Repacking and free-bundle valuation: retail relabelling of shampoo counted as manufacture, and free gel value stayed out of assessable value.

Repacking, relabelling and bundling shampoo with a free face wash gel was treated as manufacture because Chapter Note 5 to Chapter 33 deems repacking from bulk to retail packs and similar market-making treatment to be manufacture. The bundled goods were also covered by Section 4A, and the free gel, having no separate sale price and being supplied only as an additional pack, was not includible in the assessable value. Valuation under Section 4 was therefore unnecessary, and the duty demand on the free supply could not stand. The appeal succeeded and consequential relief followed.

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Issues: (i) Whether the process of repacking, relabelling and binding shampoo with free face wash gel amounted to manufacture; (ii) whether the value of the free face wash gel was includible in the assessable value and the goods were liable to valuation under Section 4 instead of Section 4A.

Issue (i): Whether the process of repacking, relabelling and binding shampoo with free face wash gel amounted to manufacture.

Analysis: The products were received in bulk, repacked into retail packs and then tied together with a fresh label. For products falling under Chapter 33, Chapter Note 5 treats labelling, relabelling, repacking from bulk to retail packs and other treatment rendering the goods marketable to the consumer as manufacture. The process adopted therefore satisfied the statutory definition of manufacture.

Conclusion: The process amounted to manufacture in favour of the assessee.

Issue (ii): Whether the value of the free face wash gel was includible in the assessable value and the goods were liable to valuation under Section 4 instead of Section 4A.

Analysis: The shampoo and face wash gel were covered by Section 4A and the Standards of Weights and Measures regime. The free gel had no separate sale price and was supplied only as an additional pack. The cited authorities on free supplies and bundled goods supported exclusion of the free product's value from assessable value. In these circumstances, valuation under Section 4 was not warranted and the demand on the free gel could not survive.

Conclusion: The free face wash gel was not includible in the assessable value and the matter was in favour of the assessee.

Final Conclusion: The appeal succeeded and the duty demand was set aside with consequential relief.

Ratio Decidendi: For goods covered by Chapter 33 and Section 4A, repacking, relabelling and bundling from bulk to retail packs constitutes manufacture, and the value of an additional free supply without a separate sale price is not includible in the assessable value.

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