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CX - Relabeling of retail pack after taking out from master pack and thereafter selling such labeled boxes - activity not manufacture: CESTAT

By TIOL News Service

MUMBAI, MAY 25, 2017: REVENUE is in appeal.

The respondent is importing Illiren & Receptal which are Patent and Proprietary medicaments in large master boxes.

Each master box consists of individual cartons containing vial/bottle. The master box was opened and cartons containing vials/bottles were taken out and sticker bearing the details of import Licence no., price and the marks that the product was meant for 'Animal treatment only' and 'not for human use' was pasted on the vial/bottle.

The case of the department is that as per Chapter note 5 of Chapter 30 aforesaid activity amounts to manufacture.

In the first round of appeal, Tribunal remanded the matter and drawing attention to the apex court decision in Johnson & Johnson Ltd. - 2005-TIOL-132-SC-CX.The Commissioner (Appeals) dropped the demand by allowing appeal of the appellant and by recording the fact that there is no evidence that the assessee is indulging in further activity which require packing or repacking of bulk pack into retail pack within the extended meaning of manufacture as contained in chapter note 5.

The AR reiterated the grounds of appeal.

None appeared for the respondent, however, since the appeal was of the year 2006, the Bench proceeded to decide the matter on merit.

Adverting to the Chapter note 5 of Chapter 30 of the CETA, 1985, the CESTAT observed -

"…From the …chapter note, we find that apart from labeling and re-labeling of the packages the activity of repacking from bulk pack to retail pack is also required to bring under ambit of the manufacture in terms of above chapter note. In the present case, the activity of the respondent is confined to only relabeling of retail pack after taking out from master pack and thereafter sold such labeled boxes which is already in the packed form. This activity does not fall under the term 'repacking from bulk pack to retail pack' for the reason that retail pack was already intact while importing the goods and said retail pack was only 'labeled' therefore activity of repacking from bulk pack to retail pack does not exist. In the earlier order it was already considered that as per the Hon'ble Supreme Court in case of Johnson & Johnson Ltd. (supra) other than labeling or relabeling activity, conversion from bulk pack to retail pack is also must to make product manufactured goods in terms of Chapter Note 5 of Chapter 30. Since activity of repacking from bulk pack to retail pack does not exist the activity carried out does not amount to manufacture…"

Holding that the impugned order is correct and legal and does not require any interference, the same was upheld and the Revenue appeals were dismissed.

(See 2017-TIOL-1744-CESTAT-MUM)


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