2002 (9) TMI 200 - AT - Central Excise

Summary

Issues:
Interpretation of notes in Chapter 34, 35, and 38 of the Tariff regarding labelling and manufacture.

Analysis:
The appeal before the Appellate Tribunal CEGAT, Mumbai revolves around the interpretation of Note 6 to Chapter 34, Note 3 to Chapter 35, and Note 5 to Chapter 38 of the Tariff, all of which are identically worded. The notes state that activities such as labelling or relabelling of containers and repacking from bulk packs to retail packs amount to "manufacture." The Commissioner held that the activities undertaken by the appellant, a trader in textile chemicals, constitute manufacture based on these notes and demanded duty and imposed penalties.

The appellant's activities involved procuring orders from customers, placing orders with manufacturers, assigning serial numbers to products, affixing their name on containers, and mentioning trade names in invoices. The main question was whether painting the consignor and consignee names on drums constitutes activities specified in the notes for labelling and manufacture.

The appellant argued that merely printing names on containers does not provide information about the product's nature or technical characteristics, and the marketability of the product was not affected by these names. The departmental representative contended that identifying goods by consignor's name amounts to labelling. However, the Tribunal found that putting names and addresses on containers does not meet the criteria for labelling as it is commonly understood.

The Tribunal emphasized that labelling should provide information about the product's nature, contents, or price to be considered as such. They noted that the intention behind the notes is to render liable to duty processes that enhance marketability to consumers. The Tribunal clarified that labelling or other treatments specified in the notes need not necessarily make the product marketable.

The Tribunal also discussed relevant case laws cited by the departmental representative, highlighting differences in the application of labelling in various contexts. Ultimately, the Tribunal concluded that the appellant's activities did not amount to labelling or manufacture as per the notes in question.

In a separate judgment by another Member, it was emphasized that all aspects of manufacture, including repacking, should be clearly mentioned in the show cause notice for duty imposition. Since the notice did not refer to repacking, the impugned order was deemed incorrect in law, leading to agreement with the order proposed by the first Member.

In conclusion, the appeal was allowed, and the impugned order demanding duty and penalties was set aside based on the Tribunal's interpretation of the notes and relevant legal principles.