Liquid transfer from tankers into carboys is not manufacture under Chapter Note 5; duty demand fails at the dealer's premises.

Transferring excisable liquid goods from tankers into carboys and affixing labels was held not to amount to manufacture under Chapter Note 5 to Chapter 38. The Board's circular clarified that a tanker is not a bulk pack and that mere transfer from tankers into smaller containers does not constitute repacking from bulk packs to retail packs; the relevant enquiry is whether the container or tanker itself can be treated as a bulk pack. As the activity involved offloading from tankers into carboys, the deeming fiction of manufacture was not attracted. No duty was payable at the Mumbai premises, and the assessee's appeals were allowed.

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Issues: Whether transferring excisable liquid goods from tankers into carboys and labelling the containers amounts to manufacture under Chapter Note 5 to Chapter 38, so as to fasten duty liability at the dealer's Mumbai premises.

Analysis: The Board's circular, issued after examining the relevant chapter note, clarified that a tanker cannot be treated as a bulk pack and that mere transfer of goods from tankers into smaller containers does not amount to repacking from bulk packs to retail packs. The circular further stated that whether an operation amounts to repacking is a question of fact, but the threshold question is whether the container or lorry tanker itself can be regarded as a bulk pack. Since the activity in question involved offloading goods from tankers into carboys, the process did not fall within the deeming fiction of manufacture under the chapter note. The Tribunal also found the cited contrary decisions distinguishable on facts.

Conclusion: The activity did not amount to manufacture and no duty was payable at the Mumbai premises; the appeals were allowed in favour of the assessees.

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