1998 (1) TMI 240 - AT - Central Excise

Summary

Issues:
Appeal against order of Collector of Customs and Central Excise, Pune dated 31-8-1989 regarding central excise duty liability on the process of repacking Organic Surface Active Agents (O.S.A.A.) into small containers.

Detailed Analysis:

1. Central Excise Duty Liability:
The appellants, engaged in repacking O.S.A.A. into small containers supplied by NOCIL, argued that duty was paid by the manufacturer on the goods in their original condition at the time of removal from the factory. They contended that repacking did not create a new excisable product and did not fall under the assessable value for duty calculation.

2. Manufacturing Process:
The Department alleged that the repacking process was shifted to the appellants' premises to circumvent a notification. The Department argued that the repacking process was incidental and ancillary to the manufacture of goods, requiring compliance with central excise formalities. The goods were confiscated, duty was demanded, and a fine was imposed.

3. Legal Precedents:
The learned counsel cited various case laws to support the contention that the repacking process did not amount to 'manufacture' and should not be subject to duty liability. The arguments emphasized that the appellants were not the owners of the materials being repacked, and the process did not create a new excisable product.

4. Tribunal's Observations:
The Tribunal noted that the appellants did not own the materials or the packing materials supplied by NOCIL. The Collector acknowledged that the goods were manufactured by another entity based on specifications provided by NOCIL. The Tribunal found that the process of repacking into small containers did not constitute 'manufacture' under the relevant tariff chapters.

5. Duty Liability Clarification:
The Tribunal highlighted that if duty was already paid by the manufacturer on the goods, demanding duty from another entity for the same goods was incorrect. The Tribunal also raised concerns about the lack of clarity in the Collector's order regarding re-valuation and duty liability determination.

6. Decision:
Considering the arguments and the lack of legal basis for duty imposition on the repacking process, the Tribunal set aside the Collector's order. The appeal was accepted, and any consequential relief due to the appellants was granted.

In conclusion, the Tribunal ruled in favor of the appellants, emphasizing that the repacking process did not amount to 'manufacture' and that duty liability should not fall on them. The decision highlighted the importance of legal clarity and adherence to established tariff provisions in determining excise duty liability.