Repacking from bulk to retail packs can amount to manufacture, with duty shifting to retail-pack clearances and suppression triggering the extended period.

Repacking snuff of tobacco from bulk packs into retail packs within the same factory is treated as manufacture under the Chapter Note to Chapter 24 of the Central Excise Tariff Act, so central excise duty attaches to the retail packs rather than the bulk packs. The text also states that declaring only bulk clearances in ER-1 returns, while the finished goods were actually cleared in retail packs at higher value, amounts to suppression of facts and mis-declaration. On that basis, the extended period of limitation is invocable and the duty demand and penalty are sustained.

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Issues: (i) Whether the appellant was liable to pay central excise duty on the clearance of snuff of tobacco in retail packs instead of bulk packs; (ii) Whether the extended period of limitation was invocable on the ground of suppression of facts and mis-declaration.

Issue (i): Whether the appellant was liable to pay central excise duty on the clearance of snuff of tobacco in retail packs instead of bulk packs.

Analysis: The goods were manufactured in bulk and subsequently repacked in the same factory into retail packs for final sale. In view of the Chapter Note to Chapter 24 of the Central Excise Tariff Act, 1985, repacking from bulk packs to retail packs amounted to manufacture. The duty liability therefore attached to the retail packs, and the appellant's contention on the merits of duty demand was not pressed.

Conclusion: The duty was payable on the clearances of snuff of tobacco in retail packs, and the demand on merits was upheld.

Issue (ii): Whether the extended period of limitation was invocable on the ground of suppression of facts and mis-declaration.

Analysis: The appellant declared only bulk clearances in the ER-1 returns, while the actual final clearances were made in retail packs at a higher value. The stated method concealed the true value of the finished goods from departmental scrutiny and amounted to a deliberate misstatement of the clearance pattern. On these facts, the existence of suppression and mis-declaration was established.

Conclusion: The extended period of limitation was correctly invoked.

Final Conclusion: The demand and penalty were sustained in full, and the appeal failed.

Ratio Decidendi: Where goods are repacked within the factory from bulk to retail packs and the assessee suppresses the retail clearances by declaring only bulk clearances in returns, duty is payable on the retail-pack value and the extended period may be invoked for suppression and mis-declaration.

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