Immediate effect of Finance Bill deeming manufacture and use of another's brand name can defeat excise exemption.

A Finance Bill provision that deems packing or repacking of specified goods to be manufacture can take immediate effect under the Provisional Collection of Taxes Act, 1931, so the inserted Note 6 in Chapter 34 applied to re-packed washing preparations cleared in March 1994 and rendered them dutiable. Clearance of the goods under another person's brand name also defeated small scale exemption under Notification No. 1/93-C.E. where the notification denied relief for such branded goods; on the stated facts, use of the ineligible brand name on the packing made the exemption unavailable and the duty demand and penalty were sustained.

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Issues: (i) Whether Note 6 inserted in Chapter 34 of the Central Excise Tariff Act, 1985 had immediate effect from the date of introduction of the Finance Bill, 1994 under the Provisional Collection of Taxes Act, 1931 and applied to re-packed washing preparations cleared in March 1994; (ii) Whether clearance of the re-packed washing preparations under the brand name of an ineligible person disentitled the appellants to the small scale exemption under Notification No. 1/93-C.E. dated 28-2-93.

Issue (i): Whether Note 6 inserted in Chapter 34 of the Central Excise Tariff Act, 1985 had immediate effect from the date of introduction of the Finance Bill, 1994 under the Provisional Collection of Taxes Act, 1931 and applied to re-packed washing preparations cleared in March 1994.

Analysis: The amendment inserting Note 6 was part of the Finance Bill, 1994 and was covered by the declaration under Section 3 of the Provisional Collection of Taxes Act, 1931. A declared provision under that Act takes effect immediately on the expiry of the day of introduction of the Bill in Parliament. The inserted note treated packing or repacking of the specified products as manufacture, and thus had a direct nexus with the imposition of excise duty. The reliance placed on cases dealing with exemption notifications or mere tariff shifts was held to be inapposite because the present amendment directly created the chargeability of the re-packed product.

Conclusion: The insertion of Note 6 took effect from the date of introduction of the Finance Bill, 1994 and the re-packed detergent powder cleared in March 1994 was liable to duty.

Issue (ii): Whether clearance of the re-packed washing preparations under the brand name of an ineligible person disentitled the appellants to the small scale exemption under Notification No. 1/93-C.E. dated 28-2-93.

Analysis: The goods were cleared under the brand name 'Tata OK', which belonged to another person who was not eligible for the small scale exemption. The Tribunal accepted that affixation of the customer's brand name on the packing attracted the relevant condition in the exemption notification. On the facts, the brand name was used on the packing of the goods and the benefit of the notification was not available.

Conclusion: The appellants were not entitled to the small scale exemption.

Final Conclusion: The duty demand and penalty were sustained, and the appeal failed on both the statutory commencement issue and the exemption issue.

Ratio Decidendi: A Finance Bill provision that directly creates excisability by deeming a process to be manufacture can receive immediate effect under the Provisional Collection of Taxes Act, 1931, and use of another person's brand name on the packing can defeat small scale exemption where the notification so provides.

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