Tankers to carbuoys is not manufacture where the container is not a bulk pack under Chapter 29

Transfer of acetic acid from tankers into 35 kg carbuoys was treated as not amounting to manufacture under Note 11 of Chapter 29 because tanker receipt was not re-packing from bulk packs and the statutory deeming fiction for repacking or labelling did not apply. The text relies on the Board's circular and an identical Supreme Court factual setting to state that transfer from tankers to smaller containers is outside the chapter note. On that basis, no duty demand can arise and the exemption question does not survive.

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Issues: Whether transfer of acetic acid from tankers into 35 kg carbuoys amounted to manufacture under Note 11 of Chapter 29 of the Central Excise Tariff Act, 1985, and whether the exemption notifications survived for consideration if manufacture was not made out.

Analysis: Note 11 treats labelling or relabelling of containers, re-packing from bulk packs to retail packs, or any other treatment rendering products marketable to the consumer as manufacture. The goods were received in tankers, which were not bulk packs, and were thereafter transferred into smaller carbuoys. The Board's circular clarified that transfer from tankers to smaller drums is not covered by the chapter note, and the Supreme Court in an identical factual setting held that gases received in tankers were not bulk packs and that their repacking or relabelling did not amount to manufacture. Once the activity itself was held not to be deemed manufacture, the proposed duty demand could not stand and the exemption issue did not survive.

Conclusion: The activity did not amount to manufacture, and the assessee was entitled to relief.

Final Conclusion: The assessee's appeal was allowed and the departmental appeal was dismissed because the conversion of tanker-supplied goods into carbuoys was not a manufacturing process under the tariff note.

Ratio Decidendi: Transfer of goods from tankers into smaller containers does not amount to manufacture where the tankers are not bulk packs and the statutory note on repacking is inapplicable.

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