Re-packing herbal and cosmetic products with brand names not manufacturing activity under Section 4 Excise Act

CESTAT New Delhi held that re-packing of herbal and cosmetic products and affixing brand names does not constitute manufacturing activity. The appellant merely received goods from manufacturers and sold them to consumers without value addition. Section 4 of the Excise Act applies only to manufacturers who charge extra for additional activities. Since the appellant was not the manufacturer and the actual manufacturers had discharged their duty liability, no excise duty demand could be sustained. The tribunal distinguished an earlier decision regarding Ayurvedic preparations, finding it inapplicable to the appellant's duty liability under Section 4. Appeal allowed, demand set aside.

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Issues Involved:
The judgment addresses the issue of illegality of duty liability under Section 4 of the Excise Act and the applicability of Section 4A in relation to duty liability.

Issue 1: Illegality of Duty Liability under Section 4 of the Excise Act

The case involved the appellant being accused of engaging in activities that rendered products marketable without paying central excise duty. The department issued a Show Cause Notice proposing recovery of duty. The Tribunal, High Court, and Supreme Court examined whether the appellant's activities constituted manufacturing under Chapter notes of the Central Excise Tariff Act. The Tribunal held that the appellant's activities did not amount to manufacture, as confirmed by the High Court and Supreme Court. The Supreme Court remanded the case back to the Tribunal to address the duty liability under Section 4 of the Central Excise Act.

Issue 2: Applicability of Section 4 of the Central Excise Act

The appellant argued that their activities, such as repackaging products received from manufacturers, did not constitute manufacturing as per statutory requirements. The department contended that certain products fell under cosmetic preparations, making the appellant liable to pay excise duty under Chapter Note 5 of Chapter 33. However, the Tribunal, relying on Circulars and previous decisions, affirmed that the appellant's activities did not amount to manufacture. It was established that the appellant did not add value to the products received from manufacturers and was not altering essential product details. As the appellant was not the manufacturer and the manufacturers had already paid their duty liability, the demand under Section 4 was set aside, and the appeal was allowed.

This judgment clarifies the distinction between activities that constitute manufacturing under the Central Excise Act and emphasizes the importance of meeting statutory requirements for duty liability. The decision provides a detailed analysis of the appellant's actions, the legal framework under Section 4, and the application of relevant case law to determine the duty liability in the given context.

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