2015 (10) TMI 834 - AT - Central Excise

Packing activity - first time packing - Manufacturing activity or not - it was contended that receipt of the chemicals in tanker lorries cannot be considered as a bulk packing. - Held that - chemicals brought in tankers can never be termed as brought in bulk packs. So the assessee was not repacking the goods from bulk packs to retail packs. Accordingly the activity undertaken by the assessee in filling the smaller container from bulk container namely tankers can never fall within the fiction of manufacture Present case is squarely covered by the clarification of the Board vide Circular 910/30/2009-CX dated 16.12.2009 and this Tribunal has also taken similar view in large number of cases starting from Ammonia Supply Co. (2001 (5) TMI 81 - CEGAT, COURT NO. III, NEW DELHI) and in view of the consistent stand of the Tribunal - Decided in favour of assessee.

Summary

Issues: Classification of activity as manufacture under Chapter 28/29 based on repacking and labelling of chemicals received in tanker lorries into carboys/drums. Interpretation of Board circulars and case laws regarding repacking from bulk packs to retail packs.

Analysis:
1. The case involves the classification of the activity carried out by the appellant, which includes receiving chemicals in tanker lorries, unloading them into carboys/drums, labelling the containers, and selling them to customers. The Revenue contends that this activity amounts to manufacture under Chapter 28/29 due to relevant chapter notes.

2. The appellant argues that their activity does not constitute repacking from bulk to retail packs but is merely the first-time packing. They rely on Board Circular no. 910/30/2009-CX, post-amendment of relevant chapter notes, to support their position that unloading goods from tanker lorries into drums/carboys does not qualify as repacking and, therefore, does not amount to manufacture.

3. The Revenue, however, refers to Board Circular no. 342/58/97-CX, asserting that packing from bulk to retail, along with labelling, constitutes manufacture. They highlight that the appellant's activity includes labelling and is done in the absence of customers, which, according to the circular, qualifies as manufacture. Case laws such as Abdos Trading Co. and Dewas Fabrics Ltd. are cited to support this argument.

4. The Tribunal examines the conflicting interpretations and clarifications provided by the Board through circulars. They refer to Circular 910/30/2009-CX, emphasizing that the activity of transferring goods from tankers into smaller drums does not fall under the definition of repacking from bulk packs to retail packs. Citing the precedent set in the case of Ammonia Supply Co., the Tribunal concludes that the appellant's activity does not amount to manufacture as per Chapter note 10.

5. Consequently, the Tribunal aligns with the Board's clarification and the consistent stance taken in previous cases, including Ammonia Supply Co., to rule in favor of the appellant. The appeals are allowed based on the understanding that the activity of transferring chemicals from tankers into smaller containers does not meet the criteria for classification as manufacture under Chapter 28/29.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved, the arguments presented by both parties, the relevant legal interpretations, and the Tribunal's final decision based on the established legal principles and precedents.