Purification and branding of bottled water can amount to manufacture and defeat small-scale exemption under trade-name restrictions.

Chapter Note 2 of Chapter 22 treats filtration, purification, packing and rendering water marketable as manufacture, so the assessee's bottled drinking water process was held to amount to manufacture. Use of another person's brand name, including under an agreement, attracted the exemption bar in the small-scale notifications because the goods bore a trade connection with that person, and the denial of exemption was upheld. Non-disclosure to the Revenue regarding manufacture and clearance under another's brand name supported invocation of limitation, so the demand was not time-barred. Duty and interest were therefore sustained.

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Issues: (i) whether filtration and purification of drinking water amounted to manufacture under the tariff; (ii) whether use of another person's brand name disentitled the assessee from the small-scale exemption under the notifications; (iii) whether the demand was barred by limitation.

Issue (i): whether filtration and purification of drinking water amounted to manufacture under the tariff

Analysis: Chapter Note 2 of Chapter 22 treats filtration, purification and allied treatment of water, including packing and rendering the product marketable, as manufacture. The assessee's process involved filtration through sand filters and activated carbon filters, softening, ozonation, filling into bottles and jars, and clearance as packed drinking water.

Conclusion: The process amounted to manufacture and the assessee's contention to the contrary was rejected.

Issue (ii): whether use of another person's brand name disentitled the assessee from the small-scale exemption under the notifications

Analysis: The exemption notifications denied benefit to goods bearing the brand name or trade name of another person, whether registered or unregistered. The assessee admitted use of the brand name of another person under agreement. Use of a brand name indicating a trade connection was sufficient to attract the bar on exemption.

Conclusion: The assessee was not entitled to the small-scale exemption and the denial of the benefit was upheld.

Issue (iii): whether the demand was barred by limitation

Analysis: The assessee had not made any declaration or other communication to the Revenue regarding manufacture and clearance of packed drinking water under another person's brand name. The non-disclosure supported the invocation of limitation against the assessee's plea.

Conclusion: The demand was not time-barred.

Final Conclusion: The order confirming duty and interest after denial of exemption was sustained, and the appeal failed in full.

Ratio Decidendi: Under Chapter 22, purification and packing of water can constitute manufacture, and use of another person's brand name bars small-scale exemption where the notification excludes goods bearing such brand name.

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