Repacking returned goods into fresh containers was not manufacture under Chapter 28, so the duty demand failed.

Repacking returned stannous chloride into fresh cardboard containers after filing a D-3 declaration was held not to amount to manufacture under Note 10 to Chapter 28 of the Central Excise Tariff Act, 1985. The note covers labelling, relabelling, repacking from bulk packs to retail packs, or other treatment that makes goods marketable, but it contemplates duty-paid bulk goods later subjected to such treatment. As the goods had been returned by the buyer and merely repacked, the activity did not fall within the note. The duty demand was therefore not sustainable, and the Board circular supporting the assessee's position was treated as applicable.

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Issues: Whether repacking returned stannous chloride into fresh cardboard containers after filing D-3 declaration amounted to manufacture under Note 10 to Chapter 28 of the Central Excise Tariff Act, 1985, so as to attract duty.

Analysis: Note 10 treats labelling or relabelling of containers, repacking from bulk packs to retail packs, or any other treatment rendering the product marketable to the consumer as manufacture. The provision contemplates duty-paid bulk goods received by an assessee and thereafter subjected to such treatment. On the facts, the goods had been returned by the buyer and were repacked in fresh cardboard containers; the activity did not fall within the kind of repacking contemplated by the Chapter Note. The departmental reliance on the Chapter Note was therefore misplaced, and the Board's circular supporting the assessee's case was found applicable.

Conclusion: The activity did not amount to manufacture and the demand of duty was not sustainable.

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