Correction of MRP and reprocessing of returned goods did not amount to manufacture; admitted Lovastatin duty liability was sustained.
Correction of the printed MRP on returned tablets did not amount to manufacture because it was neither labelling or relabelling of consumer containers nor repacking from bulk to retail packs, so the tariff note did not apply and the related demand was set aside. Milling, blending, sifting and washing of returned bulk drugs were also treated as mere reprocessing, not manufacture, particularly where earlier precedent had held the same and a change in batch number did not by itself create a new product; that demand was likewise set aside. The admitted duty liability on Lovastatin, however, was sustained because the assessee did not dispute it.
Issues: Whether reprinting the correct MRP on returned Histic tablets amounted to manufacture under the tariff note; whether milling, blending, sifting and washing of returned bulk drugs amounted to manufacture; and whether the admitted duty demand on Lovastatin survived.
Issue (i): Whether reprinting the correct MRP on returned Histic tablets amounted to manufacture under the tariff note.
Analysis: The process involved only correction of the printed MRP on the tablets returned to the factory. It did not amount to labelling or relabelling of containers intended for consumers, repacking from bulk packs to retail packs, or any treatment rendering the goods marketable to the consumer. The tariff note relied upon by the Revenue was therefore not attracted.
Conclusion: The demand relating to Histic tablets was set aside in favour of the assessee.
Issue (ii): Whether milling, blending, sifting and washing of returned bulk drugs amounted to manufacture.
Analysis: The returned bulk drugs were subjected to physical reprocessing such as milling, blending, sifting and washing. The same assessee's earlier case had already held that such processes did not amount to manufacture. The mere change in batch number did not by itself establish a new manufactured product, especially when the goods were returned for repair or reconditioning under the excise procedure.
Conclusion: The demand relating to reprocessed bulk drugs was not sustainable and was set aside in favour of the assessee.
Issue (iii): Whether the admitted duty demand on Lovastatin survived.
Analysis: The assessee did not dispute the duty liability on the Lovastatin quantity received from another unit.
Conclusion: The demand on Lovastatin was upheld.
Final Conclusion: The appeal succeeded substantially, with two duty demands set aside and one admitted demand sustained, resulting in only partial relief to the assessee.
Ratio Decidendi: Correction of MRP on returned goods and physical reprocessing of returned bulk drugs, without more, do not amount to manufacture unless the statutory tariff note conditions are actually satisfied.
TaxTMI 
AI Drafter ✕
TaxTMI 
