2012 (10) TMI 164 - AT - Central Excise

Deemed manufacture - chemicals - contention of Revenue is that from the financial year 1997-98 Chapter note 11 was introduced to Chapter 29 of the Tariff whereby labelling or re-labelling of containers and re-packing 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 Held that - Appellants are clearing chemicals in the same packing without disturbing the original packing - same does not amount to manufacture as per the Chapter Note 11 of Chapter 29 of the Tariff - allegation of suppression with intent to evade payment of duty is not sustainable - appeal is dismissed.

Summary

Issues:
Appeal against dropping of duty demand due to alleged suppression of intent to evade payment of duty.

Analysis:
The appeal was filed by Revenue against an order where the demand of duty was dropped by the Commissioner (Appeals) on the grounds of no suppression with intent to evade payment of duty by the respondent. The case involved repacking chemicals into small packing and affixing monograms on unit containers, which was considered as manufacturing activity as per Chapter Note 11 to Chapter 29 of the Central Excise Tariff.

The Revenue contended that Chapter Note 11 introduced in the financial year 1997-98 to Chapter 29 of the Tariff specified that certain activities like repacking from bulk packs to retail packs amount to manufacture. They argued that the respondents were repacking chemicals without informing Revenue, making them liable to pay duty. However, the respondent countered by stating that they were not repacking in the manner alleged by Revenue. They clarified that they received chemicals in smaller drums and cleared them without altering the original packing, which did not constitute manufacturing. They also cited Supreme Court judgments to support their position that non-declaration alone does not imply intent to evade duty.

The Tribunal found that the activity of repacking chemicals could be considered manufacturing only after the introduction of Chapter Note 11 in 1997-98. The evidence presented showed that goods were cleared without altering the original packing, and in case of small scale exemption, the duty demand was minimal. Relying on Supreme Court decisions, the Tribunal concluded that there was no suppression with intent to evade duty by the respondent. Therefore, the appeal was dismissed, upholding the Commissioner (Appeals) order dropping the duty demand.