Deemed manufacture through repacking was not established where charcoal was shifted from 20 kg bags to 50 kg bags at the stay stage.

Repacking activated charcoal imported in 20 kg bags into 50 kg bags was examined under Chapter Note 9 of Chapter 38 to see whether it amounted to deemed manufacture. The note covers labelling, relabelling, repacking from bulk packs to retail packs, or similar treatment that makes goods marketable to the consumer. On the available record, the 20 kg bags were not shown, prima facie, to be bulk packs for this purpose, so the appellant established a prima facie case against the duty, interest and penalty demand at the stay stage. Waiver of pre-deposit and stay of recovery were granted.

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Issues: Whether repacking activated charcoal from smaller bags into 50 kg bags amounted to deemed manufacture under Chapter Note 9 of Chapter 38 of the Central Excise Tariff Act, 1985, so as to justify pre-deposit of duty, interest and penalty.

Analysis: The goods were found to have been imported in 20 kg bags, and the activity complained of was repacking into 50 kg bags. The deeming provision under Chapter Note 9 applies to labelling or relabelling, or repacking from bulk packs to retail packs, or similar treatment rendering the product marketable to the consumer. On the available record, the smaller bags could not be treated as bulk packs for the purpose of that note, and therefore the appellant had made out a prima facie case against the demand at the stay stage.

Conclusion: Repacking from 20 kg bags into 50 kg bags was not shown, prima facie, to be repacking from bulk packs to retail packs within the deeming provision, and waiver of pre-deposit with stay of recovery was granted.

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