Commissioner of Central Excise v. Amritlal Chemaux Limited

(A.K. Sikri and Rohinton Fali Nariman, JJ.)

 

Commissioner of Central Excise ________________________ Appellant

 

v.

 

Amritlal Chemaux Limited __________________________ Respondent

 

Civil Appeal No. 1092 of 2005^†, decided on May 5, 2015

 

The Order of the court was delivered by

Order

 

1. There are three products involved in the present appeal and the question is as to whether the process undertaken by the respondent assessee in these products amounted to manufacture or not. The products are various dyes and dye bases, napthols and fast bases, and chrome pigments. They fall in Chapter 29 and Chapter 32 of the Central Excise Tariff Act, 1985 (hereinafter referred to as “the Act”) respectively. It is not in dispute that the assessee is not the manufacturer of these products. It buys the same from a manufacturer in bulk quantities in bulk packing. Thereafter, some process is undertaken thereupon, as noted hereinafter and that has given rise to the dispute as to whether such a process amounts to manufacture or not. The process is of repacking and/or labelling. It is thus, an admitted case that the assessee is not a manufacturer in traditional sense. However, by virtue of Chapter Note 11 of Chapter 29 and Chapter Note 3 of Chapter 32 of the Act, which gives extended meaning to “manufacture” by creating a fiction, the appellant wants to rope in the respondent assessee under the aforesaid Chapter Notes.

 

2. The two chapter notes viz. Chapter Note 11 of Chapter 29 and Chapter Note 3 of Chapter 32 are identically worded and read as under:

 

Chapter Note 11 of Chapter 29:

 

“In relation to products of this Chapter, labelling or relabelling of containers and 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’.”

 

Chapter Note 3 of Chapter 32:

 

“In relation to products of Heading 32.06, labelling or relabelling of containers and 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’.”

 

3. It was the endeavour of Mr. K. Radhakrishnan, learned Senior Counsel appearing for the appellant, to argue that even if one of the two processes viz. labelling or relabelling of containers or for that matter, repacking from bulk to retail packs is undertaken, the same should be treated as manufacture. To put it otherwise, he wanted us to read the word “and” not conjunctively but disjunctively. We are not impressed with this argument of Mr. Radhakrishnan.

 

4. It is clear from the plain language of the aforesaid Chapter Notes which use both the expression “or” as well as “and” at different places. Thus, by using the two expressions, the intention of the legislature is manifest that insofar as the process of label or relabelling of containers is concerned, it would amount to manufacture only if the other condition viz. repacking from bulk to retail pack is also satisfied. The aforesaid view gains credence from other fact i.e. where the second process is treated as manufacture viz. “adoption of any other treatment to render the product marketable to the consumer”, the expression “any other treatment” and that too, with intention to render it marketable clearly shows that insofar as first part is concerned, both the conditions have to be satisfied.

 

5. Applying the aforesaid principle to the facts of this case, in the first instance, we find that though the show-cause notice covered all the three products viz. dyes and dye bases, napthols and fast bases, as well as chrome pigments, the final order which was passed by the adjudicating authority, did not levy any excise duty on dyes and dye bases. Thus, we are concerned with the remaining two products viz. napthols and fast bases and chrome pigments.

 

6. Insofar as the napthols and fast bases are concerned, even from the order of the Commissioner, it becomes clear that though there was repacking and even relabelling, the repacking of bulk was not into retail packing as the goods after repacking were supplied to industrial consumers on wholesale basis. It is specifically stated so by the assessee which fact is not denied by the Commissioner. Therefore, both the conditions mentioned in the Chapter Notes are not satisfied.

 

7. Insofar as the chrome pigments are concerned, the assessee only obliterated the name which was appearing on containers and the name of the assessee along with the logo is stencilled on such container that may amount to relabelling. However, the process of repacking was not undertaken at all by the assessee. Thus, here both the eligibility conditions which are to be fulfilled have not been satisfied.

 

8. We, thus, do not find any merit in this appeal which is accordingly dismissed.

 

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^† From the Judgment and Order dated 13-8-2004 of CESTAT in Amritlal Chemaux Ltd. v. CCE, (2004) 172 ELT 475