2016 (10) TMI 612 - AT - Central Excise

Manufacture - repacking of oil from bulk packs to smaller packs - Whether the repacking of RBB Palmolien Oil received in tanker in bulk and repacking them into smaller packs will amount to manufacture and liable to duty or otherwise? - Held that - The issue is no more res integra. The Tribunal in a similar set of facts, in the case of CCE Pune II v. Anwar Oils 2015 (12) TMI 1348 - CESTAT MUMBAI held the decision in favour of the assessee stating that the activity of packing refined edible oil received in tankers into small containers cannot be treated as manufacturing activity in terms of Note 4 of Chapter 15 of Central Excise Tariff Act, 1985. Manufacture not taking place - appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether repacking of RBB Palmolien Oil received in tanker in bulk and repacking them into smaller packs amounts to manufacture and duty liability needs to be discharged.

Analysis:
The appeal involved a consideration of whether the repacking of RBB Palmolien Oil from tanker in bulk to smaller packs constitutes manufacture and attracts duty liability. Both lower authorities held in favor of duty liability. However, the Tribunal referred to a similar case, CCE Pune II v. Anwar Oils, where it was held that such repacking does not amount to manufacture. The Tribunal emphasized that the product being repacked, refined edible oil, was not a bulk pack and, therefore, repacking into smaller containers did not constitute manufacturing activity.

Furthermore, the Tribunal discussed Chapter Note 4 of Chapter 15, which deems repacking/re-labeling as manufacture. The Tribunal referred to a Supreme Court judgment in Amritlal Chemaux, which clarified that the process of repacking and labeling, as described in Chapter Note 11 of Chapter 29, only amounts to manufacture if both repacking from bulk to retail packs and labeling or re-labeling of containers are undertaken. The Tribunal applied this principle to the case at hand and found that the conditions for considering the activity as manufacture were not met for the products in question.

Consequently, the Tribunal dismissed the appeal, stating that the repacking of the products did not fulfill the requirements to be considered as manufacturing activity under the relevant Chapter Notes. The judgment highlighted the distinction between repacking for industrial consumers and repacking into retail packs for mass consumption, emphasizing that the latter would trigger duty liability. The decision was made in favor of the appellant, setting aside the duty liability imposed by the lower authorities.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the duty liability imposed on the repacking of RBB Palmolien Oil into smaller packs. The judgment clarified the legal interpretation of Chapter Notes related to repacking and labeling activities, emphasizing the specific conditions that must be met for such activities to be considered as manufacturing under the Central Excise Tariff Act.