CX - As per Note 10 of Ch 28, two requirements were needed to be satisfied to term activity as manufacture - One, there should labeling or re-labeling & second is repacking from bulk packs - on perusal of SCN nowhere it is coming out that appellant has done labeling on gas cylinder: CESTAT
By TIOL News Service
MUMBAI, DEC 11, 2013: THIS is a Revenue appeal.
The respondents are manufacturers of goods falling under Chapter 28 of CETA, 1985. They purchased Argon Gas (Ch.28) in tankers from M/s. RCF Ltd. and others and unloaded the gas into tanks in the factory and thereafter filled the gas into cylinders.Till 31.3.2002, they were discharging Central Excise duty liability on the Argon Gas filled in cylinders. After the decision of the Tribunal in the case of Ammonia Supply Co. - (2002-TIOL-179-CESTAT-DEL), wherein it was held that refilling of gas from tankers to cylinders would not amount to manufacture,came to their notice the respondent claimed that they were not liable to pay excise duty.
Unhappy that the decision had led to the respondent assessee not paying any CE duty, the jurisdictional authorities issued a SCN dated 17.6.2003 demanding excise duty of Rs.6,68,494/- for the period April, 2002 to March,2003 along with interest thereon and also proposing to impose penalty.
The adjudicating authority dropped the demand by holding that the activity did not amount to ‘manufacture'.
Aggrieved, the Revenue knocked the doors of the Commissioner(A) only to find that he was not ready to rule in their favour.
In their pursuit of happiness, Revenue is now before the CESTAT.
In the memorandum of appeal it is submitted by the Revenue that as per Note 10 of Chapter 28 " in relation to products of this chapter, labeling or re-labeling of containers and re-packing from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer, shall amount to manufacture." Furthermore, as per the CBE&C Circular No. 342/58/97-CX dated 8.10.1997, " the expression ‘packing' is considered as package containing a pre-packed commodity and the quantity of product contained therein is also pre-determined. It is done without the purchaser being present. The packages also contain information such as name of the manufacturer, quantity, value and other details of the product. " Therefore, as per the said clarification, the activity undertaken by the respondent would amount to ‘manufacture' and hence the orders passed by the lower authorities are bad in law and need to be set aside.
The Revenue representative also submitted that the cylinders appellant used for re-filling are bearing the name ‘Sanghi Oxygen' that has been inscribed by punching the same onto the cylinders and this fact has not been considered in the impugned orders. Reliance is also placed on the decision in Surya Air Products Pvt. Ltd. - 2012 (283) ELT 107 (Tri-Del)., wherein at the stage of grant of stay, it was held that refilling of Hydrogen Gas from bulk to small cylinders for marketing to consumer amounted to ‘manufacture'. In fine, it was pleaded that either the matter be remanded or the order be set aside.
The respondent submitted that -
+ The appellant does not undertake the activity specified in Note 10 of Chapter 28. They are not at all labeling or re-labeling the cylinder.
+ Merely because they have filled the gas from tanks to the small cylinders, it does not mean that they are undertaking re-labeling or re-packing.
+ The containers in which they are refilling the gas are returnable and, therefore, to maintain the identity of the cylinder, they have put the name of the assessee "Sanghi Oxygen" on the cylinder.
+ Sometimes they also get cylinders form their buyers in which they fill the gas and send back the cylinders to the buyers. Merely because the gas has been filled into the cylinder from the tanks, it does not mean that the appellant has undertaken repacking from bulk pack to retail pack and, therefore, the impugned orders are sustainable in law and the Revenue appeal deserves to be set aside.
The Bench observed -
"6.1 As per Note 10 of Chapter 28 as it stood at the relevant time, two requirements were needed to be satisfied. One, there should labeling or re-labeling of the container and second repacking from bulk packs to retail packs. When both these conditions are satisfied, the activity would amount to ‘manufacture'. In the present case, on perusal of the show-cause notice and the order passed by the lower appellate authority, nowhere it is coming out that the appellant has done labeling and re-labeling on the gas cylinder. It is also seen that in many cases, the gas has been supplied by the appellant in the buyer's cylinders. If that be so, the question for re-packing from bulk pack to retail pack would not arise. We find that the decision of the Tribunal in the case of Surya Air Products Pvt. Ltd.(supra) is also of no help to the Revenue, because it is only a prima facie view taken at the interim stage of stay and it is a settled position in law that interim decision cannot be considered as a precedent."
Holding that there is no infirmity in the order of the Commissioner(A), the Revenue appeal was dismissed as being devoid of merits.
All GAS!
(See 2013-TIOL-1844-CESTAT-MUM)
