Labelling imported barrels for compliance did not amount to manufacture; excise demand failed.

Labelling and re-labelling imported barrels, with sampling and test reports, did not amount to manufacture under Note 5 of Chapter 38 of the Central Excise Tariff Act. The activities were limited to removing the foreign supplier's markings, affixing the importer's details, and complying with packaging requirements under the Standards of Weights and Measures (Packaged Commodities) Rules, 1977. The goods were not repacked from bulk to retail packs, remained known to buyers as imported goods, and were not transformed into a new or distinct product. The extended definition of manufacture was therefore inapplicable, and the excise duty demand could not be sustained.

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Issues: Whether labelling and re-labelling of imported barrels, along with sampling and issuance of test reports, amounted to manufacture under Note 5 of Chapter 38 of the Central Excise Tariff Act, 1985.

Analysis: The activities consisted of removing the foreign supplier's markings, affixing the importer's name, address and brand details, drawing samples for quality testing, and enclosing test reports with consignments sold under dealer invoices. The goods were not repacked from bulk packs to retail packs, and the re-labelling was found to have been done to comply with the requirements of Rule 33 of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977. The record also showed that the goods were known to the buyers as imported goods and that the process did not transform them into a new and distinct product. In these circumstances, the extended definition of manufacture was held inapplicable.

Conclusion: The activities did not amount to manufacture, and the demand of excise duty could not be sustained.

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