2012 (4) TMI 136 - AT - Central Excise

Packing of assorted medicament from retail packs taken from different cartons into a single carton Revenue contending it to be manufacture Held that - In the present case, the duty paid goods received by the respondent from the another unit of the same company (Nagarjunasagar unit) were already marketable and nothing further was done by the respondent. Packing of assorted medicament into a single carton by taking small quantities of retail packs of various medicines from different cartons and writing the names and quantities of such medicament over the carton were done as per the requirements of the customer. Aforesaid does not amount to manufacture, as well as question of repacking from bulk pack to retail packs also does not arise Decided in favor of assessee.

Summary

Issues:
- Appeal against order confirming demand of duty
- Activity of repacking medicaments
- Interpretation of Chapter Note 5 of the Central Excise Tariff Act
- Applicability of manufacturing process
- Assessment of duty liability

Analysis:
1. The appeal was filed against an order confirming a demand of duty against the assessee for clearing medicaments to various agencies. The original authority had imposed duty and penalties, which were later set aside by the learned Commissioner (Appeals) after finding that the activity did not amount to manufacturing. The assessee received duty-paid goods from another unit for storage and marketing, repacked assorted medicaments into one carton, and supplied them to consumers as required. The department argued that this repacking constituted manufacturing under Chapter Note 5 of the Central Excise Tariff Act.

2. The learned Deputy Commissioner contended that the repacking was essential for marketing and should be considered manufacturing, citing the Supreme Court's judgment in Commissioner of Central Excise, Mumbai Vs. Johnson & Johnson Ltd. The respondent's counsel argued that the activity did not meet the criteria for repacking as specified in Chapter Note 5, as there was no repacking from bulk to retail packs or relabelling. The respondent simply picked medicaments from different cartons and supplied them in a single carton as per customer requirements.

3. The Tribunal carefully analyzed Chapter Note 5, which defines repacking as converting from bulk to retail packs. Since the respondent did not engage in such repacking, but merely packed assorted medicaments into a single carton for customer convenience without relabelling, the activity did not constitute manufacturing. The Tribunal agreed with the Commissioner (Appeals) that the respondent had not manufactured anything and therefore had no duty liability in this case. The appeal of the department was dismissed based on this interpretation of the law.

This detailed analysis of the legal judgment highlights the key issues, arguments presented by both parties, and the Tribunal's decision based on the interpretation of relevant legal provisions.