2008 (4) TMI 46 - SC - Central Excise

Supreme Court Upholds Tribunal Decision on Manufacturing Interpretation

The Supreme Court dismissed the revenue's appeals in a case involving the interpretation of Chapter 28 of the Central Excise Tariff. The Court upheld the ... Labeling or relabeling of containers amounting to manufacture - repacking from bulk packs to retail packs - legal fiction of manufacture under Note 10 of Chapter 28Labeling or relabeling of containers amounting to manufacture - repacking from bulk packs to retail packs - legal fiction of manufacture under Note 10 of Chapter 28 - Affixing the assessee's label without repacking from bulk packs to retail packs does not amount to manufacture for the purposes of Note 10 of Chapter 28. - HELD THAT: - The Tribunal found, and this Court agreed, that the respondent only affixed or refixed labels and did not undertake repacking from bulk packs to retail packs or any other treatment that would render the product marketable directly to the consumer. The Court followed its earlier decision in Commissioner of Central Excise, Mumbai v. Johnson & Johnson Ltd., holding that mere packing or labeling for marketing is not sufficient; repacking must be from bulk packs to retail packs to attract the legal fiction of manufacture. Applying that principle, the activities shown on the record did not constitute manufacture within Note 10, and the Tribunal's allowance of the assessee's appeals was correctly founded. [Paras 5, 6, 7]Appeals dismissed; the labeling activity did not amount to manufacture under Note 10 of Chapter 28.Final Conclusion: The revenue's appeals are dismissed; the Court affirmed the Tribunal's finding that mere labeling without repacking into retail packs does not create the fiction of manufacture under Note 10, and the parties are left to bear their own costs. Issues:1. Interpretation of Chapter 28 of the Central Excise Tariff regarding labeling/relabeling and repacking activities.2. Determination of whether affixing labels amounts to manufacturing under Note 10 of Chapter 28.3. Application of legal principles from previous judgments in similar cases.Analysis:1. The case involved a dispute regarding the interpretation of Chapter 28 of the Central Excise Tariff, specifically Note 10, which states that labeling or relabeling of containers and repacking from bulk packs to retail packs amount to manufacture. The Tribunal allowed the assessee's appeals based on a previous judgment in the case of M/s. Ammonia Supply Co. v. CCE, New Delhi, where it was held that certain activities did not make the product marketable.2. The revenue issued a show cause notice alleging that affixing labels by the respondent created a legal fiction of manufacture under Note 10 of Chapter 28. The Joint Commissioner confirmed the demand and imposed penalties, which were upheld by the Commissioner (Appeals). However, the Tribunal accepted the respondent's appeal, ruling that the respondent was not involved in manufacturing as they only labeled or relabeled the product, without repacking from bulk packs to retail packs.3. In a similar case, Commissioner of Central Excise, Mumbai v. Johnson & Johnson Ltd., the Supreme Court held that mere packing for marketing would not amount to manufacture. The Court emphasized that repacking from bulk packs to retail packs is necessary to render the product marketable directly to the consumer. In line with this precedent, the Supreme Court dismissed the revenue's appeals, agreeing with the interpretation of Note 10 of Chapter 28 and leaving the parties to bear their own costs.