Labelling imported cosmetics did not amount to manufacture under Chapter Note 4, so the demand and penalty were set aside.

Mere affixing of labels or stickers on imported cosmetics, without a substantive process amounting to labelling or relabelling in the statutory sense, did not constitute manufacture under Chapter Note 4 of Chapter 33. On the facts, the warehouse activity was treated as materially similar to an earlier Tribunal ruling where sticker affixation for importer details and MRP was held outside the deeming fiction. The Commissioner (Appeals) was therefore upheld, and the Revenue's appeal was rejected; the demand and penalty did not survive.

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Issues: Whether the activity of affixing labels on imported cosmetics amounted to manufacture under Chapter Note 4 of Chapter 33, and whether the Revenue's appeal against the Commissioner (Appeals) deserved interference.

Analysis: Chapter Note 4 of Chapter 33 deems certain processes, including labelling or relabelling of containers intended for consumers, to be manufacture. The determining question was whether the activity undertaken in the warehouse was of that nature. The facts were treated as materially similar to the earlier Tribunal decision relied upon by the respondent, where mere pasting of stickers on imported goods to indicate importer details and MRP was held not to constitute labelling or relabelling amounting to manufacture.

Conclusion: The activity was not treated as manufacture on the facts found, and the Commissioner (Appeals) was upheld. The Revenue's appeal was rejected.

Final Conclusion: The demand and penalty did not survive because the relabelling activity was held not to attract the deeming fiction of manufacture in the applicable tariff note.

Ratio Decidendi: Mere affixing of labels or stickers on imported goods, without a substantive process amounting to labelling or relabelling in the statutory sense, does not by itself constitute manufacture under the deeming chapter note.

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