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2021 (10) TMI 933 - AT - Central ExciseProcess amounting to manufacture or not - duty paid cigarettes - affixing brand name, repacked in new pack - non-payment of duty on removal of competitor’s cigarettes - period from 2004-05 to 2008-09 - HELD THAT:- The term “manufacture” has been defined under Section 2(f) inter alia, to include any process, incidental or ancillary to the completion of a manufactured product. In this case, the competitor’s cigarettes procured by the appellant were masked, covering the manufacturer’s brand name, repacked in new pack by putting only a code number for testing purpose to select panel of the smokers. The product emerged after carrying out the activity of masking, putting code number etc. for identification, remained cigarettes only, which were procured by the appellant on payment of appropriate Central Excise duty. Since, there was no change in the name, character and use of the originally bought-out cigarettes, in our view, the process undertaken by the appellant in its factory will not be considered as a manufacturing activity, in order to fall under the scope and ambit of the definition of “manufacture”, defined under Section 2(f) ibid. In the case in hand, it is an admitted fact on record that excepting the process of masking and putting code number, the appellant had not undertaken any other activity to render the resultant product marketable. Thus, it cannot be said that there was involvement of labeling or relabeling of containers. The appellant in this case, had repacked the bought-out cigarettes from one retail pack to another retail pack before it was coded. Such activity also will not be covered under the purview of Chapter Note 3 (supra) inasmuch as there was no repacking from bulk pack to retail pack. The basic test of marketability envisaged in Note 3 (supra) has not been satisfied - the requirements of deemed manufacture as per Note 3 to Chapter 24 are not satisfied in this case, for levy of Central Excise duty on the disputed goods. There are no merits in the impugned order in support of confirmation of the adjudged demands on the appellant - appeal allowed - decided in favor of appellant.
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