Deemed manufacture under Chapter 15 requires repacking from bulk to retail packs; tanker receipt alone is not enough.

Repacking refined edible oil received in tankers into retail containers with branding was held not to amount to manufacture under the Chapter Note 4 deemed-manufacture fiction in Chapter 15. The Tribunal applied the settled rule that the statutory conditions must be satisfied cumulatively and that repacking must be from bulk packs to retail packs, with labelling or relabelling, for the fiction to operate. It found that receipt of oil in tankers was not bulk packing for this purpose, so the process did not qualify as manufacture. Demand, interest and penalties were therefore unsustainable, and the relief granted to the assessee was affirmed.

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Issues: Whether repacking refined edible oil received in tankers into retail containers with branding amounts to manufacture under Chapter Note 4 of Chapter 15 of the Central Excise Tariff Act, 1985.

Analysis: The activity was found to be receipt of edible oil in tankers followed by packing into smaller containers and labelling. The controlling legal test was whether the process satisfied the deemed manufacture fiction in Chapter Note 4, which treats labelling or relabelling of containers and repacking from bulk to retail packs, or other treatment rendering the product marketable, as manufacture. The Tribunal applied the settled interpretation that the conditions in the chapter note are not to be read disjunctively, and that repacking must be from bulk packs to retail packs for the fiction to operate. Relying on the Supreme Court's construction of the same kind of chapter note language, and on earlier Tribunal decisions, it held that tanker receipt was not bulk packing and the activity did not amount to manufacture.

Conclusion: The activity did not amount to manufacture and the demand, interest, and penalties were not sustainable; the appeals failed.

Final Conclusion: The Tribunal affirmed the order in favour of the assessee and declined to interfere with the relief granted by the first appellate authority.

Ratio Decidendi: Where the statutory fiction for deemed manufacture requires repacking from bulk to retail packs along with labelling or relabelling, the process is not manufacture unless the factual conditions of that fiction are satisfied; receipt in tankers is not, by itself, bulk packing for that purpose.

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