Manufacture under Chapter Note 4 failed where waste oil was sold in bulk only to industrial buyers, defeating duty demands.

Processing of waste and used oil did not amount to manufacture under Chapter Note 4 to Chapter 27 because the record showed no labeling, re-labeling, re-packing from bulk to retail packs, or treatment making the product marketable to consumers. The invoices showed bulk sales only to industrial customers, so the essential ingredients for deeming manufacture were not proved. The show cause notices were therefore unsustainable, and the duty demands and penalties were set aside in favour of the assessee.

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Issues: Whether the activity of processing waste and used oil amounted to manufacture under Chapter Note 4 to Chapter 27 of the Central Excise Tariff Act, 1985, and whether the show cause notices and consequent duty demands were sustainable.

Analysis: For Chapter Note 4 to apply, the record had to show either labeling or re-labeling of containers, re-packing from bulk packs to retail packs, or adoption of treatment rendering the product marketable to consumers. The evidence did not show any sale to consumers, nor any labeling, re-labeling, or re-packing into retail packs. The invoices reflected bulk packing and sales to industrial customers only. On that material, the revenue failed to establish the essential ingredients for treating the process as manufacture.

Conclusion: The activity did not amount to manufacture under Chapter Note 4, the show cause notices were unsustainable, and the duty demands and penalties were set aside in favour of the assessee.

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