Manufacture by repacking of imported chemicals supported a prima facie stay of duty and penalty recovery

Repacking imported cerium chloride into smaller packets and clearing it on duty paid basis raised a prima facie question whether the activity amounted to manufacture under the relevant chapter note, which covered labelling, relabelling, repacking from bulk to retail packs, and other treatment making the product marketable. On the commercial context and nature of the chemical, the activity could fall within that description. The appellant was therefore held to have a prima facie case at the stay stage, and waiver of duty and penalty was granted for admission of the appeal while recovery remained stayed pending disposal.

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Issues: Whether the appellant had made out a prima facie case for waiver of duty and penalty and for stay of recovery pending the appeal.

Analysis: The dispute arose from repacking imported cerium chloride into smaller packets and clearing the goods on payment of duty. The relevant chapter note treated not only labelling or relabelling and repacking from bulk to retail packs, but also any other treatment rendering the product marketable to the customer, as manufacture. The nature of the chemical and the commercial context indicated that the repacking activity could fall within that description. On that basis, the appellant was found to have a prima facie case at the stay stage.

Conclusion: The appellant was entitled to waiver of duty and penalty for admission of the appeal, and recovery of the demanded amount was stayed during pendency of the appeal.

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