2006 (3) TMI 580 - AT - Central Excise

Summary

Issues:
1. Waiver of pre-deposit of duty and penalty under Section 11AC of the Central Excise Act, 1944.
2. Interpretation of Note 10 to Chapters 28 & 29 regarding repacking of chemicals in drums/barrels.

Analysis:
1. The case involved applications for waiver of pre-deposit of duty and penalty imposed on the company under Section 11AC of the Central Excise Act, 1944. The Commissioner of Central Excise (Appeals) Mumbai determined that the repacking of chemicals by the company in drums/barrels constituted manufacturing, citing Note 10 to Chapters 28 & 29 which considers activities like labelling, re-labelling of containers, and repacking from bulk packs to retail packs as manufacturing processes.

2. Upon hearing both sides, the Tribunal referred to a previous case, Ammonia Supply Company v. Commissioner of Central Excise, New Delhi, where it was held that for an activity to be considered repacking, labelling or re-labelling should occur when goods are transferred from bulk packs to retail packs. Since the company did not receive ammonia in bulk packs but in tankers, the Tribunal concluded that the company was not engaged in repacking. Relying on this precedent, the Tribunal found a strong prima facie case in favor of the applicants and waived the pre-deposit of duty and penalty, staying the recovery pending the appeal.

In conclusion, the Tribunal granted the waiver of pre-deposit of duty and penalty to the company, determining that the activity of repacking chemicals in drums/barrels did not amount to manufacturing under the provisions of Note 10 to Chapters 28 & 29. The decision was based on the interpretation of relevant legal precedents and the specific circumstances of the case, highlighting the importance of the timing and nature of repacking activities in determining their classification under the Central Excise Act, 1944.