2000 (9) TMI 608 - AT - Central Excise

Summary

Issues:
Interpretation of Chapter Note 10 of Chapter 28 regarding the manufacture of 'Nitrous Oxide Gas' through re-packing activities.

Analysis:
The appeal centered around determining whether the appellants, who transferred 'Nitrous Oxide Gas' from large cylinders to small ones bought by their customers, could be considered engaged in the manufacture of 'Nitrous Oxide Gas' under Chapter Note 10 of Chapter 28. The Assistant Commissioner initially ruled in favor of the appellants, stating that their activities did not amount to re-packing as per the Chapter Note. However, the Commissioner (Appeals) overturned this decision and imposed a duty demand, leading to the present appeal.

During the adjudication, the Assistant Commissioner considered various factors, such as the absence of pre-packing, the presence of purchasers during packing, lack of predetermined quantities, and the absence of required product information on small cylinders. Based on these factors, the Assistant Commissioner concluded that the appellants' activities did not constitute re-packing under Chapter Note 10. The Assistant Commissioner emphasized that the gas was delivered to customers in the same condition as received, and hence, no additional excise duty was warranted on the refilled small cylinders.

Moreover, it was highlighted that customers owned the cylinders and brought them for refilling, indicating a lack of manufacturing activity. The absence of evidence showing regular re-packing in predetermined quantities further supported the argument that the appellants' actions did not qualify as manufacturing under Chapter Note 10. The decision to set aside the Commissioner (Appeals)' order and grant relief to the appellants was based on the finding that the appellants' activities did not meet the criteria for manufacturing under Chapter Note 10 of Chapter 28. The judgment also considered CBEC Circular No. 342, dated 8-10-1997, in reaching this conclusion.