2015 (11) TMI 660 - AT - Central Excise

Manufacture - labelling and packing from bulk container to carboys - sale of goods from the warehouse / dealers at higher price - Demand of differential duty - Held that - Board vide Circular dated 16/12/2009 has examined this very issue and after examining both - before amendment on 01/03/2008 the relevant note, has clarified that the tankers cannot be termed as bulk packs and therefore the activity of transferring the goods from tankers into smaller drums cannot be said to be covered by the said chapter note 10. - In view of the circular of the Board, which is in line with the decision taken by this Tribunal in various case laws cited by the learned counsel, we allow the appeals. - Decided in favour of assessee.

Summary

Issues involved: Classification of goods under Chapter 38, whether repacking from bulk containers to carboys amounts to manufacture, applicability of excise duty in Mumbai, interpretation of Chapter Note 5 to Chapter 38, invocation of extended period of limitation, availability of credit for duty paid on inputs.

Classification of Goods under Chapter 38: The case involved the classification of goods manufactured by the appellants under Chapter 38. The Revenue contended that repacking goods from bulk containers to carboys in Mumbai amounts to manufacture, thus requiring duty payment in Mumbai. The appellants argued that Circular No. 910/30/2009-CX clarified that such activity does not constitute manufacture. They cited relevant case laws to support their contention. The Revenue, however, relied on Chapter Note 5 to Chapter 38, stating that such activities render the product marketable and amount to manufacture. They presented case laws to support their argument.

Interpretation of Chapter Note 5 to Chapter 38: The dispute centered around the interpretation of Chapter Note 5 to Chapter 38, which addresses the labelling, repacking, or other treatments that render a product marketable. The Revenue argued that the activities carried out by the appellants in Mumbai fall under this note, making them liable for duty payment. They emphasized the marketability of the goods post-repacking. The appellants, on the other hand, relied on Circulars and case laws to assert that such activities do not amount to manufacture as per the provisions of Chapter Note 5.

Invocation of Extended Period of Limitation: The appellants raised a strong argument on the limitation period, contending that as registered dealers, their activities were known to the Revenue, and the extended period of limitation should not apply. They also claimed entitlement to credit for duty paid on clearance if duty liability in Mumbai matched the duty already paid. The appellants sought the benefit of credit if the extended period was deemed applicable. They emphasized that effectively, no extra duty needed to be paid.

Conclusion: The Tribunal considered the Circular issued by the Board in 2009, which aligned with the Tribunal's decisions in various cited cases. The Tribunal found that the activities of the appellants did not amount to manufacture as per Chapter Note 5 to Chapter 38. The Tribunal distinguished the facts of the cited case laws by the Revenue and allowed the appeals in favor of the appellants. The judgment was pronounced on 16/07/2015, upholding the appellants' position and emphasizing the non-applicability of duty payment in Mumbai for the repacked goods.