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AI Drafter ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether relabelling of imported Hydrogen Peroxide containers after adding stabilizers and stirring, without repacking from bulk packs to retail packs, amounted to manufacture under Chapter Note 9 of Chapter 28, and whether reversal of CENVAT credit on the imported goods was sustainable.
Analysis: Chapter Note 9 treated labelling or relabelling of containers, repacking from bulk packs to retail packs, or other treatment rendering the product marketable as manufacture. The imported goods were cleared in 65 Kg and 30 Kg containers, and the factual record showed relabelling after adding stabilizers and stirring, but no repacking from bulk packs to retail packs. On that basis, the activity did not satisfy the statutory condition for deemed manufacture. The imported Hydrogen Peroxide cleared as the appellant's own product was therefore to be treated as removal of inputs as such. The demand was also upheld on the footing that the duty paid on the cleared product was less than the CENVAT credit availed.
Conclusion: The activity did not amount to manufacture under Chapter Note 9 of Chapter 28, and the demand for reversal of CENVAT credit was sustained.
Final Conclusion: The appellate orders confirming the demand were upheld and the challenge by the assessee failed.
Ratio Decidendi: Deemed manufacture under Chapter Note 9 of Chapter 28 applies only when the statutory conditions, including repacking from bulk packs to retail packs where relevant, are satisfied; mere relabelling with incidental treatment that does not meet those conditions does not prevent reversal of credit on removal as such.
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