Repacking is not manufacture absent a deeming tariff note, and Ayurvedic preparation classifies as medicament when sold as medicine.

Mere repacking of clove oil and sandalwood oil from bulk packs into smaller packs did not amount to manufacture because no chapter note deemed such packing or repacking to be a manufacturing process; the excise duty demand was therefore unsustainable. Saunf Ka Ark was manufactured under a drugs licence, in accordance with a formula in a recognised authoritative Ayurvedic book, and was marketed and prescribed as medicine for ailments such as constipation and indigestion; it was therefore classifiable as a medicament under the relevant tariff entry rather than as an essential-oil based product.

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Issues: (i) Whether repacking clove oil and sandalwood oil from bulk packs into smaller packs amounted to manufacture so as to attract central excise duty; (ii) Whether Saunf Ka Ark was classifiable under the medicament tariff entry as claimed by the assessee or under the essential-oil based tariff entry as claimed by the Revenue.

Issue (i): Whether repacking clove oil and sandalwood oil from bulk packs into smaller packs amounted to manufacture so as to attract central excise duty.

Analysis: The goods were received in bulk and repacked into small quantities. No evidence showed that any manufacturing process was undertaken. The decision turned on the absence of a chapter note in the relevant tariff heading deeming such packing or repacking to be manufacture. In the absence of such a deeming provision, mere repacking did not create a manufacturing activity liable to duty.

Conclusion: The repacking activity did not amount to manufacture and the duty demand on clove oil and sandalwood oil was unsustainable.

Issue (ii): Whether Saunf Ka Ark was classifiable under the medicament tariff entry as claimed by the assessee or under the essential-oil based tariff entry as claimed by the Revenue.

Analysis: Saunf Ka Ark was manufactured under a drugs licence and in accordance with the formula prescribed in an authoritative book specified in the First Schedule to the Drugs and Cosmetics Act, 1940. The record also showed that it was marketed and prescribed as a medicine for ailments such as constipation, indigestion, and griping pain. These features brought the product within the tariff entry for goods manufactured exclusively according to the specified authoritative books and sold under the corresponding name.

Conclusion: Saunf Ka Ark was correctly classifiable as a medicament under the claimed tariff entry and not under the Revenue's classification.

Final Conclusion: The assessee succeeded on both classification disputes, and the Revenue's challenge failed.

Ratio Decidendi: Mere repacking of goods does not amount to manufacture unless the tariff expressly deems it so, and a product manufactured exclusively according to a specified authoritative Ayurvedic formula and sold as medicine is classifiable as a medicament.

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