Duty-paid ammonia repacked from tankers into retail containers-whether Note 10 Ch. 28 treats it as "manufacture" without labelling; duty set aside.

Whether filling duty-paid ammonia from bulk tankers into smaller containers for retail sale constitutes "manufacture" under Note 10 to Ch. 28 was the dominant issue. The Tribunal held that Note 10 deems manufacture only where repacking is accompanied by "labelling" or re-labelling, and "labelling" in excise law connotes affixing a mark/monogram/signature or writing indicating a connection with the manufacturer. As no such label or marking was affixed on the containers, mere filling/repacking into smaller packs did not satisfy the legal fiction of manufacture. Consequently, no central excise duty liability arose on the repacking activity, the impugned order was set aside, and the appeal was allowed with consequential relief.

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Issues involved: Scope and ambit of Note 10 to Chapter 28 of the Central Excise Tariff regarding the manufacturing process of distributing Anhydrous Ammonia and Ammonia in aqueous solution.

Summary:
The appellants were distributing Ammonia received in compressed form in tankers, off-loaded into cylinders for sale. A Show Cause Notice alleged manufacturing due to repacking Ammonia into retail packs. The Assistant Commissioner confirmed the duty demand, noting the marking of cylinders with "ASCO." The appeal contended the cylinders were purchased and filled by M/s. ASCO Industrial Corporation, not manufactured by the appellants. The Appellate Commissioner upheld the decision without addressing the appellants' contentions.

Note 10 to Chapter 28 states activities like labelling containers or repacking from bulk to retail packs amount to manufacture. The judgment analyzed the ingredients required for the manufacturing process under this Note. It was found that the appellants did not engage in labelling or re-labelling containers during the filling process, thus not meeting the criteria for manufacturing as per the Note.

The department's argument regarding packing was refuted, citing a circular defining packing as containing pre-packed commodities with specific information, which did not apply to the appellants' case. The judgment clarified the specific connotation of "labelling" in excise law and highlighted that no such labelling was done by the appellants on the containers.

Ultimately, the Tribunal ruled in favor of the appellants, stating that the activity of filling Ammonia gas into smaller containers did not amount to a manufacturing process. A similar demand in a different jurisdiction had been dropped, further supporting the appellants' case. The appeal was allowed, setting aside the previous order with any consequential relief.

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