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TMI Blog2013 (9) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... carrying out the activity of repacking of soda ash, which amounts to manufacture of excisable goods falling under Chapter Heading 2836.10 of the First Schedule to the Central Excise Tariff Act, 1985 and clearing the same without payment of Central Excise duty, the officers from DGCEI carried out simultaneous searches at various premises and seized documents/records. Consequently, a show-cause-cum demand notice bearing DGCEI No. 289/EZU/KOL/2001/663, dated 9-4-2002, was issued to the appellant. In the said notice, it was alleged that from the registered trading unit of the Appellant No. 1 located at G.T. Road, Rishra, they had been operating as first stage dealer of M/s. Tata Chemicals Ltd. The said Unit of Appellant No. 1 had procured soda ash and sodium bicarbonate in bulk packs of 50 kgs. and 75 kgs. bags from M/s. Tata Chemicals Ltd. and selling the same from the said registered premises under the cover of modvatable/cenvatable invoices and also under non-modvatable challans/bills raised to their customer. It is further alleged that the said Rishra Unit of the Appellant No. 1 had been sending soda ash in bulk packs of 50/75 kgs. under the cover of challans to their other premise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cum-duty price, and after observing the principles of natural justice, he will decide the matter afresh. The appeals are thus allowed by way of remand. Stay petitions also get disposed of." 4. Pursuant to the said remand order, the ld. Commissioner initiated the de novo proceeding and after re-determination of the duty as per the direction of this Tribunal, confirmed the duty of Rs. 58,22,618/- and imposed an equivalent penalty on the Appellant No. 1 and Rs. 5.00 lakhs on the Managing Director of the Company, i.e. Appellant No. 2. Aggrieved by the said order, they have filed the present appeals. 5. The ld. Consultant, Shri B.N. Chattopadhyay, appearing for the appellants, has submitted that the Appellant No. 1 were selling soda ash in bags of 50/75 kgs. received from M/s. Tata Chemicals Ltd. since 1983. He has submitted that around 95% of the said soda ash were sold in the same bags of 50/75 kgs., whereas 5% of the products, were re-packed into smaller packings of 500 gm/ 1 kg at their Packet Department located in their Head Office at Hardutrai Chamaria Road, Howrah. After introduction of Modvat Credit Scheme in 1986, the appellants were passing on the Modvat credit to the Indus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clearly indicates the quantity which are not measured or packed in a standard pack, would only be considered as in "bulk". The contention is that the goods which they have received, were not bulk, but it is measured, weighed i.e. 50/75 kgs. contained in each package, hence it cannot be considered as in "bulk". Therefore, the condition of Chapter Note 10 of Chapter 28 of CETA, 1985 cannot be made applicable to the activity carried out by them i.e. transferring or repacking soda ash received in standard packs of 50/75 kgs. into smaller packs of 500 gms/1 kg. 8. It is his submission that it has been made clear by various Judicial pronouncements that if the packages are of 'standard packages' and in marketable condition then the activity/process of re-packing from such 'standard packages' cannot be termed as deemed 'manufacture' as per Chapter Note 10 of Chapter 28 of CETA, 1985. In support, he has referred to the following decisions viz. (i) Johnson & Johnson Ltd. v. Commr. of Central Excise, Mumbai-IV = 2003 (156) E.L.T. 134 (Tri.-Mumbai), (ii) Johnson & Johnson Ltd. v. Commr. of Central Excise, Mumbai = 2005 (188) E.L.T. 467 (S.C.), (iii) Lupin Laboratories Ltd. v. Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bulk pack of soda ash contained in bags of 50/75 kgs. and transfer of the same into smaller packs of 500 gms/1 kg. The contention is that the smaller packs also bear the brand name 'Diwali' belonging to M/s. Tata Chemicals Ltd. He has further submitted that the meaning of 'bulk' sought to be read by the appellant, in interpreting the expression 'bulk pack' of Chapter Note 10, is incorrect, inasmuch as it cannot be read in isolation, but should be read as a whole i.e. 'bulk pack'. The meaning that can be assigned to 'bulk pack' while interpreting the said Chapter Note, would be clear, when the same is read in the context and in contrast to the meaning of the expression 'retail pack'. The ld. A.R. further submitted that the argument advanced by the appellants that the Chapter Note 10 refers to 'bulk pack' and not 'standard pack', hence, the said Chapter Note is not applicable to their case, is devoid of merit as in a given circumstances, like the present one, all standard packs are invariably bulk packs. He has submitted that there is no difference between the terminology 'bulk pack' and 'standard pack' as far as Chapter Note 10 of Chapter 28 is concerned. 11. The ld. A.R. furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 2(f) of the Central Excise Act, 1944; and (ii) whether the demand is barred by limitation. The relevant Chapter Note 10 of Chapter 28 reads as follows : "In relation to products of this chapter, labelling or re-labelling of containers and repacking from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer, shall amount to "Manufacture". 15. Before analyzing the scope and applicability of Chapter Note 10 of Chapter 28, it is essential to visit the undisputed facts. The Appellant No. 1 are having two premises : one at 100 G.T. Road, Rishra, Hooghly and the second one at 8/1 Hardutrai Chamaria Road, Howrah. They have been dealing with Soda Ash as authorized dealer of M/s. Tata Chemicals Ltd. since 1983. The premises at 100 G.T. Road, Rishra, Hooghly, was registered with the Central Excise Department as a "Dealer" whereas the other premises at Hardutrai Chamaria Road, Howrah, was not registered. The registered premises at Rishra had received soda ash manufactured by M/s. Tata Chemicals Ltd. contained in bags of 75/50 kgs. and around 95% of the received quantity were sold to Industrial consumers against dealer's invoices ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ack", could be clear when it is read in the context and in contrast to the meaning of "retail pack". 