2008 (8) TMI 178 - AT - Central Excise

Tribunal rules in favor of appellants in Ammonia filling case, no duty chargeable

The Tribunal ruled in favor of the appellants, finding that filling Ammonia from big cylinders to small cylinders does not involve re-labelling and does ... Filling the Ammonia from big cylinders to small cylinders without labeling or re-labelling – this activity does not amounts to manufacture - held that re-packing has to be accompanied by re-labelling to attract the mischief of Chapter Note 10 to Chapter 28 - further, in view of the Board’s Circular No. 236/70/96-CX, dated 1-8-96, liquid ammonia (Aqueous Solution) produced from Anhydrous Ammonia does not amount to manufacture and hence no duty is chargeable on the liquid ammonia. Issues involved:1. Interpretation of Chapter Note 10 to Chapter 28 regarding labelling or re-labelling of containers and repacking.2. Classification of Anhydrous Ammonia filled in small cylinders from tankers as manufactured goods.3. Determination of whether liquid Ammonia produced from Anhydrous Ammonia amounts to manufacture and is chargeable to duty.Analysis:1. The appellants argued that the filling of Ammonia from big cylinders to small cylinders does not involve labelling or re-labelling, as contended before the Adjudicating Commissioner. They relied on the decision in Commr. of Central Excise v. Johnson & Johnson Ltd., which states that goods filled in small cylinders without re-labelling cannot be considered manufactured goods. This argument was supported by previous Tribunal decisions in similar cases, establishing that filling cylinders does not amount to packing or re-packing. The Tribunal agreed with the appellants, finding no evidence of re-labelling and citing the Supreme Court decision and previous Tribunal rulings in their favor.2. Regarding the small quantity of liquid Ammonia produced during the refilling process, the appellants referenced Board's Circular No. 236/70/96-CX, which states that liquid ammonia derived from Anhydrous Ammonia does not constitute manufacture and is not subject to duty. The Tribunal accepted this argument, noting that the process of converting Anhydrous Ammonia into liquid form does not amount to manufacture under the Central Excise Act. Therefore, no duty is chargeable on the liquid ammonia produced in this manner. The Tribunal found the appellants' case aligned with the Board's circular and ruled in their favor.3. After considering both parties' arguments and the relevant legal precedents, the Tribunal concluded that the appellants' contentions were valid and consistent with established law. They held that the impugned order had no merit and set it aside, allowing all five appeals and disposing of the case. The Tribunal's decision was based on the absence of re-labelling in the filling process and the non-manufacture status of liquid Ammonia as per the Board's circular, reinforcing the appellants' position and leading to a favorable outcome for them.