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2003 (6) TMI 48 - AT - Central ExciseManufacture - Labelling - Repackaging - Whether the activities undertaken by each of these companies on the goods imported by them amounts to manufacture within the meaning of Note 3 to Chapter 18 Note 3 to Chapter 19 and Note 5 to Chapter 30 - HELD THAT - The notices that were issued to the appellants did not allege that the goods were repacked from bulk packs to retail packs but sought to apply the notes solely on the ground of labelling. In the orders too there is no attempt to say that the goods were repacked from bulk to retail. That alone should be sufficient to allow the appeals. However the Departmental Representative raises this issue. The chocolates imported by Nestle India Ltd. were not repacked by their supplier. They were kept in large cartons referred to as shippers for the transportation. On their arrival in India they were removed from the shippers. There was clearly no packing by their supplier from retail to bulk; equally clearly it follows that there could not have been repacking from bulk to retail by this appellant. The wholesale packing generally denotes the quantities in which goods are sent for a particular industry are sold to wholesalers being made up of a number of packs and the quantity in which goods are generally sold in retail. Thus a wholesale pack of cigarettes may consist of a pack containing say 10 packs of 20 cigarettes each the retail pack means a pack of cigarettes containing 20. A bulk pack on the other hand would denote goods kept in bulk not for purposes of sale at a particular commercial level but to be utilized either for repacking into retail packs or for sale directly. Conversion from wholesale pack to retail pack would not involve repacking. All that is required to be done is to take the retail pack out of the wholesale pack in which it has been put. Conversion from bulk pack to retail pack would however require such repacking. The quantities of the commodity which are in the bulk pack would not be in any kind of packing suitable for sale at any commercial level and thus would have to be either repacked before sale or sold without any packing. This appellant received goods which were in retail packing and continued to retain them in such retail packing. Clearly keeping the cartons containing Eprex injections in a shipper for the purpose of transporting them would not be converting retail packing into bulk packing. Therefore removing the individual boxes from the shippers would not also amount to packing from bulk to retail. We also do not find it possible to consider that placing the injectables in a thermocol box for transport to the premises of the chemists dealers or individuals who buy these goods amounts to repacking. As for Topomac it too comes in boxes of 25 tablets each being put in shippers for convenience of transport. That would therefore not be bulk packing. The removal from the larger boxes to smaller boxes of the retail sale packs also would not amount to packing from bulk to retail packing. Thus repacking of Topomac tablets from drums containing say 1000 tablets each into packs or strips containing 20 tablets each and filling vials of Eprex taken from a large container in which they are kept would be covered by the terms of the note. The activity of removing the goods from the larger containers and put for packing would not (sic). Therefore there has been no manufacture. The word other in each of the notes clearly refers to a process other than those earlier specified in them. Such other treatment cannot therefore be one of the modes of treatment already specified but must be some other treatment that is not specified. The Departmental Representative has no other ground to question the ratio of Ammonia Supply Co. or its applicability to the facts before us. By applying that ratio it would have to be held that the labelling or relabelling undertaken by each of the appellants did not amount to manufacture. Duty could not have been demanded from it or penalty imposed on it or on its employees. Since we have found that the judgment in Ammonia Supply Co. is applicable to the facts before us we have not considered the other elaborate arguments which were raised by both the appellants including those on limitation and attempted to be rebutted by the Department summarized in the written submissions filed by both sides. The appeals are allowed and the impugned orders set aside.
Issues Involved:
1. Whether the activities undertaken by Nestle India Ltd. and Johnson & Johnson Ltd. on imported goods amount to manufacture within the meaning of Note 3 to Chapter 18, Note 3 to Chapter 19, and Note 5 to Chapter 30 of the Central Excise Tariff Act. Summary of Judgment: Issue 1: Definition of Manufacture as per Notes to Chapters 18, 19, and 30 - The common question in these appeals is whether the activities undertaken by Nestle India Ltd. and Johnson & Johnson Ltd. on imported goods amount to manufacture within the meaning of Note 3 to Chapter 18, Note 3 to Chapter 19, and Note 5 to Chapter 30 of the Central Excise Tariff Act. - Note 3 to Chapter 18 and Note 3 to Chapter 19 state: "In relation to products of this chapter, labelling or relabelling of containers intended for consumers, repacking from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer, shall amount to manufacture." - Note 5 to Chapter 30 reads similarly but includes "conversion of powder into tablets or capsules." Issue 2: Activities Undertaken by Nestle India Ltd. - Nestle India Ltd. imported chocolates and affixed stickers containing the name and address of the importer, maximum retail price, net weight, month and year of manufacture, and month of importation as required by the Standards of Weights & Measures (Packaged Commodity) Rules, 1977, and the Prevention of Food Adulteration Act, 1954. Issue 3: Activities Undertaken by Johnson & Johnson Ltd. - Johnson & Johnson Ltd. imported medicaments (Topomac and Eprex) and affixed stickers containing information such as maximum retail price, name of the supplier, quantity, manufacturing date, and other details as required by Rule 32 of the Drugs & Cosmetics Rules and Rule 33 of the Standards of Weights & Measures (Packaged Commodities) Rules, 1977. Issue 4: Arguments by Appellants - The appellants argued that the notes contain an artificial definition of manufacture and should be strictly construed. They contended that labelling by itself does not amount to manufacture and that the goods were already marketable without the labelling. Issue 5: Departmental Representative's Argument - The Departmental Representative argued that the goods were labelled as required by law, making them marketable. Therefore, the process of labelling rendered the goods marketable and amounted to manufacture. Issue 6: Interpretation of Labelling and Repacking - The Tribunal noted that the notes to the chapters are a deeming provision and must be strictly construed. Labelling or relabelling must be accompanied by repacking from bulk packs to retail packs or any other treatment to render the goods marketable. - The Tribunal found that the goods imported by Nestle India Ltd. and Johnson & Johnson Ltd. were already in retail packs and were not repacked from bulk to retail packs. Issue 7: Conclusion - The Tribunal concluded that the labelling or relabelling undertaken by the appellants did not amount to manufacture as per the notes to the chapters. - The appeals were allowed, and the impugned orders were set aside.
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