Correction of wrong potency labels on returned medicaments is not re-labelling or manufacture under Chapter 30.

Correcting an incorrect potency declaration on medicaments returned to the factory after duty payment does not amount to re-labelling under Note 5 to Chapter 30 of the Central Excise Tariff Act. The deeming provision covers labelling or re-labelling of consumer containers as manufacture, but replacing a wrong label with a correct one on already-cleared goods was treated as a mere correction, not a new process rendering the goods marketable in a different way. The process therefore did not constitute manufacture, and the assessee's challenge succeeded.

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Issues: Whether correction of an incorrect potency declaration on labels of medicaments returned to the factory amounted to re-labelling so as to attract Note 5 to Chapter 30 of the Central Excise Tariff Act.

Analysis: Note 5 to Chapter 30 treats certain processes, including labelling or re-labelling of containers intended for the consumer, as manufacture. On the admitted facts, the goods had already been cleared on payment of duty and were brought back only because the potency printed on the labels was ; the subsequent process merely replaced the wrong label with a correct one. The correction did not involve re-labelling in the sense contemplated by the deeming provision, nor did it amount to any treatment rendering the product marketable in a new way.

Conclusion: The process did not fall within Note 5 to Chapter 30 and did not amount to manufacture. The finding against the assessee was set aside and the appeal was allowed.

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