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TMI Blog2024 (10) TMI 1127X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, it is opined that the assertion made by the learned Commissioner (Appeals) for treating the process of refilling as amounting to manufacture is not duly supported by factual evidences or any supporting technical documents. The Circular No. 342/58/97-CX dated 08.10.1997 was issued by CBEC in the specific context of doubts raised in respect of receiving of liquid chemicals in bulk in containers and offloading the same into available empty vessel and consequent delivery of these materials in the very same condition to customers against orders. It had been specifically clarified that the question of whether an operation amounts to repacking or not, has to be decided on facts; and activities such as simply transferring the material from one container to another container may not be categorised under the scope of this description packing for deeming it as manufacture. The impugned order, insofar as it had categorised the activity undertaken by the appellants as amounting to manufacture, in the present case is not legally sustainable. It is found that on a similar set of facts, in the case of M/S 3M INDIA LTD., SHRI SAMEER AGARWAL, SHRI SUNIL BANTHIYA, SHRI D.K. SURESH, SHRI AMIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired to be released with high pressure to effectively put out fire. Therefore, the department had interpreted that such activity of filling of empty fire extinguisher cylinders with FM 200 Liquid amounts to manufacture , in terms of Chapter Note 9 to Chapter 38 of Central Excise Tariff Act, 1985 (CETA). However, since no Central Excise duty was paid by the appellants on such activity during the disputed period from 30.12.2006 to 30.12.2009, the department had initiated investigation into the alleged duty evasion by the appellants and upon completion of the investigation had issued Show Cause Notice (SCN) dated 07.12.2011, proposing for treating the process of refilling undertaken by the appellants as manufacture , in terms of Note 9 to Chapter 38 of CETA and for classifying such goods under Central Excise tariff item 3813 0000 and demanding central excise duty short levied for an amount of Rs.21,28,891/- under Section 11A(1) [now 11A(4)] of the Central Excise Act, 1944 along with interest; and proposing for confiscation of impugned goods, imposition of penalty under Section 11AC ibid. In adjudication of the SCN, the original authority vide Order-in-Original dated 31.03.2013 had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 200 gas. 2.5 He further stated that the entire activity carried on by the appellants is that the imported FM-200 gas is filled in the empty seamless cylinders with the help of a refilling machine; thereafter, these seamless cylinders are super pressurized by nitrogen gas; the said activity helps the FM-200 gas to come out with high pressure to put off the fire. After the above activity, the valve is locked in the cylinder to protect the gas from leakage. The appellants had not availed Cenvat credit on aforesaid imported goods as well as on locally purchased goods, as they were under the bona fide belief that the filling up of FM-200 gas and Nitrogen gas does not amount to manufacturing of new product. 2.6 In support of their stand, the appellants had relied upon the following judicial pronouncements: (i) 3M India Ltd., Vs. Commissioner of Central Excise, Bangalore-III 2023 (384) E.L.T. 424 (Tri. Bang.) (ii) Commissioner of Central Excise, Vadodara Vs. Vadilal Gases Ltd., - 2017 (346) E.L.T. 161 (S.C.) (iii) Ammonia Supply Company Vs. Commissioner of C, Ex., New Delhi 2001 (131) E.L.T. 626 (Tri. Del.) 3.1 On the other hand, learned Authorised Representative for Revenue reiterated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) which is specified in relation to any goods in the Section or Chapter notes of the Substituted for the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) with Fourth Schedule by the Taxation Laws (Amendment) Act, 2017, w.e.f. 01.07.2017. [First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986)]Fourth Schedule as amounting tomanufacture; or (iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer; and the word manufacturer shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account; Central Excise Tariff Act, 1985 CHAPTER 38 MISCELLANEOUS CHEMICAL PRODUCTS Notes: xxx xxx xxx xxx 9. In relation to products of this Chapter (other than products of heading 3808), labelling or relabelling of containers or repac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s manufacturer of Mechanical appliances especially when their activity is restricted to refilling of cylinders provided by their clients with Agent FM 200 under pressure of Nitrogen gas. The description of Chapter subhead 84241000 i.e., Fire extinguishers, whether or not charged itself indicates that to fall under the said category basically the fire extinguishing cylinder / equipment has to be manufactured which is not the case in the present context. 8. In view of the above discussion I am of the view that the activities undertaken by the appellants amount to manufacture. Accordingly duty ought to have been paid upon clearance of the said goods from the factory. Since there is a nonpayment of duty, interest on delay automatically accrues. From the above it could be seen that learned Commissioner (Appeals) have mainly relied upon the fact that the activity undertaken by the appellants is covered by the Chapter note 9, as FM 200 gas has been repacked from mother containers to cylinders of various capacities i.e., from bulk to retail packs. Further, he also observed that imported FM 200 gas has been subjected to Nitrogen gas treatment, for making it marketable to consumer for puttin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter they were refilled into the seamless cylinders. Therefore, we are of the opinion that the assertion made by the learned Commissioner (Appeals) for treating the process of refilling as amounting to manufacture is not duly supported by factual evidences or any supporting technical documents. 9. We also find that the appellants have contended that issue of repacking of imported goods would amount to manufacture or not, have been addressed by the Central Board of Excise Customs (CBEC) earlier by issue of clarification vide Circular No. 342/58/97-CX dated 08.10.1997. In this regard, the copy of the said CBEC circular issued on 08.10.1997is extracted and given below: Circular No. 342/58/97-CX F. No. 341/14/97-TRU Government of India Ministry of Finance (Department of Revenue) Tax Research Unit New Delhi, dated 08.10.2017 Subject : Clarification regarding labelling and repacking etc. amounting to manufacture. I am directed to refer to the Chapter notes introduced in this year s budget enlarging the scope of the term manufacture in respect of products falling under Chapters 28, 29, 34, 35 or 38 of the Central Excise Tariff. 