18. We agree with the contention of the ld. A.R. that the expression "bulk pack" cannot be read by dissecting the expression into "bulk" and "pack". It is to be read as a whole and in contrast to the meaning of "retail pack", as the activity of converting/transferring the contents of a "bulk pack" into "retail packs", is the decisive factor, in determining whether the activity falls within the scope of Chapter Note 10 of Chapter 28 of CETA, 1985. Once, it is a "bulk pack", then the quantity ought to be definite and measured according to the packing in which it is placed. In case of solid, it is packed in standard size of packings and in case of liquid and gas, it takes shape of the containers. No specified quantity could be assigned or earmarked to understand the meaning of "bulk pack" and "retail pack". The said connotation are to be ascertained by delving into the facts and circumstances of each case. For example, in case of soda ash quantity of 75/50 kgs. in bags, may be considered as "bulk packs" in contrast to the quantity of 500 gms/1 kg. But, in case of spices, for example, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MRP, name and address of manufacturer, manufacturing date etc. The issue involved for determination was whether placing of these retail packs of 20 packets of 10 Tablets each in the cardboard boxes, would fall under the scope of Chapter Note 5 of Chapter 30 of CETA, 1985. This Tribunal while distinguishing between wholesale pack & retail pack observed at para 16 as : "16. It is significant to note that the notes do not refer to repacking from wholesale pack to retail pack, but refer to repacking from bulk pack to retail pack. There is, clearly, a distinction between a bulk pack and the wholesale pack. To our minds, the expressions "wholesale pack" and "retail pack" denote the kind of packing to which goods are subjected to render them suitable for sale at a particular commercial level. Wholesale packing would consist of a number of retail packs put together for ease of transportation and distribution. The wholesale packing generally denotes the quantities in which goods are sent for a particular industry are sold to wholesalers, being made up of a number of packs and the quantity in which goods are generally sold in retail. Thus, a wholesale pack of cigarettes may consist of a pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to pay duty twice on any one product first when it comes off the production line and the second when it is packed. This, surely, is not the intention of the law makers. The intention which appears to us is to ensure that the value addition, which is sometimes substantiated, which results as a consequence of packing the product into a retail pack is levied to duty. Each of the processes referred to in these notes, conversion of powder into tablets; labelling or relabelling of containers intended for a consumer; repacking from bulk pack to retail pack obviously results in or facilitates sale of the product to the retail consumer. The adoption of any other treatment referred to in each of these notes would be such treatment that would render the product marketable to a consumer. It is therefore not possible for us to uphold the finding of the Commissioner (Appeals) that a new product has emerged which was not entitled to benefit of either of the notification." 23. We find that the facts are similar to that of Johnson & Johnson's case and hence its ratio is also not relevant to the facts of the present case. 24. In Lakme Lever Ltd.'s case (cited supra), the appellants were manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and sold the same in the open market. Thus the question arose was whether the activity carried out by the appellants would attract Chapter Note 10 of Chapter 28 of the CETA, 1985. Their Lordship was observed as under : "13. In the instant case, Helium gas was having different marketability, which it did not possess earlier and hence the gas sold by the appellant was a distinct commercial commodity in the trade, rendering it liable to duty under Chapter Note 10 of Chapter 28 of the Act. If the product/commodity, after some process is undertaken or treatment is given, assumes a distinct marketability, different than its original marketability, then it can be said that such process undertaken or treatment given to confer such distinct marketability would amount to "manufacture" in terms of Chapter note 10 to Chapter 28 of the Act. .......................... 18. It is also pertinent to elucidate on the phrase "marketable to the consumer". The word "consumer" in this clause refers to the person who purchases the product for his consumption, as distinct from a purchaser who trades in it. The marketability of the product to "the purchaser trading in it" is distinguishable from the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. The appellants claim is that in the registered premises, they have maintained prescribed statutory Registers/documents, namely, RG-23D Register, wherein the quantity transferred to their other unit at Chamaria were duly mentioned and accounted. The transfer of the said bags of 50/75 kgs of soda ash were carried out against delivery challan mentioning as : "Self Packet Department". The records of Rishra unit had been periodically submitted to the department and the same were also audited by the department. Hence, all the facts were within the knowledge of the Department and nothing had been suppressed or misdeclared. We are unable to accept the said contention of the Appellant. We have perused the sample copies of delivery challans and the extracts of RG-23D Register enclosed with the Appeal; in the delivery challans, nowhere it is mentioned that the quantity of soda ash were transferred to their premises at Chamaria were for carrying out the activity of converting/transferring the contents of 'bulk pack' into smaller packs of soda ash of 500 gms/1 kg. Also, we find that the Director of the appellants had initially accepted their mistake and liability and agreed to discharge of d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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