Packing garments for distribution did not prima facie amount to manufacture; predeposit waived and recovery stayed.

Packing garments with packing materials and selling them to distributors was examined against Note 4 to Chapters 61 and 62 of the Central Excise Tariff Act, 1985. On the material then available, the activity did not prima facie satisfy the statutory ingredients of manufacture: the cartons were second-hand, labelling or relabelling was not established, and repacking from bulk packs meeting the relevant requirements was not shown. The department therefore had not substantiated manufacture at that stage, and the assessee was entitled to waiver of predeposit and stay of recovery of the duty demand and penalties.

---

---

Issues: Whether the activity of packing garments with packing materials and selling them to distributors amounted to manufacture under Note 4 to Chapters 61 and 62 of the Central Excise Tariff Act, 1985, and whether the assessee was entitled to waiver of predeposit and stay of recovery.

Analysis: The activity, on the material then available, did not appear to fall within the processes specified in the Chapter Note. The cartons used were second-hand and were not shown to bear labels, so the ingredients of labelling or relabelling were not established. In the absence of evidence that the goods were repacked from bulk packs satisfying the relevant statutory requirements, the allegation of repacking also remained unsubstantiated at that stage. Prima facie, the department had not established manufacture as contemplated by the Chapter Note.

Conclusion: The assessee was held entitled, at that stage, to waiver of predeposit and stay of recovery of the duty demand and penalties.

---