Whether Excise duty is applicable on just packaging

[Samik Chaudhuri]

Sir

We are food manufacturing co , now we want to sale Rice, Mustard Oil, Dal just after packaging now i would like to know whether duty is applicable just for packaging. Please suggest me at earliest.

With thanks & regards

Samik Chaudhuri.

[Rajagopalan Ranganathan]

Sir,

According to Section 2 (f) of Central Excise Act. 1944 "manufacture" includes any process,-

i. incidental or ancillary to the completion of a manufactured product;

ii. which is specified in relation to any goods in the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture; or

iii. which, in relation to the goods specified in Third Schedule involves packing or re-packing of such goods in a unit container or labeling or re-labeling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer,

and the word "manufacturer" shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account;

Since Rice and Dal are agricultural products they cannot be treated as manufactured products. Hence Central Excise Act, 1944 is not applicable to them. As far as mustard oil is concerned it can be treated as manufactured product and fall under Chapter 15 of Central Excise Tariff Act, 1985 and this chapter is not mentioned in third schedule of Central Excise Act, 1944. Hence packing of mustard oil is also not excisable. and hence no duty is payable.

[YAGAY andSUN]

Dear Samik,

In addition to above reply, the provisions of Legal Metrology (PC) Rules, 2011 as amended by LM (PC) Rules, 2015 would be applicable on such packaging activities also. Registration with FSSAI is also mandatory.

Regards,

YAGAY and SUN

AI Summary

Manufacture includes packaging, but excisability depends on tariff classification; packaging may still trigger metrology and food law duties. Section 2(f) treats packing, repacking and labeling as manufacture for excise where processes render goods marketable, but excisability depends on tariff classification and inclusion in the Third Schedule; rice and dal, as agricultural produce, are not excisable and packaging does not attract central excise, and although mustard oil is a manufactured product under the Tariff, the relevant chapter is not in the Third Schedule so packaging there also does not attract excise. Packaging remains subject to Legal Metrology rules and FSSAI registration.