The Little Known Third Schedule - Is it Needed?

Section 2. Definitions. -

“(f) “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 the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling 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,”

MANY GOODS ARE COVERED UNDER SECTION 2(f)(ii) and 2(f)(iii) BOTH.

For example, Chapter Note 4 of Chapter 27 sates “In relation to lubricating oils and lubricating preparations of heading 2710, labeling or relabeling of containers or repacking 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”.” These goods viz. Lubricating oils and lubricating preparations falling under heading 2710, have also been included in the Third Schedule at serial number 30.

The wordings of such Chapter Notes [read with Section 2(f)(ii)] and Section 2(f)(iii) are similar though not identical. In the Chapter Note, there is no specific mention about declaration or alternation of retail sale price; whereas, it is specifically mentioned in Section 2(f)(iii). However, the wordings "labelling or relabelling" mentioned in the Chapter Note, may include declaration or alternation of retail sale price, if labels of MRP have been affixed or labels have been changed.

It is felt that Section 2(f)(ii) and all Section/Chapter Notes prescribing that labeling, relabeling, repacking etc. amounts to manufacture should be removed from Statues after incorporating all such goods in the Third Schedule so that all such goods can be find out from one place. Alternatively, the Third Schedule may be removed after ensuring all goods mentioned therein are covered under respective Section/Chapter Notes with appropriate wordings.

These are personal views.

Shvetal Parikh 10/12/2015