Repacking as manufacture applies only within the deeming provision; mere non-declaration is not enough to prove suppression.

Repacking chemicals is treated as manufacture only to the extent covered by the deeming provision in Chapter Note 11 to Chapter 29: relabelling, repacking from bulk to retail packs, or other treatment that makes goods marketable can attract duty, but clearance in the same original packing does not. On the facts, only the repacking activity fell within the note. The allegation of suppression with intent to evade duty also failed because long-standing activity, later introduction of the note, and mere non-declaration did not establish intentional concealment; the resulting demand was therefore not sustained.

---

---

Issues: (i) Whether repacking chemicals in the same packing or repacking and relabelling them amounted to manufacture under Chapter Note 11 to Chapter 29 of the Central Excise Tariff Act. (ii) Whether the allegation of suppression of facts with intent to evade duty was sustainable.

Issue (i): Whether repacking chemicals in the same packing or repacking and relabelling them amounted to manufacture under Chapter Note 11 to Chapter 29 of the Central Excise Tariff Act.

Analysis: Chapter Note 11 provided that labelling or relabelling of containers, repacking from bulk packs to retail packs, or any other treatment rendering the product marketable to the consumer would amount to manufacture. On the facts, the evidence showed that a substantial quantity of the goods was cleared in the same packing without disturbing the original packing. Such clearance did not fall within the deeming provision. Only the remaining quantity, which involved repacking, could attract the chapter note.

Conclusion: The activity of clearing goods in the same packing did not amount to manufacture, while only the repacking activity could be treated as manufacture under the chapter note.

Issue (ii): Whether the allegation of suppression of facts with intent to evade duty was sustainable.

Analysis: The activity of repacking had been carried on for years, and the relevant chapter note was introduced only from financial year 1997-98. In the circumstances, and applying the principles that mere non-declaration does not by itself establish suppression with intent to evade duty, the Department failed to establish the requisite mens rea. The availability of small scale exemption also reduced the demand substantially.

Conclusion: The allegation of suppression with intent to evade payment of duty was not sustainable.

Final Conclusion: The order dropping the demand was upheld and the appeal was dismissed.

Ratio Decidendi: Repacking or relabelling amounts to manufacture only to the extent covered by the deeming chapter note, and suppression for duty demand requires proof of intentional concealment beyond mere non-declaration.

---