2009 (12) TMI 382 - AT - Central Excise

Cenvat Credit- The appellants received Carbon-di-oxide gas from M/s. Madras Fertilizers, through pipeline which is stored and compressed and subsequently filled in cylinders. Cylinders carry the buyers name PILLAY apart from the particulars of gross weight and net weight. Held that- it is only a procedural error for which credit cannot be denied. It is more so as it was not necessary to take credit immediately on receipt of inputs/payment of service tax and it can be taken at any time.

Summary

Issues: Interpretation of Chapter Note 10 to Chapter 28 for labelling and re-labelling of containers; Determination of 'manufacture' in the context of repacking from bulk packs to retail packs.

In the judgment by the Appellate Tribunal CESTAT, CHENNAI, the case involved the receipt of Carbon-di-oxide gas from a supplier, stored, compressed, and filled in cylinders for sale. The lower appellate authority referred to Chapter Note 10 to Chapter 28, emphasizing the requirement of labelling or re-labelling of containers and repacking to render the product marketable to determine if the process amounted to 'manufacture.' The authority relied on a previous Tribunal decision in the case of Ammonia Supply Company v. CCE, New Delhi, where it was held that a similar process did not constitute manufacture.

The Tribunal noted that the view taken in the aforementioned case was also upheld by the Hon'ble Supreme Court in the case of CCE, Mumbai v. BOC (I) Ltd. The Tribunal highlighted the specific wording in the Chapter Note during the relevant period, which required both labelling or re-labelling of containers and repacking to satisfy the 'manufacture' criteria. The Tribunal observed that the subsequent amendment replacing 'and' with 'or' was not applicable during the period in question (April 2002 to March 2004). Consequently, the Tribunal upheld the lower appellate authority's decision, stating that the process undertaken did not amount to manufacture based on the existing legal framework.

In conclusion, the Tribunal dismissed the department's appeal, affirming the decision of the lower appellate authority. The judgment provides clarity on the interpretation of Chapter Note 10 to Chapter 28 regarding labelling and re-labelling requirements for containers and the determination of 'manufacture' in the context of repacking from bulk packs to retail packs. The decision underscores the importance of legal provisions and precedents in assessing whether a particular process constitutes manufacturing under the law.