2017 (2) TMI 254 - AT - Central Excise

Manufacture - whether the activity of conversion of edible oil from tanker to retail pack and labeling amounts to manufacture and repacked refined edible oil is liable to duty? - Held that - the conversion of the product from tanker to retail pack is not conversion of bulk packs to retail packs because the tanker in which goods are received is not bulk pack, therefore, one limb of the Chapter Note that packing from bulk pack to retail pack does not satisfy. Though there is an activity of labeling but as per the Chapter Note 4 prevailing at the relevant time, the activity of repacking from bulk pack to retail pack and also labeling both should be carried out in order to hold manufacture under Note 4 to the Chapter 15. There is no activity of repacking from bulk packs to retail packs and only labeling alone is carried out, therefore, the activity does not amount to manufacture - appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the conversion of edible oil from tanker to retail pack and labeling amounts to manufacture and attracts duty liability.

Analysis:
The Department contended that the process of converting edible oil from a tanker to retail pack and labeling constitutes manufacture, making the repacked refined edible oil dutiable. The appellant's counsel argued that previous Tribunal decisions and case law supported their position that such repacking does not amount to manufacture. The appellant referenced judgments like CCE Vs. M/s Amritlal Chemaux Ltd. and others to bolster their case.

The Revenue, represented by the AC (AR), stood by the findings of the impugned order, maintaining that the conversion process indeed amounted to manufacture.

Upon careful consideration, the Tribunal examined Chapter Note 4 to Chapter 15 of the Central Excise Act, 1944, which states that labeling and repacking from bulk packs to retail packs amount to manufacture. However, the Tribunal noted that in the present case, the goods were not repacked from bulk packs to retail packs, as the tanker was not considered a bulk pack. While labeling was conducted, the Tribunal emphasized that both repacking and labeling were required to constitute manufacture under Chapter Note 4.

Ultimately, the Tribunal concurred with the appellant's arguments, supported by previous judgments, that the activity of packing edible oil from a tanker into retail packs and labeling did not meet the criteria for manufacture as per Chapter Note 4. Consequently, the impugned order was set aside, and the appeals were allowed.

The judgment was pronounced in court on 30.01.2017.