Refilling and relabelling ink containers is not manufacture; CVD credit reversal was therefore unwarranted.

Refilling and relabelling imported or procured ink containers did not amount to manufacture under Section 2(f) of the Central Excise Act because no new commodity with a different name, character or use emerged; the goods remained ink and Chapter Note 7 to Chapter 32 did not apply. On that basis, the demand founded on manufacture failed. Since the activity was not manufacture, denial or reversal of CVD credit was also unjustified, and duty already paid after clearance was treated as sufficient to protect the credit position. The impugned order was set aside, the appeals were allowed, and no penalty survived.

---

---

Issues: (i) Whether refilling and relabelling of imported or procured ink containers amounts to manufacture under the Central Excise law. (ii) Whether CVD credit taken on imported goods is liable to be denied or reversed when the activity undertaken does not amount to manufacture.

Issue (i): Whether refilling and relabelling of imported or procured ink containers amounts to manufacture under the Central Excise law.

Analysis: Manufacture under Section 2(f) of the Central Excise Act, 1944 is not attracted merely because a commodity is subjected to filling, relabelling, or repacking. The decisive test is whether a new commodity emerges with a different name, character, or use. The goods in question remained ink before and after the process, and the activity only enabled convenient use in the containers. No transformation resulting in a distinct commercial product was shown. Chapter Note 7 to Chapter 32 of the Central Excise Tariff Act, 1985 also did not extend the deeming fiction of manufacture to the goods involved.

Conclusion: The activity of refilling and relabelling did not amount to manufacture, and the demand on that basis was unsustainable.

Issue (ii): Whether CVD credit taken on imported goods is liable to be denied or reversed when the activity undertaken does not amount to manufacture.

Analysis: The levy under Section 3 of the Central Excise Act, 1944 operates on excisable goods produced or manufactured in India. Once the process was held not to amount to manufacture, the basis for treating the goods as dutiable manufactured goods failed. However, since the goods were cleared on payment of duty after the activity, the duty paid was treated as sufficient reversal of the credit position, and further reversal was not warranted.

Conclusion: Denial or reversal of the CVD credit was not justified.

Final Conclusion: The impugned order was set aside and the appeals were allowed, with no penalty sustained.

---