Activities of filling anhydrous ammonia into cylinders not manufacturing under Chapter Note No.9

The Tribunal held that filling anhydrous ammonia from tankers into cylinders and dissolving anhydrous ammonia in water to obtain aqueous ammonia do not amount to manufacturing under Chapter Note No.9 to Chapter 28. The activities were found to be for transportation convenience and not for consumer marketability, aligning with CBEC Circular and Tribunal precedents. The impugned orders were overturned, and the appeal was allowed with any consequential relief for the appellant.

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Issues:
1. Whether the activity of filling anhydrous ammonia from tankers into cylinders amounts to manufacture under Chapter Note No.9 to Chapter 28.
2. Whether the activity of dissolving anhydrous ammonia in water to obtain aqueous ammonia or liquor ammonia amounts to manufacture.

Analysis:
1. The appellant, engaged in buying and selling anhydrous ammonia, faced proceedings on whether filling anhydrous ammonia from tankers into cylinders constitutes manufacture. The Tribunal cited a previous case where a similar activity with oxygen gas was deemed not manufacturing. The Chapter Note No.9 specifies that labeling, repacking, or other treatments for consumer marketability amount to manufacture. The Department argued that repacking from tankers to smaller containers is manufacturing, but a CBEC Circular and Tribunal precedent disagreed. Thus, the Tribunal held that the activity does not amount to manufacture, overturning the impugned order.

2. Regarding the dissolution of anhydrous ammonia in water, the Commissioner's order was challenged. Another Commissioner had previously ruled that this activity does not constitute manufacture. The process involves dissolving ammonia in water under pressure for transportation convenience, with the resulting aqueous ammonia not used as is. The Central Board of Excise and Customs clarified that this process does not amount to manufacture. The Tribunal referenced a Circular and a previous case supporting this view. Consequently, the Tribunal set aside the impugned order on this issue as well, allowing the appeal with any consequential relief for the appellant.

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