Tribunal rules affixing labels on imported cosmetics not 'manufacture' for excise duty

The Tribunal upheld the decision of the Commissioner (Appeals) in a case concerning the labelling/re-labelling of cosmetics, ruling that the activity did not amount to "manufacture" under Chapter Note 4 of Chapter 33 for excise duty purposes. The Tribunal found the process of affixing labels on imported cosmetics cartons did not meet the criteria specified in the chapter note, aligning the case with a previous decision where a similar activity was not considered as manufacturing. Consequently, the appeal by the Revenue was dismissed.

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Issues involved: Interpretation of Chapter Note 4 of Chapter 33 regarding labelling/re-labelling of products under excise duty.

The judgment dealt with the issue of whether the activity of labelling/re-labelling of cosmetics by the respondent constituted "manufacture" for the purpose of excise duty levy and collection. The Ld. Commissioner (Appeals) allowed the appeal stating that the label affixed on the package did not contain all necessary details as required by Chapter Note 4 of Chapter 33. The Central Excise Officers alleged that this activity amounted to manufacture of an excisable commodity, leading to the imposition of a penalty. The Addl. Commissioner confirmed the demand, prompting the importer to appeal before the Commissioner (Appeals), who upheld the decision.

The Revenue argued that the labelling/re-labelling activity fell under the purview of Chapter Note 4 of Chapter 33, which defines certain processes as constituting "manufacture." The respondents were fixing labels on imported cosmetics cartons, which, according to the Revenue, amounted to manufacture and thus attracted duty payment. The Revenue contended that the Commissioner (Appeals) erred in holding that no duty was payable, emphasizing that the Addl. Commissioner's decision was correct.

On the other hand, the respondent's counsel argued that the activity did not fall within the category specified in Chapter Note 4, as the processes described therein were primarily for consumer convenience. The counsel highlighted a previous Tribunal case, CCE v. Panchsheel Soaps Factory, where a similar issue was addressed. In that case, it was held that merely pasting a sticker on the packaging did not amount to labelling or re-labelling as defined in the chapter note. The counsel contended that the facts of the present case aligned with the Panchsheel Soap Factory decision, and thus, the appeal by the Revenue should be rejected.

After considering the arguments and perusing the relevant Chapter Note and case law, the Tribunal found the facts of the current case akin to those in Panchsheel Soap Factory. Following the precedent set in that case, the Tribunal upheld the impugned order, concluding that the activity of labelling/re-labelling by the respondent did not amount to manufacture as per Chapter Note 4 of Chapter 33. Therefore, the appeal filed by the Revenue was rejected.

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