CX - Sika Noleek - premature to come to a conclusion on issue of manufacture and dutiability without ascertaining correct classification of bulk talc powder and its technical characteristics - Matter remanded: CESTAT
By TIOL News Service
MUMBAI, JAN 29, 2018: THE appellants are engaged in the manufacture of (a) Refractory cements, mortars concrete, etc. [CH 3816 0000] (b) Glaziers putty, grafting putty, resins cements, caulking compounds and other mastics; painters filling; non-refractory surfacing preparations for facades, including walls floor, ceiling, [CSH32149010] (c) prepared glues and other prepared adhesives, [CSH35069900].
The appellants are also purchasing from market non-dutiable talc powder (Soap stone) and repacking them into small pack of 1 Kg. and after putting their brand name "SikaNoleek" clear the same from their factory.
It is the contention of the Revenue that product "SikaNoleek" is a prepared adhesives for cements, mortars, concrete and, therefore, liable for classification under CSH38244010 and chargeable to CE duty.
Demand notices were issued and the same were confirmed by the adjudicating authority holding that re-packing of Talc under the brand name of "SikaNoleek" tantamount to manufacture.
In one case, the Commissioner (Appeals) upheld the order-in-original against which the assessee filed the Appeal No. E/387/08 and by another order the Commissioner(A) dropped the demand, therefore, Revenue filed appeal no. E/58/10.
In the matter of the assessee appeal, the Tribunal vide its order dated 26.06.2008 ordered pre-deposit. See 2008-TIOL-1563-CESTAT-MUM.
Both the appeals were heard recently.
The assessee submitted that they purchased talc powder (soap stone) which is a mineral product classifiable under Chapter 25 of the CETA; that they were carrying out the activity of re-packing from bulk to retail pack and affixing the brand name of "SikaNoleek"; that there is no chapter note in the Chapter 25 which notifies this activity as manufacture. Reliance is placed on the decisions in Osnar Chemical Pvt. Ltd. - 2012-TIOL-03-SC-CX, Servo Med Industries Pvt. Ltd. - 2015-TIOL-103-SC-CX, Kothari Products Ltd. - 2002-TIOL-442-CESTAT-DEL, KishanBiri Mfg. Co. - 2014-TIOL-2279-CESTAT-KOL, Toyo Engg. India Ltd. - 2006-TIOL-111-SC-CUS.
The AR submitted that after the repacking activity the product was sold as cement water proofing compound and is, therefore, correctly classifiable under CSH3824 4010 and liable to CE duty.
The Bench inter alia observed -
++ Unless until it is ascertained that the input purchased by the assessee, i.e. talc powder is either a mineral product falling under Chapter 25 or a mixture of various materials and has a characteristic of cement water proofing compound, which is classifiable under Chapter 38, it cannot be concluded that re-packing amounts to manufacture.
++ If the goods purchased by the assessee is a mineral product and classifiable under Chapter 25, the activity carried out by the assessee, i.e. re-packing from bulk packs to retail pack, even though a brand name was affixed, these activities alone will not amount to manufacture, in the absence of any legal fiction by way of the Chapter note in Chapter 25.
++ If it is found that the bulk talc powder is admixture of various chemicals and mineral and is cement water proofing compound will fall under Chapter 38, in that case repacking, relabeling and conversion from bulk pack to retail pack and affixing of brand name would certainly amount to manufacture in terms of Chapter Note 9 of Chapter 38.
++ However, right from the adjudication stage upto the Commissioner (Appeals) stage the core issue of correct classification of bulk talc powder and its technical characteristics were not considered. Therefore, it is premature to come to a conclusion on the issue of manufacture and dutiability in respect of retail printed pack of talc powder which is marketed as cement water proofing compound.
Both the orders were set aside and the matter was remanded to the adjudicating authority.
(See 2018-TIOL-349-CESTAT-MUM)
