Labelling after packing with power does not amount to manufacture or packing, preserving excise exemption for the job worker.

Power used only to affix labels on bottles after packing was complete did not amount to a process in or in relation to manufacture or packing, so the exemption under Notification No. 101/66 was not defeated. The document also states that the job workers, who carried out the operations at their own premises with their own plant, machinery and labour, were the manufacturers for excise purposes. On that basis, the exemption and consequential licence relief were available, and the contrary view treating the principal as manufacturer was rejected.

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Issues: (i) whether affixing labels with the aid of power amounted to a process in or in relation to manufacture or packing so as to defeat the exemption under Notification No. 101/66 dated 17-6-1966; (ii) whether the appellants, as job workers, were the manufacturers entitled to the exemption and related licence relief.

Issue (i): whether affixing labels with the aid of power amounted to a process in or in relation to manufacture or packing so as to defeat the exemption under Notification No. 101/66 dated 17-6-1966

Analysis: The use of power was confined to affixing labels on already packed bottles. The labelling did not bring about any change in the product and was not part of the packing process, as packing was complete before the labels were affixed. The notification was to be strictly construed and its condition was concerned with processes ordinarily carried on with the aid of power in manufacture and packing, not with mere labelling. The reasoning that label affixation was part of packing was rejected.

Conclusion: Labelling with the aid of power was not a process in or in relation to manufacture or packing for the purpose of denying the exemption.

Issue (ii): whether the appellants, as job workers, were the manufacturers entitled to the exemption and related licence relief

Analysis: The appellants carried on the manufacturing operations at their own premises with their own plant, machinery, and labour, while M/s. Reckitt & Colman did not themselves manufacture the goods. On that basis, the appellants were the manufacturers. Since power was not used in manufacture or packing within the meaning of the notification, they fell within the exemption. The licence requirement was also inapplicable in view of the exemption for units producing wholly exempt goods.

Conclusion: The appellants were the manufacturers and were entitled to the exemption and the consequential relief, while the contrary finding against M/s. Reckitt & Colman could not stand.

Final Conclusion: The assessment, duty demand, penalties, and denial of exemption were set aside, and the appellants obtained the exemption benefit with consequential relief.

Ratio Decidendi: Where power is used only for labelling after packing is complete, and the labelling does not itself amount to manufacture or packing, the exemption condition excluding processes carried on with aid of power is not attracted; a job worker carrying on the manufacturing activity is the manufacturer for excise purposes.

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