessee.

2. The assessee argued that re-packing talc powder did not amount to manufacture as there was no change in the product's identity. They cited various judgments to support their claim. On the other hand, the Revenue contended that the re-packing, along with other activities like affixing a brand name, constituted manufacturing. They argued that the product was sold as a water proofing compound and should be classified under Chapter 38244010.

3. The Tribunal analyzed the facts and noted that the suppliers of talc powder were not registered with Central Excise. It was unclear whether the input was a mineral product or a mixture of chemicals. Without proper classification of the bulk talc powder, determining the dutiability of the re-packed product was premature. The Tribunal highlighted the importance of correctly classifying the input material before concluding whether re-packing constituted manufacture.

4. Referring to Chapter Note 9 of Chapter 38, the Tribunal emphasized that labeling, re-labeling, and repacking from bulk to retail packs would amount to manufacture for products under Chapter 38. However, this legal fiction did not apply to products under Chapter 25 unless specific characteristics were met. The Tribunal set aside the previous orders and remanded the matter for a fresh decision, stressing the need for a detailed examination of the technical characteristics and classification of the bulk talc powder.

In conclusion, the Tribunal's judgment highlighted the significance of correctly classifying the input material before determining the dutiability of re-packed products. The decision emphasized the specific legal provisions applicable to different product categories and the necessity for a thorough analysis of technical characteristics for accurate classification.