2015 (10) TMI 2585 - AT - Central Excise

Tribunal rules in favor of appellants, determining repacking not manufacturing for retail sale

M/s Dhampur Alco-Chem Ltd., Shri Sorabh Gupta Director, Shri Murli Monohar Gupta Versus Commissioner of C. Ex., Ghaziabad

M/s Dhampur Alco-Chem Ltd., Shri Sorabh Gupta Director, Shri Murli Monohar Gupta Versus Commissioner of C. Ex., Ghaziabad - 2017 (357) E.L.T. 627 (Tri. - ... Issues:1. Whether the appellants engaged in repacking from bulk packs to retail packs amounting to manufactureRs.2. Whether the appellants are liable to pay Central Excise duty and penalties for repacking activitiesRs.3. Whether the labeling of products by the appellants renders them marketable to consumersRs.4. Whether the appellants are entitled to consequential benefits based on the Tribunal's rulingRs.Issue 1: Repacking ActivitiesThe appellants, engaged in distributing hazardous chemicals, received chemicals in bulk and transferred them to smaller containers at their premises before dispatch. The Revenue alleged that this repacking constituted manufacturing, requiring Central Excise duty payment. However, the appellants argued that their activities did not amount to repacking from bulk to retail packs, as they sold to manufacturers, not consumers. They contended that labeling the containers did not make the products marketable to consumers, citing legal definitions and precedents.Issue 2: Liability for Central Excise DutyThe Revenue issued show cause notices demanding Central Excise duty and penalties for the alleged repacking activities. The appellants contested these notices, arguing that their actions did not constitute manufacturing under the relevant laws. They relied on legal precedents, including a Supreme Court ruling, to support their position. The Tribunal considered these arguments and ruled that the appellants were not engaged in repacking for retail sale, thus not liable for duty or penalties.Issue 3: Marketability of ProductsThe appellants maintained that their labeling activities did not make the products marketable to consumers, as they were selling to industrial consumers, not end-users. They cited legal definitions and case law to support their position. The Tribunal, after considering the arguments and legal precedents, agreed with the appellants, ruling that the labeling activities did not render the products marketable to consumers.Issue 4: Consequential BenefitsBased on the Tribunal's findings that the appellants were not liable for Central Excise duty or penalties, the impugned orders were set aside. The Tribunal held that there was no concealment of facts or contumacious conduct by the appellants, and the extended period of limitation was not applicable. Consequently, the appellants were entitled to consequential benefits in accordance with the law.In conclusion, the Tribunal ruled in favor of the appellants, holding that their activities did not amount to repacking for retail sale, and they were not liable for Central Excise duty or penalties. The appellants were granted consequential benefits, and the impugned orders were set aside.