2019 (12) TMI 735 - AT - Customs

Benefit of exemption - re-import of goods - Customs duty goods which are reimported within three years of their export for repair or reconditioning - benefit of N/N. 52/2003-Cus dated 31.03.2003 - 100% EOU - the goods in the present case were reimported for the purpose of repacking - whether the activity of repacking of pharmaceuticals can be called as repair or reconditioning? HELD THAT - Reconditioning also is more or less synonymous with the word repair - Pharmaceutical products are covered at Sl.No. 31 of the Third Schedule to the Central Excise Tariff Act. Since the product in question is a pharmaceutical product we also looked into the chapter notes to Chapter 30 of Central Excise Tariff under which these products fall. Chapter Note 6 clarifies that while dealing the pharmaceutical products re-labelling or re-labelling of the containers intended for consumers or repacking sought from bulk packs to retail boxes or for adopting of any other treatment to render the product marketable to the consumer shall amount to manufacture . Section 2(f) of the Central Excise Act 1944 as well as Chapter Note 6 to Chapter 30 of Central Excise Tariff make it abundantly clear that repacking of pharmaceuticals amounts to manufacture. Any activity which gets squarely covered under the definition of manufacture cannot be called as repair or reconditioning of the products. Sl. No. 14 of Annexure-I to the impugned notification exempts the products/goods imported within 3 years from the date of exportation only under the condition that the goods are reimported either for repair or for reconditioning. Hence when the goods are reimported for an activity which amounts to manufacture such re-importation will not fall under the impugned notification. Therefore the exemption benefit of the notification cannot be extended to the appellant. The appellant also relied on CBEC s circular No. 127/95 dated 14.12.1995 - there is nothing as such in this circular which extends the benefit of the exemption notification No. 52/2003 for re-importation of goods when those are re-imported within 3 years of exportation for an activity which amounts to manufacture. The appellant is not entitled to the benefit of exemption notification No.52/2003-Cus. Dated 31.03.2003 - Appeal dismissed - decided against appellant.

Summary

Issues:
- Denial of benefit of Notification No. 52/2003-Cus for reimported goods meant for repacking.
- Interpretation of the terms "repair" and "reconditioning" in the context of customs duty exemption.
- Whether repacking of pharmaceuticals qualifies as repair or reconditioning.
- Analysis of relevant legal provisions and case laws to determine the eligibility for exemption.
- Consideration of CBEC circular and strict construction of exemption notifications.

Analysis:
1. The judgment deals with the denial of the benefit of Notification No. 52/2003-Cus to an appellant who reimported goods for repacking within three years of exportation. The first appellate authority rejected the appellant's claim based on the purpose of reimportation, leading to a dispute over the interpretation of the exemption notification.

2. The appellant, a 100% EOU in the pharmaceutical sector, imported goods for repacking under the said notification. The department contended that repacking does not qualify as repair or reconditioning as specified in the notification, thus disallowing the exemption. The initial demand for customs duty was confirmed by the Order-in-Original, which was challenged by the appellant in the appeal.

3. The central issue revolved around whether repacking pharmaceuticals constitutes repair or reconditioning as per the notification. The appellant argued that repacking aimed at restoring goods to a good condition, citing relevant case laws and emphasizing the intent behind the activity.

4. The Tribunal analyzed the definitions of "repair" and "reconditioning" from standard dictionaries to determine their applicability in the context of customs duty exemptions. It also referred to the Central Excise Act and Chapter Notes to establish that repacking of pharmaceuticals falls under the definition of "manufacture," precluding it from being classified as repair or reconditioning.

5. The judgment highlighted that activities falling under the definition of "manufacture" cannot be considered as repair or reconditioning for the purpose of the exemption notification. It emphasized the strict construction of exemption notifications and cited case laws supporting the Revenue's position regarding the emergence of new goods in repair activities.

6. Additionally, the Tribunal examined a CBEC circular cited by the appellant but found no basis for extending the exemption to activities amounting to manufacture. It underscored the principle of construing exemption notifications strictly in favor of the Revenue, as established by previous court rulings.

7. Ultimately, the Tribunal upheld the impugned order, rejecting the appellant's claim for exemption under Notification No. 52/2003-Cus. The decision was based on the finding that repacking of pharmaceuticals did not qualify as repair or reconditioning under the notification, aligning with the Revenue's interpretation and legal principles governing customs duty exemptions.