2018 (6) TMI 181 - AT - Central Excise

Manufacture or not - CENVAT credit of the counterveiling duty paid on imported Hydrogen Peroxide - imported Hydrogen Peroxide in 30 Kgs and 65Kgs individual cans - demand of CENVAT credit on the ground that there is no manufacture - It is the case of the appellant that they are undertaking the activity of addition of stabilizers, stirring the Hydrogen Peroxide and relabeling the said containers as their own product, is an activity recognised as a manufacture - Held that - The activity would amount to manufacture if labelling or relabelling of the containers are undertaken after repacking from bulk packs - In the case in hand it is undisputed that Hydrogen Peroxide imported in 65 Kgs and 30 Kg containers were relabelled after adding stabilizers and stirring the Hydrogen Peroxide as their own product. The activity of repacking from bulk pack to retail packs has not taken place in the case in hand, hence chapter note 9 of Chapter 28 is not applicable. As already recorded, in the case in hand, appellant has paid less duty than the CENVAT credit availed on Hydrogen Peroxide cleared as manufactured product - demand upheld. Appeal dismissed - decided against appellant.

Summary

Issues:
- Whether the activity of repacking and relabeling imported Hydrogen Peroxide amounts to manufacture under Chapter Note 9 of Chapter 28.
- Whether the demands raised for reversal of CENVAT credit on imported Hydrogen Peroxide are sustainable under Rule 16 of Central Excise Rules, 2002.

Analysis:
1. The appeals were against Orders-in-Appeal confirming demands for reversal of CENVAT credit on imported Hydrogen Peroxide. The appellant imported Hydrogen Peroxide in various containers, added stabilizers, stirred it, and relabeled the containers before supplying them. The appellant argued that this activity amounted to manufacturing as per Chapter Note 9 of Chapter 28, and Rule 16 could not be invoked for demanding reversal of credit.

2. The appellant contended that the relabeling and repacking after adding stabilizers and stirring should be considered manufacturing, as it met the technical specifications of the purchasers. The lower authorities did not consider this aspect properly. The appellant cited precedents and submitted evidence not considered by the lower authorities, challenging the demands raised under Rule 16.

3. The Departmental Representative argued that the relabeling and repacking of Hydrogen Peroxide did not amount to manufacturing under Chapter Note 9 of Chapter 28 during the relevant period. The demands were based on imported Hydrogen Peroxide in 65 Kg and 30 Kg containers, which were relabeled and cleared as manufactured products.

4. The Tribunal analyzed Chapter Note 9 of Chapter 28, which states that relabeling and repacking to render a product marketable amount to manufacturing. However, in this case, the Hydrogen Peroxide was only relabeled after adding stabilizers and stirring without repacking from bulk packs to retail packs. Therefore, Chapter Note 9 did not apply, and the imported Hydrogen Peroxide was considered as removal of inputs. The Tribunal upheld the first appellate authority's decision based on the Apex Court's ruling in Johnson & Johnson Limited.

5. The Tribunal rejected the appellant's arguments, stating that the demands were correctly confirmed as the duty paid was less than the CENVAT credit availed on the Hydrogen Peroxide cleared as a manufactured product. The Tribunal found no reason to interfere with the lower authorities' orders and upheld the impugned orders, thereby rejecting the appeals.

6. In conclusion, the Tribunal upheld the Orders-in-Appeal, confirming the demands for reversal of CENVAT credit on imported Hydrogen Peroxide, and rejected the appeals.