2000 (10) TMI 96 - AT - Central Excise

Summary

Issues involved: Whether repacking of goods amounts to manufacture u/s chapter 33 of the tariff? Whether affixing labels on goods renders them marketable?

Repacking as manufacture: The appellant, a manufacturer of cosmetics, repacked goods for the Canteen Stores Department (CSD) in a manner different from regular market packaging. The Commissioner alleged this repacking amounted to manufacture u/s chapter 33 of the tariff, which includes activities like repacking to render products marketable. However, the Tribunal noted that the repacking did not add marketability as the goods were already marketed to other customers in their original packaging. The process only involved transferring goods to different retail packs, not enhancing marketability. The Tribunal emphasized that for a treatment to be considered manufacture, it must confer marketability that the product lacked before.

Value addition and labelling: The Commissioner argued that the value addition resulting from repacking was taxable, but the Tribunal disagreed. The appellant sold goods to CSD at lower prices due to being a large customer and exempt from sales tax, resulting in potential value reduction. The demand based on value addition was deemed unsustainable. Additionally, the Commissioner claimed that affixing labels on goods for CSD with celebratory messages constituted a treatment rendering goods marketable. However, the Tribunal found that this labelling did not enhance marketability but was a promotional method for CSD, not affecting the goods' inherent marketability.

Conclusion: The Tribunal allowed the appeal, setting aside the order confirming repacking as manufacture and labelling as a treatment rendering goods marketable. The activities undertaken by the appellant were deemed not to amount to manufacture u/s chapter 33 of the tariff, as they did not enhance marketability and did not involve significant value addition.