Customs, Excise and Gold Tribunal - Calcutta
Boc (I) Ltd. vs Commissioner Of Central Excise on 4 April, 2002
Equivalent citations: 2002ECR578(TRI.KOLKATA), 2003(160)ELT864(TRI-KOLKATA)
ORDER G.R. Sharma, Member (T)
1. The short point for determination in this appeal is whether the appellants by affixing its own label on its own cylinders containing Helium gas, manufactured and filled by Pure Helium India Pvt. Ltd. into empty gas cylinders of BOC would amount to manufacture and attract levy of duty of excise in terms of Note 10 of Chapter 28 of Central Excise Tariff.
2. The facts of the case briefly stated are that the appellant is a manufacturer of Acetylene, Oxygen, etc., amongst other gases and clears the same on payment of appropriate duty of excise. Helium is procured by the appellants from other manufacturers and sold under BOC brand name claimed as a part of its trading activity. The Revenue issued a show cause notice alleging that since they had affixed label of their own name and other particulars, therefore, in terms of Note 10 of Chapter 28, the legal fiction of manufacture is created. Their activity of affixing labels amounted to manufacture and called upon the appellants to explain as to why Central Excise duty amounting to Rs. 7,39,910/- should not be demanded from them and why a penalty should not be imposed. The Joint Commissioner adjudicating the case confirmed the demand and imposed a penalty of Rs. 1,00,000/- on the firm and further a penalty of Rs. 1,00,000/- on Shri P.R. Chakraborty, Business Manager of the firm. When the appellants filed an appeal, the ld. Commissioner (Appeals) confirmed the order of the adjudicating authority and hence, the present appeal before us.
3. Arguing the case for the appellants, Shri B.J. Mookherjee, ld. Advocate submits that the only activity undertaken by the appellants was of sending empty cylinders for filling Helium gas and that when the Helium filled cylinders were received back by the appellants, they affixed their own name indicating other particulars after testing the purity etc. of the gas. He submits that this activity of the appellants was not covered by Note 10 of Chapter 28 of the Central Excise Tariff. In support of his contention, he cited the decision of the Tribunal in the case of Ramkishore Chemicals Co. Pvt. Ltd. v. CCE, New Delhi reported in 2001 (132) E.L.T. 184 (Tribunal) - 2001 (47) RLT 679 (CEGAT - Del.) and further decision of this Tribunal in the case of Ammonia Supply Company v. CCE, New Delhi, 2001 (131) E.L.T. 626 (T). Ld. Counsel submits that the ratio of the decision of the Tribunal in these two cases squarely covered their case. He, therefore, prayed that the appeal may be allowed.
4. The T.K. Kar, ld. DR submits that the labelling and re-labelling of the containers created the legal fiction of manufacture in terms of Note 10 of Chapter 28 of the Central Excise Tariff. He submits that the fact remains that the appellants affixed labels on their cylinders after getting them filled with Helium and other special gases. He reiterates the findings of the authorities below.
5. We have heard the rival submissions. We find that the entire issue revolved round the interpretation of Note 10 of Chapter 28 of Central Excise Tariff. Note 10 to Chapter 28 reads :-
"In relation to products of this Chapter, labelling or re-labelling 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."
We find that this Tribunal in the case of Ammonia Supply Co. cited above has interpreted this Note lucidly in Para 5 and 6, which are reproduced below :
"5. From the above Chapter Note one can spell out the manufacturing process only if the activities mentioned therein are carried out. The activity mentioned therein when carried out area treated as manufacturing process. In such circumstances, a legal fiction as to manufacture is to be presumed. The fiction incorporate in the note should have a restricted meaning only. In other words, for a manufacturing process to come into existence, by invoking this fiction, ingredients contained therein must be strictly complied with. What are the ingredients that are to be satisfied to bring in a fiction of "manufacture" as per this Note? The first ingredient that is to be satisfied is labelling of container while repacking from bulk packs to retail packs. The second may be re-labelling of the container while repacking from bulk packs to retail packs. The third will be adoption of any other treatment to render the product marketable to the consumer. In the instant case, we can safely exclude the third option because the department has no case that the assessee adopted any treatment to render the product, Ammonia, marketable in the course of filling it into smaller container.
