Refilling fire extinguishers is not manufacture where no new commercial product emerges; duty and penalty were unsustainable.

Filling or refilling dry chemical powder and carbon dioxide into fire extinguishers was held not to amount to manufacture because the activity merely packed an existing chemical mixture without creating a commercially distinct product with a different name, character or end use. The tariff heading and HSN explanatory notes did not themselves create a new taxable commodity, and the deeming fiction treating such activity as manufacture applied only from 1 March 1997, which was outside the period in question. No duty was payable, and the penalty on the appellant and its partner was unsustainable.

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Issues: Whether filling or refilling dry chemical powder and carbon dioxide into fire extinguishers amounts to manufacture and attracts duty under heading 38.13.

Analysis: Manufacture requires emergence of a commercially distinct product with a different name, character and end use. The activity here was only packing the existing chemical mixture and carbon dioxide into fire extinguishers, whether at the appellant's premises or at the customer's premises. Such packing or refilling did not alter the identity, use or nomenclature of the goods. The tariff heading and the HSN explanatory notes did not by themselves create a new taxable commodity, and the deeming provision treating such activity as manufacture was introduced only from 1 March 1997, which was not applicable to the period in question.

Conclusion: The activity did not amount to manufacture and no duty was payable. The penalty imposed on the appellant and its partner was also unsustainable.

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