Manufacture and extended limitation under central excise: mere statutory labelling on imported biscuits is not manufacture, and suppression must be specifically shown.

Affixation of statutory labels on imported retail biscuit packets, including importer details, maximum retail price and month of import, does not by itself amount to manufacture under Chapter 19 unless the process involves repacking or relabeling that changes the goods into a different marketable article. The extended period of limitation under the Central Excise Act applies only where fraud, wilful misstatement, suppression of facts or similar conduct with intent to evade duty is specifically pleaded and established; a bare failure to disclose activity or obtain registration is insufficient. On these principles, the demand and penalty were set aside and relief was granted to the assessee.

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Issues: (i) Whether affixing labels on imported retail biscuit packets to indicate particulars such as importer name, maximum retail price and month of import amounted to manufacture under Note 3 of Chapter 19 of the Central Excise Tariff Act, 1985. (ii) Whether the extended period of limitation under Section 11A of the Central Excise Act, 1944 could be invoked on the basis of alleged suppression of facts.

Issue (i): Whether affixing labels on imported retail biscuit packets to indicate particulars such as importer name, maximum retail price and month of import amounted to manufacture under Note 3 of Chapter 19 of the Central Excise Tariff Act, 1985.

Analysis: The process relied upon by the revenue was only affixation of labels required for compliance with other statutory obligations. The goods did not undergo repacking from bulk packs to retail packs or relabeling of the kind contemplated by the chapter note. The legal position reflected in the cited authorities is that mere affixation of stickers or labels containing importer details and price particulars, without transformation of the goods into a different marketable product by manufacture, does not constitute manufacture.

Conclusion: The issue was answered in favour of the petitioner and against the revenue; the activity did not amount to manufacture.

Issue (ii): Whether the extended period of limitation under Section 11A of the Central Excise Act, 1944 could be invoked on the basis of alleged suppression of facts.

Analysis: Invocation of the extended period requires a clear and specific foundation of fraud, wilful misstatement, suppression of facts, or similar conduct with intent to evade duty. A mere failure to intimate departmental registration or to disclose the activity, without more, is insufficient. On the facts, no specific and explicit allegation establishing the statutory ingredients for the extended period was made out.

Conclusion: The issue was answered in favour of the petitioner and against the revenue; the extended period could not be invoked.

Final Conclusion: The writ petition succeeded, the demand and penalty order were set aside, and the assessee was granted relief on both the merits of manufacture and limitation.

Ratio Decidendi: Mere affixation of statutory labels on imported goods, without repacking or relabeling that changes the product into a different marketable article, does not amount to manufacture; and the extended limitation period under the central excise law can be applied only on a clear, specific showing of suppression or other enumerated misconduct with intent to evade duty.

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