6. The Department has nowhere alleged that the assessee in this case resorted to labelling or re-labelling the container while filling the Ammonia gas into smaller container. As per Note quoted above, labelling or re-labelling of the container should take place at a time when the goods are packed from bulk packs to retail packs. The assessee was not getting Ammonia in bulk packs. They were getting it in tankers. Ammonia gas brought in tankers can never be termed as brought in bulk packs. So the assessee was not repacking the goods from bulk packs to retail packs. Accordingly, the activity undertaken by the assessee in filling the smaller container from bulk container namely tankers can never fall within the fiction of manufacture as envisaged by Note 10 quoted above."
We further note that the Department had issued clarification in regard to packaging and its implication for the purposes of Note 10 to Chapter 28 of Central Excise Tariff. This has been brought out by the Tribunal in Para 7 of its judgment in the case of Ammonia Supply Company. The Para 7 is reproduced below for better appreciation :-
"7. The Department went into the question as to what type of packing can fall within the purview of the Note. Reference may be made to Circular No. 342/58/97-CX., dated 8-10-97 [reported in [1997 (22) RLT M107]. Paragraph 3 of this circular gives Government of India's understanding of the word packing. It reads as :-
'Generally the expression "packing" is considered as "package containing a prepacked commodity" and the quantity of the product contained therein is also predetermined. The packaging is also done without the purchaser being present. The packages also contain information such as name of the manufacture, quantity, value and other details of the product.' None of the condition enumerated in the above quoted portion of the Circular is satisfied in the instant case. Ld. Departmental Representative was trying very hard to make out the case of packing being carried out by the assessee. According to him the word "ASCO" written on the cylinders was the mark of the assessee. The cylinders were colour coated to identify the product as that of the assessee. He failed miserably in this attempt. The trademark of the manufacturer of the cylinders ASCO Industrial Corporation was the one written on the cylinders. They had permission from the Explosive Authority to manufacturer such cylinders in compliance with the direction given by those authorities. They were having colour coated to the cylinders as they were to carry Ammonia. These activities of the manufacturer of cylinders cannot be taken as activity undertaken by the assessee."
6. In Para 8 of this order in the case of Ammonia Supply Co., this Tribunal observed as under :
"8. In Note 10, labelling, re-labelling of the container along with repacking etc. are taken to form manufacturing process. The word labelling has got specific connotation in excise law. This can be seen from Notification No. 8/98-C.E., dt. 2-6-98 (General Exemption No. 1) dealing with small scale exemption. The word labelling was used in that Notification in the Explanation added to that Notification. A reading of that Explanation shows that the labelling is used as synonymous to symbol, monogram, signature including the words or writing for the purpose of indicating a connection between the goods and the manufacture. No such mark or monogram or label or other marking is affixed by the assessee in the instant case on the container in which Ammonia gas is filled."
7. On careful examination of the above, we find that the ratio of the decision of the Tribunal squarely covers the facts of the present case.
8. We also find support for the above view of the Tribunal from the decision of this Tribunal in the case of Ramkishore Chemicals Co. Pvt. Ltd.. In Para 2 of its order, this Tribunal has observed as under :
"2. Both sides duly represented by Shri V. Lakshmikumaran, ld. Advocate along with Shri B.L. Narasimhan, Advocate and Shri Mewa Singh, ld. SDR for the Revenue, agreed that the issue involved is covered in favour of the appellants by the recent decision of the Tribunal in the case of Ammonia Supply Co. v. CCE, New Delhi vide Final Order No. 85/2001-C, dated 30-5-2001 [reported in 2001 (131) E.L.T. 626 (Tribunal) = 2001 (45) RLT 271]. The Tribunal has held that such an activity would not amount to manufacture as envisaged by Note 10 to Chapter 28. For better application, we reproduce para 6 of the above order hereunder :-
"The Department has nowhere alleged that the assessee in this case resorted to labelling or re-labelling the container while filling the Ammonia gas into smaller containers. As per Note quoted above, labelling or re-labelling of the container should take place at a time when the goods are packed from bulk packs to retail packs, the assessee was not getting Ammonia in bulk packs. They were getting it in tankers. Ammonia gas brought in tankers can never be termed as brought in bulk packs. So the assessee was not repacking the goods from bulk packs to retail packs. Accordingly, the activity undertaken by the assessee in filling the smaller container from bulk container namely tankers can never fall within the fiction of manufacture as envisaged by Note 10 quoted above."
9. Having regard to the above discussions and following the ratio of the judgment cited above, we allow the appeal, consequential relief, if any, shall be admissible to the appellants in accordance with law.