Composite retail packing as manufacture supports input duty credit on detergent cake in a mixed detergent pack

Packing detergent powder and detergent cake into a composite retail pack was treated as manufacture because Chapter Note 6 to Chapter 34 covered packing, repacking, or any other treatment that renders the product marketable to consumers. The Tribunal also drew parity with Chapter Note 5 to Chapter 30 and the earlier reasoning allowing credit in a similar context. On that basis, detergent cake supplied free in the composite pack was accepted as an input eligible for duty credit, and the packing activity was regarded as manufacture for excise purposes.

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Issues: Whether detergent cake supplied free in a composite pack with detergent powder was eligible for input duty credit, and whether such packing amounted to manufacture for excise purposes.

Analysis: The composite pack contained detergent powder and detergent cake, and the assessee had claimed input duty credit on the cake. The Tribunal noted that Chapter Note 6 to Chapter 34 treated packing or repacking into retail packs, or any other treatment rendering the product marketable to the consumer, as manufacture. It also relied on the parity between that note and Chapter Note 5 to Chapter 30, under which credit had already been allowed in a similar context. The earlier view that the cake was merely placed in the pack without being used in manufacture was not accepted in light of the larger bench reasoning and the prior decision allowing credit on similar facts.

Conclusion: The detergent cake was treated as an input eligible for credit, and the composite packing activity was regarded as manufacture for excise purposes; the assessee succeeded.

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