2. In this context clarification have been sought regarding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are of the opinion, that a different view cannot be taken from the legal position of the clarification, mentioned in the circular issued by the CBEC. Accordingly, we find that the impugned order, insofar as it had categorised the activity undertaken by the appellants as amounting to manufacture, in the present case is not legally sustainable. 10.1 In this regard, we find that on a similar set of facts, in the case of 3M India Limited (supra), the Co-ordinate Bench of the Tribunal has dealt with the similar issue of deemed manufacture as per chapter note 38 and have held that injecting raw material into cans would not amount to adopting any treatment on the raw materials to render the product marketable. The relevant paragraphs of the said order is extracted and given below: 37. It needs to be noted that the note 6 of Chapter 34 has consciously used distinct expressions 'containers' and 'bulk packs'. Thus, when the Legislature has consciously used two different words, they would have different implications and in this connection reliance can be placed on the decision of the Supreme Court in Union of India v. Kumho Petrochemicals Company Limited 2017 (351) E.L.T. 65 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot amount to manufacture 8. The Hon'ble Apex Court in the said judgment has approved the judgment of the Hon'ble Tribunal in the case of Ammonia Supply Co. v. Commissioner (supra) after nothing that the order of the Hon'ble Tribunal has attained finality having not been challenged by the Department. 9. In view of the above, when the activity itself does not amount to deemed manufacture, the question of demand of duty does not arise and hence the other issue raised by the Department regarding availability of exemption does not survive for determination. ( emphasis suppled ) 40. The impugned order holds that the activity undertaken by the job worker of repacking raw material received from the appellant into retail packs would amount to manufacture. There is no finding that the job worker undertakes the activity of repacking from bulk packs to retail packs nor does the appellant undertake such an activity. 41. With regard to the activity of adopting any treatment to render the product marketable to the consumer, it is the case of the appellant and the job worker that such a treatment has not been undertaken on the raw materials supplied by the appellant in bulk containers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pra) have held that mixing of gases and making them available to consumers in smaller cylinders, did not make gases marketable as they did not chemically mix/react with each other and retained their character, without any new commodity being created and hence this would not amount to manufacture in terms of the chapter note. The relevant paragraphs of the said judgement is extracted and given below: 4. Note 10 of Chapter 28 of the Tariff Act is in the following terms : In relation to products of this Chapter, labelling or relabelling 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 . 5. Reading the aforesaid Note 10 of Chapter 28 of the Tariff Act would go to show that the deeming provision contained therein with regard to what would also amount to manufacture is in two parts. The first is where labelling or relabelling of containers and repacking from bulk packs to retail packs is undertaken and secondly where the adoption of any other treatment is undertaken to render the product marketable to the consumer. Whether either of the two situations are attrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Note 10 of Chapter 28 of the Tariff Act, the reasoning adopted by the learned Tribunal in Ammonia Supply Company (supra) and the contents of the Circular dated 8-10-1997, we are of the view, that the conclusion of the learned Tribunal, as above, does not suffer from any infirmity which would require our interference. 11. This would bring the Court to a consideration of the second limb of the requirement stipulated by Note 10 of Chapter 28 of the Tariff Act, namely, deployment of any other treatment to render a product marketable. 12. From the manufacturing activity undertaken by the assessee, as found by the learned Commissioner himself, and as extracted above, the assessee apart from packing pure Argon and Nitrogen in smaller cylinders is also engaged in the activity of mixing of inert gases (like argon, nitrogen, helium, etc.) with other gases like oxygen, nitrogen, carbon dioxide and making available such combination to the consumers in smaller cylinders. Whether such mixing of the gases in question amount to manufacture has been gone into by the learned Tribunal in Goyal Gases (P) Ltd. v. CCE, Meerut - 2000 (115) E.L.T. 467 (Tribunal). Paragraph 11 of the report in Goyal Gas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to controvert the assessee s case that no new product with distinct usage and marketability had been produced. Even so, it is contended that the Tribunal failed to appreciate that by the mixing of four more gases a totally different product with distinct use and marketability was produced. We find, having heard the learned Additional Solicitor General, that there is, in fact, no evidence led by the Department to establish that case. The reliance upon the order of the Commissioner would appear to be misplaced because the Commissioner s ipse dixit carries the matter no further. 14. While it may be correct that in Goyal Gases (P) Ltd. (supra), the scope and effect of Note 10 of Chapter 28 of the Tariff Act was not specifically under consideration, nonetheless, the conclusion of the learned Tribunal, affirmed by this Court, to the effect that the mixture of an inert gas with oxygen, nitrogen, etc., does not result in creation of a new commodity, marketable as such, would be relevant insofar as the second limb of Note 10 of Chapter 28 of the Tariff Act is concerned. The finding in Goyal Gases (P) Ltd. (supra) that notwithstanding the mixing, the gases retained their individual propertie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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