Relabelling containers constitutes manufacture under Note 3 Chapter 18 Central Excise Tariff Act after 2008 amendment

The SC held that relabelling of containers constitutes manufacture under Note 3 to Chapter 18 of the Central Excise Tariff Act. The appellant's Taloja unit relabelled goods from its Jammu unit on both sides of packs before market introduction or export. The court clarified that the 2008 amendment replaced "and" with "or" between labelling/relabelling and repacking, making either activity sufficient for manufacture. Since relabelling alone now qualifies as manufacture under Section 2(f)(ii) of the Central Excise Act, the appellant's activity fell within the statutory definition. The appeal was dismissed.

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Issues Involved:
1. Whether the activity of labelling carried out by the respondent amounts to manufacture under Note 3 to Chapter 18 of the Central Excise Tariff Act.
2. Whether the respondent was entitled to avail cenvat credit and rebate.
3. Whether there was suppression or misrepresentation of facts by the respondent to avail irregular credit.
4. Whether the extended period of limitation was available to the revenue for issuing the show cause cum demand notice.

Issue-wise Detailed Analysis:

1. Whether the activity of labelling carried out by the respondent amounts to manufacture under Note 3 to Chapter 18 of the Central Excise Tariff Act:
The core issue is whether the activity of labelling carried out by the respondent at its Taloja unit amounts to manufacture. The Central Excise Act defines "manufacture" to include processes specified in the Chapter notes of the Central Excise Tariff Act as amounting to manufacture. Note 3 to Chapter 18, post-amendment (effective from 01.03.2008), states that "labelling or re-labelling of containers or repacking from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer" shall amount to manufacture. The amendment replaced the word "and" with "or," thus splitting the composite activity into three independent processes. The Court concluded that the activity of labelling carried out by the respondent falls within the ambit of "manufacture" as per Note 3 to Chapter 18.

2. Whether the respondent was entitled to avail cenvat credit and rebate:
The respondent's Jammu unit manufactured cocoa butter and cocoa powder, which were sent to the Taloja unit for labelling and subsequent export. The respondent claimed cenvat credit for the duty paid by the Jammu unit and rebate on the duty paid for exported goods. The Judicial Member and the third member of CESTAT held that the labelling activity amounted to manufacture, thus entitling the respondent to avail cenvat credit and rebate. The Court affirmed this view, stating that the respondent was entitled to the credit of the duty paid on goods received from the Jammu unit and the countervailing duty paid on imported goods.

3. Whether there was suppression or misrepresentation of facts by the respondent to avail irregular credit:
The appellant alleged that the respondent had suppressed the fact that it was only undertaking labelling at its Taloja unit, which did not amount to manufacture, with the intent to avail irregular credit. The Judicial Member and the third member of CESTAT found no suppression or misrepresentation of material facts by the respondent. The Court agreed, stating that since the issue was related to the interpretation of a statutory provision, the question of suppression or misrepresentation did not arise.

4. Whether the extended period of limitation was available to the revenue for issuing the show cause cum demand notice:
The appellant issued a show cause cum demand notice to the respondent, alleging irregular availing of cenvat credit and erroneous rebate claims, and sought to recover the amounts along with interest and penalties. The Judicial Member and the third member of CESTAT held that the extended period of limitation was not available to the revenue as there was no suppression or misrepresentation of facts by the respondent. The Court concurred, stating that the extended period of limitation was not applicable in this case.

Conclusion:
The Supreme Court upheld the CESTAT's majority decision, affirming that the activity of labelling carried out by the respondent amounted to manufacture under Note 3 to Chapter 18 of the Central Excise Tariff Act. Consequently, the respondent was entitled to avail cenvat credit and rebate, and there was no suppression or misrepresentation of facts. The extended period of limitation was not available to the revenue. The appeal by the revenue was dismissed, and the impugned order of CESTAT dated 16.04.2015 was affirmed.

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